Medicare Set Aside and MMSEA Section 111 Legal Cases - Haro v. Sebelius

Blackburn Group, Inc. MSA and MMSEA Section 111 Legal Cases - Haro v. Sebelius, CV 09-134 TUC DCB, (D. AZ.)(May 5, 2011)

This suit was filed by two Medicare beneficiaries both of whom settled auto accident claims and pursued appeals of the Medicare Secondary Payer Recovery Contractor's recovery amount, and also by a lawyer who represented one of the beneficiaries. The beneficiaries challenged the right of Medicare to demand reimbursement within 60 days of receiving settlement proceeds in those situations where an appeal or waiver request remains unresolved. Additionally, the lawyer challenged Medicare's ability to hold attorneys personally liable for their client's reimbursement claim, contending such collection practices exceeded the United States Labor Department's authority under the Medicare statutes and violated due process.

The court ruled that Medicare may not demand immediate payment from beneficiaries while the reimbursement amount is pending on appeal or a waiver request. The District Court specifically determined the "60-day reimbursement requirement to support immediate collection activities against beneficiaries when the reimbursement claim is in dispute is neither rational nor consistent with the statutory scheme providing for waiver and appeal rights . . . because it unnecessarily chills a beneficiary's right to seek a waiver or to dispute the reimbursement claim and reaches beyond the fiscal objectives and policies behind the 60-day reimbursement provision." However, the opinion made clear that once the appeal or waiver is complete and the reimbursement amount finalized, a beneficiary who refuses to pay the claim will properly be subject to collection efforts and interest which may be charged dating back to the original date of the notice.

Also, the court found that Medicare cannot hold plaintiff attorneys financially responsible for Medicare Secondary Payer reimbursement and cannot require them to either turn the settlement awards over to Medicare or hold the settlement sums in trust