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District Court Grants Motion to Dismiss After U.S. Argues that Court Lacks Jurisdiction Over Medicar

In Cheryl Nelson & Geico Gen. Ins. Co. v. Medi-Cal., No. 1:16-cv-01328-LJO-BAM, 2016 U.S. Dist. Ct. LEXIS 153596 (E.D. Cal., November 4, 2016), the Plaintiffs (Geico General Insurance Company and Cheryl Nelson) brought an action for an interpleader of funds. The Plaintiffs intended on resolving competing claims by twelve entities against a $100,000.00 motor vehicle accident insurance settlement which was to be paid to the injured party. Plaintiffs alleged that they were unable to determine the entities to which the settlement belonged and the proportions in which they were owed.

One of those entities, the United States (through the Medicare program), made conditional payments on behalf of the injured party totaling $4,100.00. In response to its inclusion in the claim, the U.S. filed a motion to be dismissed from the action, arguing that the court lacked jurisdiction over its Medicare repayment claim and further arguing that sovereign immunity had not been waived. In making this argument, the U.S. contended that the Medicare Secondary Payer Act (MSPA) does not give the Medicare program a lien against the insurance proceeds such that sovereign immunity is waived. Further, they argued that the MSPA requires the exhaustion of administrative remedies before a claim can be subject to judicial review.

The Court considered the arguments of the U.S. separately, first finding that sovereign immunity had not been waived. As a rule, the U.S. is immune from suit unless it has unequivocally expressed its waiver of sovereign immunity. The burden of proving that this immunity has been waived falls on the party seeking relief. In this case, the Plaintiffs did not even put forth an argument that the U.S. waived its sovereign immunity. While sovereign immunity is expressly waived under federal law in cases in which the U.S. claims a mortgage or lien, this law is not applicable in this case since the MSPA does not, by itself, establish a lien. Rather, the MSPA permits the U.S. to bring an action against a primary payer; it does not give the government a claim against property. The Plaintiffs also did not put forth an argument that they exhausted their administrative remedies under the Medicare Act. As a result, the court did not have subject-matter jurisdiction over the claim. The Court granted the Defendant’s motion to dismiss on both grounds.

This case illustrates the unique hurdles that arise in cases involving Medicare. If you have questions regarding the administrative remedies available for claims arising under the MSPA, please contact us and we will be happy to help.

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