## Facts

- A nonprofit home health provider participated in Medicare, which reimburses providers for reasonable costs based on annual cost reports subject to later audit and reopening within three years.
- The provider also received federal CETA grant funds used to support personnel and expanded services.
- Medicare rules required that grants paying specific operating costs be offset against Medicare-reimbursable costs to avoid double payment.
- The provider asked its Medicare fiscal intermediary whether salaries paid with CETA funds for employees serving Medicare patients were reimbursable.
- An intermediary manager orally advised that the CETA funds qualified as “seed money” and that the salaries could be claimed for Medicare reimbursement.
- Relying on that oral advice, the provider included the CETA-funded salaries in cost reports for 1975–1977 and received reimbursement.
- After the intermediary received guidance from the agency that the CETA funds were not “seed money,” it reopened the cost reports and assessed an overpayment of $71,480.
- The provider sued, arguing the government should be equitably estopped from recouping the overpayment due to its reliance on the intermediary’s erroneous advice.

## Issues

1. Whether the federal government may be equitably estopped from recovering Medicare overpayments based on a provider’s reliance on erroneous advice from a fiscal intermediary.
2. Whether the provider proved the traditional elements of estoppel, including reasonable reliance and a detrimental change of position.

## Decision

- The Supreme Court reversed the court of appeals and held the Secretary was not estopped from recovering the $71,480 overpayment.
- The Court assumed, without deciding, that estoppel might be available against the government in some circumstances, but ruled the provider failed under ordinary estoppel requirements.
- The provider did not show a legally cognizable detrimental change of position because repayment only removed funds the provider had no legal entitlement to retain.
- The provider’s reliance on oral advice was not reasonable where governing regulations required offsetting such grant-funded costs and the intermediary official lacked authority to bind the government on policy.
- The Court stressed the governmental interest in enforcing statutory and regulatory limits on spending and in protecting federal funds from unauthorized disbursement.

## Legal Principles

- A party seeking to estop the federal government must, at minimum, satisfy the traditional elements of estoppel, including reasonable reliance and a detriment resulting from a change of position.
- Loss of an unlawful benefit or “windfall” is not the type of detriment that supports estoppel.
- Reliance is generally unreasonable when it conflicts with statutes or regulations or is based on informal oral statements by officials without authority to make binding policy determinations.
- The Court may decline to decide whether estoppel ever lies against the government when the claimant cannot meet ordinary estoppel requirements.

## Conclusion

The Court permitted recoupment of Medicare overpayments despite erroneous intermediary advice because the provider neither reasonably relied on the advice nor suffered a cognizable detriment beyond being required to return money it was not authorized to keep.


Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51 (1984)