Pinnacle MultiCare v. HHS - $31.2M Medicare Recoupment Dispute
Summary
Pinnacle MultiCare Nursing and Rehabilitation Center, a Bronx nursing facility, filed a federal action in SDNY on February 26, 2026, to contest HHS's $31.2 million Medicare Part A recoupment demand. OIG cited a 99% error rate in claims submitted during 2020-2021, with HHS demanding repayment by February 27, 2026, plus 12% interest. Pinnacle argues the recoupment violates pandemic-era federal directives and state immunity protections.
What changed
Pinnacle MultiCare challenges HHS's $31,227,884 Medicare Part A recoupment demand arising from 2020-2021 claims. OIG found a 99% error rate in Pinnacle's claims, citing failures to properly assign reimbursement rate codes and provide sufficient clinical review for skilled nursing services. Pinnacle contests the recoupment by invoking CMS's pandemic-era 'patients over paperwork' directive that temporarily suspended audit and documentation requirements, as well as New York Executive Orders that provided immunity for providers acting in good faith during the emergency.
Healthcare providers and nursing facilities with pandemic-era Medicare claims should assess their vulnerability to similar recoupment efforts. Organizations should review documentation practices during the public health emergency and evaluate whether PREP Act protections or other pandemic flexibilities may apply to their circumstances. The outcome of this case may establish precedent affecting the scope of post-pandemic Medicare audits and recoupment actions across the industry.
What to do next
- Review pandemic-era documentation flexibilities that may support defense of COVID-era claims
- Assess applicability of PREP Act and state emergency order immunity to billing practices
- Monitor Pinnacle v. HHS for precedent on pandemic-era Medicare recoupment disputes
Penalties
12% interest on unpaid $31.2 million recoupment
Source document (simplified)
March 30, 2026
Bronx Nursing Center Fights $31 Million HHS Recoupment from Pandemic
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Last month, Pinnacle MultiCare Nursing and Rehabilitation Center (Pinnacle) filed a federal action to stop the U.S. Department of Health and Human Services (HHS) from recouping tens of millions of dollars in Medicare Part A payments made to Pinnacle during the COVID-19 pandemic. According to its Complaint, Pinnacle received a letter from HHS’s Centers for Medicare & Medicaid Services (CMS) on January 29, 2026, demanding recoupment of $31,227,884 by February 27, 2026. The letter included a notice that, absent Pinnacle’s timely compliance, interest would be assessed at a rate 12%.
HHS’s Office of Inspector General (OIG) allegedly found a 99% error rate in Pinnacle’s claims submitted between 2020 and 2021. According to OIG, the “errors occurred because Pinnacle’s clinical and billing staff did not always follow its procedures to properly assign reimbursement rate codes in accordance with Medicare requirements and provide sufficient clinical review to verify that enrollees required skilled nursing services.” Pinnacle filed its action on February 26, one day before the letter’s deadline.
Pinnacle asserts that HHS’s recoupment efforts are “riddled with constitutional violations,” inconsistent with federal and state law, and go back on CMS’s directive during the pandemic for providers to put “patients over paperwork.” According to Pinnacle, CMS’s directive expressly gave providers “temporary relief from many paperwork, reporting and audit requirements” to allow “focus on providing needed care to Medicare and Medicaid beneficiaries affected by COVID-19.”
Pinnacle also points to a New York Executive Order during the pandemic that “relieved” providers from certain “recordkeeping requirements” and conveyed “immunity” to providers “acting reasonably and in good faith.” According to Pinnacle, compliance with New York law would also convey federal immunity pursuant to the Public Readiness and Emergency Preparedness (PREP) Act, which protects against legal claims related to health emergencies. HHS issued a “PREP Act Declaration” in March 2020 relating to the administration or use of “covered countermeasures” during the pandemic.
Pinnacle, located in the Bronx’s Co-op City community, maintains that it acted “consistent with state and federal directives to put patients over paperwork, [and] charting by exception allowed Pinnacle to save lives, at the extremely modest expense of some documentation that might have been produced under normal circumstances.” The Court has not yet made any substantive decisions, but Pinnacle’s action is worth tracking as its outcome may have broader implications to recoupments related to the pandemic.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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