CMS Doesn’t Want a Court Order Approving Its Full Reimbursement?

CMS, Medicare Set-Aside Blog, MSP Litigation on April 8, 2013
Posted by Louis Jordan

CMS relies heavily upon the basic premise of the Supremacy Clause in that the MSP is a federal law and, as a general proposition, supersedes state law. However, I frequently question the extent of the applicability to MSP debt given that the claims that give rise to the reimbursement obligation are governed by state law. Absent a determination through settlement, judgment or award, Medicare cannot establish entitlement to reimbursement unless it can prove its claim itself and subrogate. So if a judge adjudicating the matter under applicable state laws specifically allocates a portion of compensation to the Medicare issues, who is Medicare to challenge that number? Well, it appears that CMS may be trying to prove my Supremacy Clause point for me. Obviously, a state court order is meaningful to CMS.

The District Court in Oklahoma remanded a case back to state court on Friday April 5, 2013 that should have never left state court. Justin Morgan sued only Betty Louise Villa in Tulsa Count District Court – DHHS was not a named party. Mr. Morgan was a Medicare beneficiary and owed Medicare $5,788.22 as determined by the MSPRC. No party disputed the amount owed to Medicare. When the parties reached a $50,000 settlement, enough to satisfy all liens in full, they filed a motion to allocate settlement funds and sent notice to all lien holders, including Medicare. CMS swooped in and filed to remove the case to federal court and, in its usual fashion, attempted to play the subject matter jurisdiction card – administrative remedies not exhausted, etc. Unfortunately for the government, there was no dispute as to the entire $5,788.22 being paid to Medicare from the settlement proceeds; therefore, there was nothing to appeal to Medicare.

Eventually, DHHS articulated that it removed this case to federal court to request that the court dismiss this case as to the United States only and the case should be remanded to the state court, absent the United States, so that “any orders issued by the state court will not affect the rights of the United States and the Medicare Program.” Hmmm…

So why doesn’t CMS want a judicial ruling approving Medicare’s reimbursement of $5,788.22? I can only guess that it is because it would limit Medicare to $5,788.22 even if it finds more payments later which the MSPRC letters always state is a possibility. The SMART Act will bring an end to this open-ended nonsense to some degree, so the case itself is insignificant except for the peculiar actions of DHHS. There must be some significance to DHHS actively intervening in a case to which it was not a party – for no other reason than to keep an order from being issued that would affect Medicare’s recovery rights. I think all of my unapproved WCMSAs that rely on state law just got more defensible.

Case No. 12-CV-0640-JED-PJC
2013 U.S. Dist. LEXIS 49520
April 5, 2013, Decided