Question: I have a PI case in which our client was in a Motor Vehicle Accident in 1995. We settled the case in 2000. Our office was proceeding through the process of getting a final repayment amount from Medicare. In 2001 Medicare quit communications with our office and our client. The attorney who was handling this case refunded the monies we were holding in our trust account to the client in 2004. In August, 2009 both our client and our office received a demand letter from CMS. Is there any kind of statute of limitations with regards to repaying Medicare if they let eight years pass before demanding money?
Answer: Under the statute of limitations (28 U.S.C. 2415), Medicare has six (6) years and three (3) months to recover Medicare’s claim. The statute of limitations begins at the time Medicare is made aware that the overpayment exists.
Medicare’s overpayment does not come into existence until a judgment award or settlement offer is accepted. It is at the point of settlement that Medicare’s conditional payments are considered to be overpayments. Medicare’s claim come into existence by operation of law 42 U.S.C. 1395Y(B)(2)(B)(I) when payment for medical expenses that Medicare conditionally paid for has been made by a third party payer.
In your situation, the date of settlement was 2000, the clock started ticking on Medicare's SOL when you notified Medicare of the settlement. Considering that you and your client have received a demand letter from Medicare, it must be addressed promptly to avoid collection efforts by Medicare, such as garnishment of your clients Social Security benefits and/or double damages for you.
Section 42 CFR 411.23 states that a beneficiary must cooperate in any action taken by the Centers for Medicare and Medicaid Services in recovering conditional payments. Failure to do so or not protecting the Medicare program during and after settlement negotiations may result in CMS taking action against the beneficiary to collect the mistaken payment.
In the event that reimbursement is not made to Medicare as required by 42 USC 1395y(b)(2)(B)(I), action may be brought against any entity responsible for payment (and may collect double damages from insurance companies), or any entity that has received a third-party settlement. Under 42 CFR 411.24(g), this includes attorneys whose fees are paid from settlement proceeds. Please refer to US v. Sosnowski, et. al. where judgment was entered against a beneficiary and his attorney for failing to reimburse Medicare after receiving settlement proceeds on a personal injury case.
CMS has a direct right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency, or a private insurer that has received a third party payment, 42 CFR 411.24.
Having said this, the best way to address the situation is to request a post-settlement compromise of Medicare's interest. When submitting your request, craft a compelling story; provide them with the facts of the case and supporting documentation for your argument. All post-settlement compromise requests must be in writing and sent to the MSPRC Medicare Contractor), they will forward your request to the CMS Regional office. The MSPRC contractor does not have the authority to compromise. The authority to compromise a Medicare claim is reserved exclusively for the CMS home office or regional offices. Any agreement for a compromise settlement under the Federal Claims Collection Act ("FCCA") may not be appealed.
I hope this was helpful. Should you need further guidance please contact me.