Hicks v. Chamberlin – Medicare’s Administrative Process Must Be Exhausted Before Dragging CMS Into a Case over Conditional Payments

Posted date in Jason D. Lazarus, J.D., LL.M., MSCC Liens, Medicare, Medicare Secondary Payer Act, MSP Compliance

In another case of misunderstanding the process for Medicare conditional payment resolution, a federal district court dismisses a request for Medicare to be forced to assert is repayment obligation or be barred.  In Hicks v. Chamberlin, the plaintiff was a dog bite victim who brought suit in state court seeking damages for the injury suffered.  At the same time the plaintiff sued Medicare asserting that Medicare may have paid some of the medical bills and “should be required to assert its interest or otherwise be forever barred from doing so.”  Medicare removed the case to federal court.  Medicare moved to dismiss for lack of subject matter jurisdiction.

Medicare argued, in its motion to dismiss, that the administrative procedure required by Medicare’s Secondary Payer statute had not been initiated in this case.  Therefore, the plaintiff can’t request judicial review.  Medicare pointed out that the plaintiff had not received a judgment, award, or settlement and accordingly the plaintiff’s claims were not ripe as there has been no “primary payment”.  Without a primary payment, there can be no demand by Medicare for reimbursement under the MSP statute.  This is because proof “that it is a ‘primary plan's responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means.’ 42 U.S.C. § 1395y(b)(2)(B)(ii).”  

Medicare pointed out to the court, and the court agreed, that the plaintiff could not have presented his claims to Medicare for administrative review since there was no judgment, settlement or award.  Furthermore, even if the plaintiff had received an initial decision from Medicare and presented the claims to the Secretary of Health and Human Services, the plaintiff’s claims would be barred under 42 U.S.C. § 405(h) because the plaintiff had no gotten a final decision from the Secretary.  The federal district court held that the plaintiff “has neither received an initial determination from the Secretary nor completed any of the subsequent steps necessary to receive a final decision.”  Accordingly, “[w]hether the Secretary will seek reimbursement, and if so, how much, can only be reviewed by a federal court after Medicare's administrative procedure has been exhausted.”  The claim against Medicare was dismissed for lack of subject matter jurisdiction.

Two important things to take away from this decision for all parties are that a primary payment must be made which is demonstrated by a judgment, award or settlement and there must be a final decision by the Secretary regarding conditional payments before a case is ripe against Medicare.  Understanding the administrative process for conditional payments and working with the MSPRC early on can mitigate issues at the back end of a case.  Medicare conditional payment resolution is a complex area and is fraught with liability issues for all parties since regulations permit the government to bring an action against all parties