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U.S. District Court Upholds Conditional Payment Claim Demand Amount

Parties often wait to finalize settlement until initial information concerning conditional payment claims is received. While this is certainly a worthwhile and often advisable thing to do, the present case, Shapiro v. Sec’y of HHS, No. 15-22151-Civ-COOKE/TORRES, 2017 U.S. Dist. Ct. LEXIS 42278, is a reminder that relying too heavily on the initial conditional payment information can become problematic. The Plaintiff, Barbara Shapiro, was seriously injured in an accident involving a UPS truck. UPS denied liability and during the course of the litigation, Medicare paid for the Plaintiff’s accident-related treatment. An initial conditional payment letter was obtained showing claims of approximately $17,000.00.

The Plaintiff was able to reach a settlement with UPS. Prior to settlement, Plaintiff’s counsel called Medicare and confirmed that the lien amount remained approximately $17,000.00. The settlement was finalized and Medicare’s demand letter was later issued showing over $40,000.00 in claims and requesting reimbursement of over $23,000.00 once the procurement cost reduction was applied. The Plaintiff appealed the demand amount; however, Medicare disagreed with the appeal and the demand amount was upheld. Plaintiff continued the appeal process requesting a reconsideration review, then a hearing before an Administrative Law Judge (ALJ), and an appeal to the Medicare Appeals Council (MAC). The reviewers all reached the same finding against Plaintiff, noting that the conditional payment amount cannot be final until a settlement is reached and Medicare’s letters concerning conditional payments contain a disclaimer specifically noting the same.

In reaching a decision, the District Court first looked to the Medicare Secondary Payer Act (MSP) itself. The Court noted that there is no dispute as to the relatedness of the charges or the fact that Plaintiff received a settlement related to the injuries she sustained in the accident As a result, Medicare is entitled to recover the full principal amount of the payments owed under the MSP absent a basis for waiver. After finding no basis for waiver, the Court granted Defendant’s motion for summary judgment and closed the case.

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