MSP Recovery Demands Are a Title Interest and Not a Lien Interest

Medicare Set-Aside Blog on June 8, 2012
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People dealing with MSP conditional payment recoveries continue to freely call the government’s demand a “lien,” despite the government’s consistant use of the term “overpayment.” When I attempt to correct people, I typically receive a “whatever” response, but it is an important legal distinction. The MSP provides the government with a statutory right to reimbursement, making it a title interest, not a lien. I bring this up because not only does it make a difference in the government’s ability to fully recover in situations that should dictate otherwise, but it also makes a difference when trying to get around sovereign immunity.

The US District Court for the Central District of California recently upheld a dismissal of Secretary Sebelius in an interpleader action on the basis of sovereign immunity. Given Plaintiff’s attempt to interplead, we have to assume that this is not a judicial review of a Medicare appeal determination; therefore, administrative remedies are not exhausted. Plaintiff’s Complaint states that its interpleader action is proper under 28 U.S.C. § 2410 which waives the sovereign immunity of the United States in any civil action or suit in any district court or in any State court having jurisdiction of the subject matter –

(1) to quiet title to,
(2) to foreclose a mortgage or other lien upon,
(3) to partition,
(4) to condemn, or
(5) of interpleader or in the nature of interpleader with respect to, real or personal property on which the United States has or claims a mortgage or other lien.

§2410 must be narrowly construed and does not apply if the government claims a title interest rather than a lien interest in the subject property. Nice try, but as with all other attempts to get the Secretary to make a court appearance before her time, it is just not worth the effort.

United States Liability Insurance Co. v. Kathleen Sebelius, Secretary of U.S.
Department of Health and Human Services, et al.
CV 12-2516 DSF (VBKx)
2012 U.S. Dist. LEXIS 77380
June 4, 2012, Decided