Nursing Home Litigation
Haro v. Sebelius
A Victory for Plaintiffs and Their Representatives Concerning Medicare’s Debt Collection Practices
Elliott Andalman, Richard P. Neuworth & Michele Amick
O
n May 5, 2011, the U.S. District Court of Arizona upheld a challenge by Medicare beneficiaries and their personal injury attorneys concerning the
Center for Medicare Services (CMS) debt collection practice of demanding reimbursement of Medicare funds within 60- days of receiving settlement proceeds where there is a pending appeal or waiver request. Te Court certified the Plaintiff ’s class and granted the Plaintiff ’s Motion for Summary Judgment, holding that CMS’ collection practices were not in line with Congressional intent regarding the Medicare Secondary Payer (MSP) statute.1 Te “purely legal” questions presented to the court
include: (1) whether the Defendant can require prepayment of a MSP reimbursement claim before the correct amount is administratively determined where the beneficiary either appeals or seeks a waiver of the MSP reimbursement claim; and (2) whether Defendant can hold plaintiffs-attorneys financially responsible for MSP reimbursement if they do not hold or immediately turn over to Medicare their clients’ injury compensation awards. Basing its reasoning on the Supreme Court’s principles
of statutory construction as set forth in Chevron v. Natural Resources Defense Council, Inc., and an earlier 9th
Cir. 1995), the Court found that “the lack of an Circuit
decision involving the MSP, Zinman v. Shalala, 67 F.3d 841 (9th
express prohibition against initiating collections and the MSP provision that interest accrue from the time of notice
1 See Haro v. Sebelius, CV 09-134 TUC DCB (D. Az.) (May 9, 2011). Te decision was based on the Court’s construction of the statute. Te Court declined to review the Plaintiff ’s due process claims. Te Court certified the requested class as “persons who are or will be subject to MSP recovery, and from whom defendant has demanded or will demand payment of MSP claims before there have been determinations of the correct amounts through the waiver or appeal process.”
14 Trial Reporter / Fall 2011
creates an ambiguity [in the meaning of the statute]. Where ambiguity exists, the statutory prohibition of the agency charged with implementing it is entitled to deference.” Notwithstanding the deference entitled to the Agency,
the Court held that the statute did not allow the CMS to collect on reimbursement claims prior to an appeal or waiver request being decided. Te Court specifically held, …the Secretary’s application of 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 provided for waiver and appeal rights. Her interpretation is not permissible 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.
Haro, Supra at p. 16. Concerning CMS’ right to hold the attorneys for
Plaintiffs financially responsible for the MSP reimbursement if they do not hold or immediately turn over to Medicare the
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