PA Court Acknowledges Need for Administrative Remedy Exhaustion

Medicare Set-Aside Blog, MSP Litigation on February 27, 2014 | Posted by Jennifer Jordan, JD, MSCC

On February 24, 2014, the US District Court for the Eastern District of Pennsylvania denied a motion for interpleader of HHS on the basis that administrative remedies under the Medicare Act had not been exhausted. The case involves a FELA claim in which a NJ Transit worker contracted esophageal cancer and died as a result. His wife reached a settlement with the railroad, which she reported to CMS despite the fact that she posed several legal arguments as to why she had no duty to make reimbursement in an effort to avoid “potential sanctions for non-compliance under the MSP.” Plaintiff received a CPN showing $413.39 so she sent in her Notice of Final Settlement requesting a formal demand which came back two weeks later demanding an amount of $24,585.13 (of $67,602.46 spent, by the way). After a few months of negotiations, CMS further reduced the amount to $12,292.00 which apparently was still not to Plaintiff’s liking, as she filed the motion for interpleader (of course naming the wrong party) and deposited the compromised amount into the Registry of the Court. In her motion, the plaintiff asserted that she had “a constitutional right to have the issue of her legal duty to repay Medicare determined by this Court and not by the same administrative agency which is demanding the disputed amount.” While it is true to some extent that this court could ultimately be the arbiter of such a determination, that cannot take place until the administrative remedies provided under the Medicare Act have been exhausted.

So lessons to be learned here:

  1. When you want to sue Medicare, the proper party is actually the Secretary of Health and Human Services.
  2. You must exhaust all steps of the Medicare administrative process before any court will touch your case.
  3. If you receive compensation for medical expenses, the party writing that check might actually have provided it with the intention of medical expenses being repaid, possibly because of a statutory duty to do so. It’s not your money – Let it go.
  4. Depositing funds with the court is not the same as reimbursing the federal government, so it is likely not going to stay statutory interest from accruing at day 60 and an eventual referral to collections on day 120 while your case is being dismissed for lack of merit. Just something to consider…
 
IN RE ASBESTOS PRODUCTS LIABILITY LITIGATION No. IV MARIA
TORRES, Administratrix of the Estate of Ruben Torres, Deceased, et al. v.
CONSOLIDATED RAIL CORPORATION, et al. FEB 2 5 2014 MICHAELE. l&NZ, Clerk
Consolidated Under MDL DOCKET NO. 875 E.D. PA Civil Action No. 95-1173
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
2014 U.S. Dist. LEXIS 24138
February 24, 2014, Decided