Heckler v. Community Health Services

In Heckler v. Community Health Services (1984) 467 U.S. 51, the United States Supreme Court declined to apply equitable estoppel to bar recoupment of federal funds received and expended by a health care services provider where the provider relied on the express authorization of a responsible government agent in making the expenditures. In so doing, the high court found the provider received an immediate benefit as a result of the overpayment. "Its detriment is the inability to retain money that it should never have received in the first place. Thus, this is not a case in which the respondent has lost any legal right, either vested or contingent, or suffered any adverse change in its status. When a private party is deprived of something to which it was entitled of right, it has surely suffered a detrimental change in its position. Here respondent lost no rights but merely was induced to do something which could be corrected at a later time." (467 U.S. at pp. 61-62 81 L. Ed. 2d at p. 53, ) The court concluded that respondent cannot assert equitable estoppel without proving that "it will be significantly worse off than if it had never obtained" the funds. ( Id. at p. 63 p. 54.) The court recognized the provider could be adversely affected by the government's recoupment of the funds it had already spent, but indicated there was no finding on the extent of the curtailment of services. The court concluded that curtailment of operations did not justify estoppel where the expansion of services was based on the unlawful access to governmental funds. The court also indicated that while respondent may need an extended period to repay the recoupment or other modification in the recoupment process, the method of collection was not before the court. ( Id. at pp. 62-63 at pp. 53-54.)