A Reminder that there is no MSP Reimbursement Obligation Until CMS Makes a Demand

Commentary, Medicare Set-Aside Blog, MSP Litigation on July 14, 2016
Posted by Jennifer Jordan, JD, MSCC

While always entertained by pro se plaintiffs who take on the man, an interesting MSP opinion came out of the Eastern District of NY on July 11, 2016. Upon receipt of a conditional payment letter, indicating that Medicare had paid $678.60 for treatment related to his accident and in large, bold letters that it was not a bill and that no payment was to be sent at that time, plaintiff immediately filed suit seeking to compel Medicare “to recover the funds from American Transit Ins. Co. or from the providers that Medicare knowingly paid by mistake instead of from” plaintiff. The government moved to dismiss and plaintiff failed to respond, even after provided with extra time to do so. Ultimately and unsurprisingly, the case was dismissed.

But what was interesting was the government’s grounds for dismissal. Of course there were failure to exhaust administrative remedies and sovereign immunity issues. But the other defense highlighted a point that many people lose sight of and that is that there is no payment obligation unless and until the government makes a demand for reimbursement.  And unless and until liability for primary payment is established or a payment made, the MSP does not attach giving the government recovery rights. Therefore Defendant argued that plaintiff’s claim was not ripe for judicial review because plaintiff had not suffered an actual or imminent injury where defendant’s right to collect any purported Medicare overpayments from plaintiff rests on contingent, future events that may not even occur. If the case does not settle or get pursued through judgment and the government does not subrogate, MSP reimbursement liability will never attach.

Of course because the plaintiff erroneously believed that Medicare improperly sought to recover purported overpayments directly from him rather than the insurer of the driver of the vehicle that struck him, the court also had to set the record straight that the government is free to choose which party it will recover from. Medicare may collect from any entity with primary payment responsibility or from anyone, beneficiary included, in receipt of payment from that primary payer. And in cases where liability is not admitted, the MSP reimbursement obligation is triggered by settlement, judgment, award or other payment. So as you can see, plaintiff was wasting the court’s time from the outset. Furthermore, the amount indicated in the CPL was below the SMART Act exemption and would not have been recovered anyway, so the point was truly moot all along.

So although a pointless endeavor, the opinion highlights just how technical the MSP is and that judicial resources continue to be wasted resolving nonissues.

KEVIN SEXTON, Plaintiff, -against- MEDICARE, Defendant.
2016 U.S. Dist. LEXIS 89815