CMS Increased Conditional Payment Demand by $142k: New York Supreme Court Vacates Settlement Agreement

CMS, Conditional Payments, Medicare Set-Aside Blog, MSP Litigation on March 26, 2018 | Posted by Jean S. Goldstein, JD

An interesting case came out of the Supreme Court of New York City on Friday, challenging whether a settlement agreement may be declared null and void based upon an erroneous assumption of the total sum of conditional payments made by Medicare.  Mayo v. NYU Langone Med. Ctr., 2018 NY Slip Op 30456(U) (Sup. Ct.). The parties litigated the matter from October 2014 through January 2016; however, all medical care provided to the beneficiary ceased on May 24, 2014, after the death of the beneficiary.  This action was brought by the Executor of the Decedent’s Estate against the Defendant, the Hospital, which provided care to the Decedent.

Pertinent Facts of the Case:

  • The Parties relied upon a conditional payment notice (CPN) from CMS dated January 15, 2015 which indicated a total paid of $2,824.50.
  • The CPN included the standard caveat that CMS was still “reviewing the medical claims related to your case.” 
  • On July 21, 2015, the parties received an additional notice indicating the total amount in conditional payments was $1,811.95, which contained CMS’ caveat once again.
  • The Parties entered into a settlement agreement on January 20, 2016, noting that the final Medicare lien would not exceed $2,824.50, and releasing the funds of the Estate to Plaintiff and Plaintiff’s attorneys.
  • CMS subsequently sent a final demand requesting $145,764.08 for medical care paid. 

The final demand was appealed, but denied through all of stages of the Medicare Appeal process. The instant action was brought before the Court by the Plaintiff to “…declare the Settlement Agreement null and void, as it was entered into under an erroneous assumption based on the conditional letters from Medicare that the maximum amount that Medicare would assert was $2,824.50.”  Ultimately, Plaintiff succeeded in demonstrating that Settlement Agreement was the product of mutual mistake and an incorrect belief that the Medicare lien was $2,824.50. Id. at 14. The Settlement Agreement was vacated, and the parties were instructed to appear for a pre-trial conference in April.

Why is This Case Important?

If you are settling a case, it is important to be aware that there are now methods that enable to you to request that your case be put into the “Final Conditional Payment Process” which allow you to notify the Benefits Coordination & Recovery Center that the case is within 120 days of settlement.  Fortunately, through use of the Medicare Secondary Payer Recovery Portal (MSPRP), the Final Conditional Payment Amount can also be requested within 3 business days of settlement.  In the instant matter, the parties spent significant time litigating, yet failed to understand that the amount owed to CMS can change post-settlement, which resulted in the parties being thrown back into the Court Room. Quite often the reimbursement amount increases from a Conditional Payment Notice to the time the Demand is issued, but being diligent in investigating, disputing charges, and understanding the Conditional Payment Recovery Process in this case would certainly have saved the parties a lot of time and trouble.   

For assistance with conditional payments or lien resolutions, please contact our team at info@medval.com.  Our lien resolution team is comprised of an experienced group of clinical, legal, and claims professionals.  We advocate on your behalf to make sure you can settle your claim.