Haro Up On Appeal Too

Medicare Set-Aside Blog on February 14, 2012
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Again I find myself turning to WorkCompCentral for my MSP related news, so kudos to Dave DePaolo and his crew for staying on top of the issue for us. Last May, I pondered why we had not seen an appeal by the federal government in Haro v. Sebelius considering what a crushing blow the injunction must have been to the CMS ego. As it turns out, I just wasn’t looking hard enough. DHHS filed an appeal on June 30, 2011, the parties just finished briefing the case on January 10, 2012 and the attorneys are now just waiting for the U.S. Court of Appeals for the 9th Circuit to schedule oral arguments, expected to be in late spring or summer. The issue at hand: the injunction ordered by the Arizona district court prohibiting CMS from sending Medicare beneficiaries to collections while an appeal or waiver request was being processed and from making certain threats in its recovery demand letters. MSPRC halted operations for about 60 days following the decision, during which time it did little more than make much needed changes to its recovery related templates and update chapter 7 of the MSP Manual, which as of yet remains unreleased. Interest continues to accrue, pursuant to the statute, starting on day 61 on regardless of whether the claim is placed in collections or not. All in all, less than exciting impact in an area so ripe for improvement. The only significance of the district court decision was the symbolic nature of the court limiting, to any extent, the unbridled reach of CMS’ recovery program. This is why most assumed an appeal was not forthcoming.

The article goes on to sound warning bells that primary payers may become an easy target if the Haro decision is upheld and pursuit of Medicare beneficiaries for reimbursement becomes too hard, but I just don’t see it. Insurance companies are still United States citizens with due process rights, and legal redress is already available, although perhaps cost prohibitive, to fight unwarranted demands for reimbursement. That certainly does not make for an easy target when CMS has to prove the carriers’ legal obligation to make payment in the underlying state law claim. Given that carriers are prone to making payment because it is easier than fighting, one wonders why carriers are not pursued more often under the current regime. We already know that the creation of ORM RACs is on CMS’ agenda, so it already has carriers in its sights, but if ORM is reported, that money was likely already owed. And going after the carriers might force CMS to consider the subrogation option and we know it doesn’t like to subject itself to state law. So, as a general proposition, the easiest recovery method will be to utilize the priority right of recovery from anyone in possession of an insurance payment and the Medicare beneficiary will always be the easiest target because the federal government has so many options against them. They have contractual obligations to Medicare to help obtain or make repayment, the Federal Claims Collection Act permits the government to offset any other funds owed, such as SSDI, SSI or tax returns, for the reimbursement claim, and the False Claims Act permits a claim against the beneficiary for causing the overpayment to be made even absent fraud due to the FERA amendment. Nevertheless, while CMS has the greatest recovery rights against them, they are typically the least likely to have funds to make reimbursement with so really what is the point. From an easy target standpoint, I would have picked attorneys’ fees.

Considering the 9th circus aspect, this appeal really could go either way. The district court decided solely upon public policy, which frankly was the right thing to do. CMS’ treatment of United States citizens, those who have financially supported this entitlement program throughout their entire work lives, has been historically atrocious. Besides taking forever, being uncommunicative, unresponsive and completely devoid of compassion, more often than not CMS is wrong, yet makes it demands anyway and drags all parties involved along for the ride because frequently it will get paid simply to go away. When it comes to waivers and compromises, the fact that we get more sympathy from the IRS speaks volumes to just how ridiculously this agency is behaving. I personally believe the injunction will stand  because frankly it is not inhibiting the government’s collection efforts. While it may delay recovery in some instances, due process is an issue and it is not unreasonable to want to know what your actual debt is before you pay it.

We shall continue to monitor the case (or wait for WorkCompCentral to report on it) and keep you up to date on the progress.