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US District Court: Plaintiff Responsible for Full Amount of Formal Demand

In Anderson v. Burwell, 2016 U.S. Dist. LEXIS 26633 (March 3, 2016), a case arising out of the United States District Court for the Eastern District of Michigan, Southern Division, the Court upheld the Administrative Law Judge’s decision requiring Plaintiff to reimburse Medicare for the full amount of the formal demand, rather than the amount of the prior Conditional Payment Letter (CPL).

After Barbara Anderson passed away on September 20, 2006, Roland Anderson (Plaintiff), as the personal representative of his mother’s estate, filed a medical malpractice/wrongful death suit against the doctors that treated his mother. Before Plaintiff signed the settlement agreements, the Medicare Secondary Payer Recovery Contractor (MSPRC) issued a CPL dated November 17, 2009, to Plaintiff notifying him that $41,340.46 had been paid by Medicare on his mother’s behalf. Plaintiff disputed the CPL claiming that Medicare would have paid for Barbara’s treatment in the absence of alleged the negligence.

The MSPRC later issued a CPL on January 31, 2011, claiming $1,713.7 in conditional payments made on Barbara’s behalf, removing a substantial amount of claims. This CPL explained, as did the first, that the conditional payment amount listed in the CPL was not final and was subject to change. Less than two months later, Plaintiff requested a final demand from the MSPRC; however, prior to receiving the final demand, Plaintiff requested approval of the settlements and referenced only the $1,713.77 amount noted in the January 31, 2011 CPL in the settlement documents. On July 1, 2011, the MSPRC issued a formal demand requesting reimbursement for in the amount of $22,668.01 for treatment rendered to Barbara from September 11 to September 20, 2006, “i.e., within the negligence period set forth in Plaintiff’s malpractice complaint and the Settlement Agreements.”

Plaintiff then filed an appeal with the MSPRC on July 6, 2011 arguing again that Medicare would have paid for Barbara’s treatment anyway. On August 14, 2011, the MSPRC affirmed its original decision, which led to the Plaintiff making a Request for Reconsideration to Medicare’s Qualified Independent Contractor (QIC). The QIC affirmed the MSPRC’s decision and found that Plaintiff was responsible for payment of the requested reimbursement amount, $22,668.61.

Next, Plaintiff filed an appeal requesting an ALJ review on December 12, 2011. In the ALJ hearing, Plaintiff reasserted his prior arguments, but further argued that he relied upon the $1,713.77 CPL when settling his case. The ALJ succinctly defeated that argument by simply pointing to the language in the CPL that noted the amount provided was not final, meaning it should not have been relied upon. The ALJ also found Plaintiff’s argument that Medicare would have been responsible for the charge for Barbara’s care in the absence of the alleged negligence to be without merit.

Plaintiff subsequently filed his final administrative appeal with the Medicare Appeals Council (MAC) on July 13, 2012. Plaintiff continued to assert his prior arguments; however, he also presented the argument that Medicare should not be permitted to recover since the state court order allocating the settlement funds was made after the judge conducted an “evidentiary hearing” and “as a matter of law the allocations to the heirs and interested parties were for losses other than for medical services.” The MAC rejected these arguments and affirmed the ALJ’s decision. The MAC found that because the settlement was the direct result of the alleged negligence, the Plaintiff could not then argue that the treatments obtained following the alleged malpractice had nothing to do with the claimed negligence and that Medicare therefore had no right to recovery. The MAC further found that Medicare was not bound by the $1,713.77 CPL, as the judge did not determine this amount, but rather relied upon Plaintiff’s representation of the lien amount. Finally, the MAC agreed that CPL’s language clearly noted that the amount provided was not final.

After exhausting all of the available administrative appeals, Plaintiff sought judicial review of the MAC decision and reiterated the same arguments he made at each level of his administrative appeals to the Michigan District Court. The Michigan District Court found that there was substantial evidence to support the recovery of the conditional payments from the Plaintiff in the full amount sought by Medicare and affirmed that MAC’s decision upholding the ALJ’s ruling.

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