Meadowlands Hospital, Seacucus, New Jersey. Photo: Carmen Natale/ALM

A New Jersey appeals court has ruled that Meadowlands Hospital in Secaucus may continue to pursue claims that it is owed more than $26.3 million in outstanding Medicare and Medicaid payments.

Appellate Division Judges Richard Hoffman, Robert Gilson and Jessica Mayer, in an unpublished decision released Aug. 3, overturned Bergen County Superior Court Judge Robert Wilson’s dismissal of the lawsuit on summary judgment.

“These claims … should not have been dismissed,” the panel said in the per curiam decision. “There is no bar on claims seeking to enforce a provider’s right to be paid the … statutory rates.”

Meadowlands filed suit against insurance carrier Healthfirst in Bergen County Superior Court in September 2013, claiming it violated New Jersey laws governing reimbursement to out-of-network health care providers. Healthfirst removed the case to federal court and moved to dismiss for failure to state a claim upon which relief can be granted. U.S. District Judge Susan Wigenton of the District of New Jersey dismissed Meadowlands’ Medicaid claims for failure to exhaust administrative remedies before bringing suit, and dismissed the suit’s Medicare claims as pre-empted by federal law.

Meadowlands claimed that its reimbursement rates were governed by Medicare and Medicaid law because it did not have a contract with Healthfirst. Meadowlands asserted that because it was an out-of-network provider, Healthfirst delayed or denied reimbursements in an attempt to pressure the hospital to become a network provider. The hospital claimed it was owed $28.9 million for services provided from between 2010 and 2013 but was reimbursed only $2.5 million.

The payments, Meadowlands argued, were “grossly insufficient.”

The Third Circuit reinstated the lawsuit but transferred the case back to New Jersey court.

On remand, Wilson dismissed the case, saying Meadowlands failed to state a claim and failed to exhaust its administrative remedies.

Meadowlands appealed, and on Aug. 3, the panel reversed: ”On a motion to dismiss, a plaintiff need not prove the case, but need only ‘make allegations, which, if proven, would constitute a valid cause of action,’” it said, quoting an earlier Appellate Division from 2011, Kieffer v. High Point Insurance.

“A motion to dismiss should be granted only ‘in the rarest of circumstances,’” the judges said, again quoting Kieffer.

The appeals court said Meadowlands did not have to exhaust all administrative remedies before filing a lawsuit.

“Plaintiff was not required to plead exhaustion of remedies, or futility, because exhaustion is an affirmative defense and defendants bore the burden of pleading and proving it,” the judges said.

One of Meadowlands’ lawyers, Eric Katz, said Meadowlands was “obviously pleased” with the ruling.

“It was crystal clear that we were able to pursue our claims,” said Katz, of Roseland’s Mazie Slater Katz & Freeman. “We are ready to get going.”

HealthFirst’s lawyer, Scott Klugman of Levine Lee in New York, did not return a call seeking comment on the decision.