In Hero v. CMS, a Federal District Judge inArizona enjoined recovery procedures being utilized by CMS against Medicare recipients.
The enjoining order was issued in a class action, in whichthe Plaintiffs were challenging recovery procedures utilized by CMS under the Medicare Secondary Payor Act (“MSP”).
Enjoining the CMS, the Arizona Federal Court ruled:
“It is further ordered that the Defendant’s demand that attorneys withhold liability proceeds from clients, pending payment of amounts claimed by the Defendant as MSP reimbursement, exceeds her authority under the Medicare statute, and Defendant is enjoined from demanding that attorneys withhold liability proceeds from their clients pending payment of disputed MSP reimbursement claims”.
The “her” is Kathleen Sebelius, the Secretary of the United States Department of Healthand Human Services, withCMS being a division thereof.
Under review by the Federal Court were issues critical to all practitioners involved in settling personal injury or other claims that involve interface withMedicare payments, and CMS demands for reimbursement, as the Court reviewed the following:
- Whether CMS can require prepayment of an MSP recovery claim before the correct amount is determined throughthe administrative procedure; and,
- Whether CMS can make Plaintiffs’ attorneys financially responsible (if they do not hold or immediately turn over to CMS their clients’ litigation proceeds).
In so enjoining CMS, the District Court ruled that a due process analysis was implicated by CMS’ recovery procedures, requiring a three part balancing of:
(1) The private interest affected;
(2) The risk of erroneous deprivation and probable value of additional safeguards; and,
(3) The governmental or public interest in current procedures.
In light of CMS’ aggressive recovery procedures, the Hero ruling is perhaps a critical recognition that CMS cannot simply demand to be repaid what it unilaterally determines is recoverable, without consideration of there being potential challenges to CMS’ calculation, and its rights to recover thereunder.
Obviously, we will continue to tracks similar rulings and decisions that impact on CMS recovery procedures, and the rights of litigants, claimants, and insurers in personal injury and workers’ compensation claims.
– By Kevin L. Connors
ConnorsLaw LLP
Our casualty litigation practice group routinely defends litigation for self-insureds, third-party administrators, and insurance carriers throughout Southeastern and Eastern Pennsylvania, appearing in state and federal civil courtrooms in Philadelphia, as well as in the surrounding counties of Bucks, Montgomery, Delaware, Chester, Lancaster, Berks, Lehigh, Northampton, and Schuylkill.
Any clients or contacts seeking information about our workers’ compensation practice group, kindly contact Kevin Connorsat 610-524-2100 Ext. 112, or at [email protected], and kindly consider asking us to provide you with a practical update on the latest trends and developments in Pennsylvania Workers’ Compensation practice and procedure.
