[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5062 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 5062
To amend title XVIII of the Social Security Act to require medicare
administrative contractors, unified program integrity contractors, and
qualified independent contractors to pay the legal fees for certain
durable medical equipment suppliers that were incorrectly denied
payment.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 22, 2026
Mr. Cassidy introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to require medicare
administrative contractors, unified program integrity contractors, and
qualified independent contractors to pay the legal fees for certain
durable medical equipment suppliers that were incorrectly denied
payment.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fee Awards for Incorrect Reviews DME
Appeals Act'' or the ``FAIR DME Appeals Act''.
SEC. 2. PAYMENT OF LEGAL FEES FOR CERTAIN DURABLE MEDICAL EQUIPMENT
SUPPLIERS INCORRECTLY DENIED PAYMENT.
(a) In General.--Section 1869 of the Social Security Act (42 U.S.C.
1395ff) is amended by adding at the end the following new subsection:
``(j) Payment of Certain Legal Fees for Certain Durable Medical
Equipment Suppliers Incorrectly Denied Payment.--
``(1) In general.--
``(A) Payment of fees.--Notwithstanding section 504
of title 5, United States Code and section 2412 of
title 28, United States Code (commonly known as the
`Equal Access to Justice Act'), subject to the
succeeding subparagraphs of this paragraph, in the
event a supplier of durable medical equipment wins a
favorable final appeal of an initial determination (and
at the time of such initial determination, such
supplier was a small business concern, as defined in
section 3 of the Small Business Act (15 U.S.C. 632)) by
a covered contractor arising from or relating to the
claims administration process involving durable medical
equipment under this title, such appeal was heard by
the Office of Medicare Hearings and Appeals, and the
administrative law judge hearing such appeal determines
that such initial determination was clearly erroneous,
was not supported by substantial evidence, or failed to
follow applicable provisions of law, regulation, or
instruction issued by the Secretary in effect at the
time of the initial determination, such contractor
(regardless of whether such contractor is a named party
in the appeal) shall pay the reasonable attorney fees
(as applicable) and litigation costs of such supplier
resulting from the appeal of the initial
determination--
``(i) at each stage of the appeal up to and
including the hearing before the Office of
Medicare Hearings and Appeals; and
``(ii) including any stage of the appeal at
which such supplier did not receive a favorable
decision.
``(B) Splitting of fees.--If, during the claims
administrative process under this title, a covered
contractor affirmed an initial determination that
resulted in a favorable final appeal described in
subparagraph (A), such covered contractor and the
covered contractor who made the initial determination
shall evenly split the reasonable attorney fees and
litigation costs described in such subparagraph.
``(C) Application.--A supplier of durable medical
equipment seeking the payment of reasonable attorney
fees and litigation costs under subparagraph (A) shall,
by not later than 30 days after the date the favorable
final appeal was issued--
``(i) submit an application for such fees
and costs with evidence of such fees and costs
to the administrative law judge who heard such
appeal; and
``(ii) serve such application on each
covered contractor that made the initial
determination or affirmed such initial
determination.
``(D) Contractor response.--A covered contractor
shall have 30 days after the date on which such
contractor is served an application under clause (ii)
of subparagraph (C) to submit a response to the
administrative law judge described in clause (i) of
such subparagraph.
``(E) Determination.--
``(i) In general.--Not later than 60 days
after the end of the 30-day period described in
subparagraph (D), an administrative law judge
described in subparagraph (C)(i) shall issue a
determination as to the amount (if any) of
reasonable attorney fees and litigation costs
that shall be awarded to a supplier of durable
medical equipment pursuant to subparagraph (A).
In making such determination, the
administrative law judge shall--
``(I) consider evidence submitted
in the application described in
subparagraph (C)(i) and any response
submitted under subparagraph (D);
``(II) with respect to reasonable
attorney fees, use the lodestar method;
and
``(III) if more than 1 covered
contractor was served under
subparagraph (C)(ii), specify the
amount owed by each covered contractor.
``(ii) Non-appealable decision.--Any
determination made pursuant to clause (i) shall
not be appealable.
``(2) Ineligibility of certain payments.--Paragraph (1)
shall not apply to a favorable final appeal of an initial
determination by a covered contractor won by a supplier of
durable medical equipment when the initial unfavorable
determination resulted from--
``(A) such supplier failing to provide any required
documentation;
``(B) such supplier failing to comply with any
billing or submission requirement; or
``(C) a covered contractor--
``(i) applying current law or guidance
issued by the Secretary in effect at the time
the initial determination was made, and such
law or guidance had changed at the time of the
favorable final appeal; or
``(ii) applying a local coverage
determination in effect at the time of the
initial determination.
``(3) Clawback.--If, after any reasonable attorney fees or
litigation costs have been awarded to a supplier of durable
medical equipment under this subsection, a court or other
adjudicator determines that such supplier obtained a favorable
final appeal through fraud, misrepresentation, or bad-faith
conduct, such supplier shall be required to return such fees or
costs to each covered contractor who was required to pay such
fees or costs to such supplier.
``(4) Definitions.--In this subsection:
``(A) Covered contractor.--The term `covered
contractor' means--
``(i) an eligible entity with a contract
under section 1893;
``(ii) a qualified independent contractor
(as defined in subsection (c)(2)); or
``(iii) a medicare administrative
contractor (as defined in section 1874A(a)(3)).
``(B) Favorable.--The term `favorable' means, with
respect to an appeal of a decision arising from or
relating to the claims administration process under
this title, a decision that is decided in the
appellant's favor with respect to every issue related
to coverage and payment rules or the application of
eligibility, entitlement, or premium rules.
``(C) Final appeal.--The term `final appeal' means
the last stage of review available within the claims
administration process under this title in which--
``(i) the only appeal available is a review
by the Medicare Appeals Council; and
``(ii) an administrative law judge enters a
binding determination of the rights or
obligations of the parties.
``(D) Litigation costs.--The term `litigation
costs' means, with respect to a favorable final appeal
by a supplier of durable medical equipment, out-of-
pocket expenses (not including reasonable attorney
fees) incurred in the course of litigation that are
traditionally taxable or recoverable by a prevailing
party under statute, rule, or contract.
``(E) Reasonable attorney fees.--The term
`reasonable attorney fees' means, with respect to a
favorable final appeal by a supplier of durable medical
equipment, compensation for the reasonable time
expended by an attorney or paralegal on legal work
necessary to litigation.''.
(b) Medicare Administrative Contractors.--Section 1874A(d)(4) of
the Social Security Act (42 U.S.C. 1395kk-1(d)(4)) is amended--
(1) in subparagraph (A), by striking ``(B) and (D)'' and
inserting ``(B), (C), and (D)''; and
(2) in subparagraph (C)--
(A) by striking ``Indemnification.--
Indemnification'' and inserting ``Indemnification.--
``(i) In general.--Subject to clause (ii),
indemnification''; and
(B) by adding at the end the following new clause:
``(ii) No indemnification for legal fees.--
No reasonable attorney fees or litigation costs
awarded to a supplier of durable medical
equipment under section 1869(j) shall be
subject to indemnification by the Secretary
under subparagraph (A).''.
(c) Unified Program Integrity Contractors.--Section 1893(e) of the
Social Security Act (42 U.S.C. 1395ddd(e)) is amended--
(1) by striking ``Liability.--The Secretary'' and inserting
``Liability.--
``(1) In general.--Subject to paragraph (2), the
Secretary''; and
(2) by adding at the end the following new paragraph:
``(2) Payment of certain legal fees.--Any regulation
promulgated by the Secretary under paragraph (1) shall not
include any limitation of a contractor's liability for any
reasonable attorney fees or litigation costs awarded to a
supplier of durable medical equipment under section 1869(j).''.
(d) Qualified Independent Contractors.--Section 1869(c)(5) of the
Social Security Act (42 U.S.C. 1395ff(c)(5)) is amended--
(1) by striking ``liability.--No qualified'' and inserting
``liability.--
``(A) In general.--Subject to subparagraph (B), no
qualified''; and
(2) by inserting at the end the following new subparagraph:
``(B) Payment of certain legal fees.--Subparagraph
(A) shall not apply to any reasonable attorney fees or
litigation costs awarded to a supplier of durable
medical equipment under subsection (j).''.
(e) Implementation.--Not later than 2 years after the date of
enactment of this Act, the Secretary shall promulgate regulations to
carry out the amendments made by this section.
(f) Effective Date.--The amendments made by this section shall
apply to contracts entered into on or after January 1 of the year
following the year in which the Secretary promulgates the regulations
described in subsection (e).
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