Last week, the United States District Court for Arizona decided to enjoin Medicare and its agents from charging interest on unpaid MSP claims where the plaintiff has an ongoing Medicare waiver or appeal. The holding in Haro v. Sebelius includes:
“IT IS FURTHER ORDERED that the class is certified and defined as follows: ‘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.’
“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.“
This holding by Presiding Judge David C. Bury has two parts. First, the MSPRC cannot charge interest on your unpaid Medicare liens where you continue to actively fight that Medicare lien. We emphasize “actively” because it is likely a court would require proof of waiver or appeal attempt. In turn, the MSPRC could easily point to a lack of filing that waiver or appeal to prove that interest is appropriate in that case. At LRS, we suggest you either send payment or waiver/appeal forms to the MSPRC within your 60 day time frame, or interest may still be applicable (just in case!).
Second, and admittedly something we originally overlooked, the MSPRC may no longer demand that attorneys withhold proceeds from the client prior to paying a lien. Obviously, it’s the safer path for attorneys (and for plaintiffs). However, this will have a great effect on the settlement payment and distribution processes.
This post will not include details on those effects, but possible effects include:
- Defendants can no longer require proof of Medicare lien prior to payment of the funds;
- Defendants can no longer require Medicare be paid prior to the remainder of the settlement funds; and,
- Plaintiffs can receive at least a portion of the settlement even prior to Medicare issuing a final demand (at both the attorney’s and their own peril).
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