More than two million claims for private-sector emergency health care services provided to VA-enrolled veterans since February 2010 could be eligible for VA reimbursement if a recent ruling by the U.S. Court of Appeals for Veterans Claims is allowed to stand, the VA general counsel has warned.

The counsel also has warned in court documents that over the next decade VA could be swamped with an estimated 68.6 million additional claims for emergency care reimbursements, which could drive up VA health costs over that period by as much as $10.6 billion.

Despite these alarms, and VA introducing a new legal argument, a full panel of judges on the claims court voted six-to-one last month to deny VA’s motion to rehear the case, and instead made final its ruling of last April in the case of Richard W. Staab v. Robert A. McDonald.

VA has until Sept. 20 to appeal the decision to the U.S. Court of Appeals for the Federal Circuit, a near certainty given what’s at stake. Meanwhile, VA officials say they are unable to begin to pay any of the emergency health care claims that the Staab decision requires until they can prepare new regulations to support the complex review process.

“Even if the Staab decision is upheld,” VA officials explained in a statement Wednesday, “the statutory authority [cited by the court] does not set forth a payment methodology or payment limitations necessary for VA to implement the decision. Therefore, VA must follow legal procedures to [draft, publish for public comment and] implement regulations that would allow it to process payments for claims impacted by Staab.”

In Staab, the court agreed with lawyers for an 83-year-old Air Force veteran that the Department of Veterans Affairs wrongly ignored “plain language” of a 2010 statute meant to protect VA-enrolled veterans from out-of-pocket costs when forced to use outside emergency care. So VA should not have turned down Staab’s claim for roughly $48,000 in health care costs he was forced to pay following open-heart surgery in December 2010.

For many years VA has maintained that, by law, it can reimburse VA-enrolled veterans for outside emergency care only if they have no alternative health insurance. That includes Medicare, Tricare, employer-provided health insurance or contracted health plans of any kind. The practical effect is that veterans with other health insurance often are stuck paying hefty out-of-pocket costs that their plans won’t cover, while veterans with no other insurance see VA routinely pick up their entire emergency care tab.

The logic of this offended some lawmakers and in 2009 they persuaded Congress to clarify the law on VA coverage of outside emergency care. A single provision was changed to say VA could “reimburse veterans for treatment in a non-VA facility if they have a third-party insurance that would pay a portion of the emergency care.”

To ensure colleagues understood the change, Staab’s attorneys noted, Sen. Daniel Akaka, then-chairman of the Senate Veterans' Affairs Committee, said in a floor speech that it would “modify current law so that a veteran who has outside insurance would be eligible for reimbursement in the event that the outside insurance does not cover the full amount of the emergency care.”

The change took effect Feb. 1, 2010. But in preparing new regulations, VA officials interpreted the revised law as still preserving its way of screening most emergency care claims. The revised regulation said VA would continue to cover outside emergency care only if the “veteran has no coverage under a health-plan contract.”

That was wrong, a three-judge panel on the appellate claims court ruled last April, citing the “plain language” of the revised statute. It deemed the revised regulation as invalid and vacated a Board of Veterans’ Appeals decision that had upheld VA denial of Staab’s claim. The board, it said, had relied on a faulty rule rather than the revised statute.

VA’s general counsel immediately asked the three-judge panel to reconsider its decision but also asked the full appellate court to review the case. Reconsideration was denied in late June. On July 14, while a decision on full court review was pending, VA filed a motion to “stay the precedential effect” of Staab, that is, to not require payment of previously denied emergency claims given the “strong likelihood” the decision will be reversed.

In the same motion, VA argued that the claims court erred by not focusing on language in the statute Congress didn’t change in 2010, which VA believes still bars reimbursement if the veteran has a separate health-plan contract. Instead, the claims court based its decision on changes to another section of the statute. VA argues the intent of that change was only to address situations where veterans benefit from third party insurance coverage, not their own alternative health plans.

VA appears to be saying that the 2010 law was intended to allow VA only to cover emergency costs not fully covered, for example, by the insurance of a driver at fault in an accident that injured a veteran. But to be eligible, the veteran still can’t have other health insurance.

This was not an argument VA previously had made, said Bart Stichman, one of Staab’s attorneys. VA declined interview requests about the case and gave only limited written responses to questions, noting Staab is active litigation that could be overturned. But documents filed since we first reported on this decision last April show VA wants judges to know the magnitude of the burden on VA if the decision is allowed to stand.

From April through July 6, VA has had to suspend consideration of almost 85,000 claims for emergency care that it previously would have denied. They can’t be adjudicated “until VA has promulgated payment regulations necessitated by the Court’s decision and established the technological or other means to confirm the amounts paid by the veterans’ health-plan contracts,” VA lawyers explained in their filing.

VA estimates that, looking back six years, more than two million claims could be impacted by Staab, and 68 million more claims could be eligible for reimbursement over the next 10 years. Numbers are so large, VA reported, because emergency-room visits generate multiple claims, given the acuity of care required. The averages are four claims per outpatient emergency-room visit and eight per emergency hospital admission.

The administrative costs alone of handling these claims, which would require more employees, new technology and other support needs, would be $182 million over the next 10 years, raising total VA costs to $10.8 billion.

Within a week of receiving these estimates, six of seven judges on the claims court still signaled it was VA that erred in interpreting the 2010 law.

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