Community Hospital of Monterey v. Thompson,
No. C-01-0142 VRW (C.D. Cal. Oct. 11, 2001)

Medicare required hospitals to maintain documentation of attempts to collect reimbursement from Medicaid for bad debts incurred in treating "crossover" patients who were eligible for both programs. Medi-Cal (California's Medicaid program) implemented a payment ceiling on co-insurance and deductible bad debts which made it time-consuming and often futile for California hospitals to pursue bad debt reimbursement for crossover patients from Medi-Cal. Nevertheless, Medicare still required that hospitals pursue Medi-Cal reimbursement as a condition of Medicare bad debt reimbursement for crossover patients. A suit was brought by 56 California hospitals challenging this policy. The United States District Court for the Central District of California granted the hospitals' motion for summary judgment and held that Medicare's "must bill" requirement was plainly erroneous and inconsistent with applicable regulations.