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Wednesday, May 18, 2011

Federal Court Enjoins CMS From MSP Recovery Procedures

A US District Court Judge in Arizona has certified a putative class, composed of a nationwide class of Medicare recipients challenging the recovery procedures utilized by The Centers for Medicare and Medicaid Services (CMS). The Court also issued an Order enjoining CMS from certain collection activities.

This follows a broad discovery ordered issued by the Court a year ago. Haro v. Sebelius, 2010 WL 1452942 (A. Ariz.) CV 09-134 TUC DCB, Decided April 12, 2010.The plaintiffs were permitted discovery beyond the administrative record. The class action is challenging the recovery procedures of CMS under the Medicare Secondary Payer Act (MSP). The discovery permitted will included depositions and expert evidence .

The Court Order enjoins CMS from certain actions:
"IT IS FURTHER ORDERED that Defendant's demand for payment of her MSP reimbursement claims, under threat of collection actions before there has been a resolution of an appeal regarding the amount of the Defendant's MSP claim or a waiver request, exceeds her authority under the Medicare statute, and Defendant is enjoined from demanding payment of a MSP reimbursement claim with threats of commencing collection actions before there is a resolution of an appeal or waiver request. 
"IT IS FURTHER ORDERED that the Defendant's demand that attorneys withhold liability proceeds from clients pending payment of amounts claimed by the Defendant as MSP reimbursement exceeds her authority under the Medicare statute, and Defendant is enjoined from demanding that attorneys withhold liability proceeds from their clients pending payment of disputed MSP reimbursement claims.
In reaching its decision to allow discovery, the Court held that the putative class, that is challenging the recovery methods of Medicare, is permitted to extend discovery beyond the limited administrative record action without the necessity of the exhaustion of administrative remedies since constitutional and due process were collateral to any individual claim.

The issues reviewed by the court were:
"1) whether Defendant [CMS] can require prepayment of an MSP recovery claim before the correct amount is determined through the administrative appeal procedures, and
2) whether Defendant [CMS] can make plaintiffs' attorneys financially responsible if they do not hold or immediately turn over to the Defendant [CMS] their clients' litigation proceeds.

These questions involve a due process analysis, which consists of a three part balancing test:
1) the private interest affected;
2) the risk of erroneous deprivation and probable value of additional safeguards, and
3) the government or public interest in current procedures. "

Haro v. Sebelius, (A. Ariz.) CV 09-134 TUC DCB