Firm News

What is the Statute of Limitations under the Medicare Secondary Payer Act?

A new case (U.S. vs. Stricker, decided September 30, 2010) has established the statute of limitations period for a claim under the Medicare Secondary Payer Act.

The Medicare Secondary Payer Act is a Federal statute that enables Medicare to recover money spent during the pendency of a workers’ compensation or civil claim (‘conditional payments’) or will have to expend in the future (depending on the size and type of settlement). Applying the Medicare Secondary Payer Act to the workers’ compensation context has been challenging – we have devoted chapters to this subject in our New York and New Jersey Workers’ Compensation handbooks).

We previously reported on the Stricker case back in January. In Stricker, Medicare brought actions against the attorneys and insurance carriers involved in a toxic-tort lawsuit. Medicare argued that the attorneys and the corporate defendants had failed to take Medicare’r recovery interests into account and had disbursed the settlement proceeds inappropriately.

In a stunning decision, The United States District Court for the Northern District of Alabama just ruled that Medicare’s claims were to be dismissed for failing to file their lawsuit within the applicable Statute of Limitations time periods.

The Federal Court ruled that under the ‘Federal Claims Collection Act’ (“FCCA”) (28 U.S.C. 2415) a three-year statute of limitations applied to the corporate defendants. The Federal judge also ruled that a six-year statute of limitations applied to the attorney defendants (the attorneys who represented the claimants in those cases).

The federal court also ruled that the statute of limitations started running for the corporate defendants “on the date that the settlement was approved by the state Court.” In regards to the attorney defendants, the date of accrual for the statute of limitations was the date they received the first settlement payment. The different defendants each had different applicate statutes of limitations because the FCCA treats ‘primary payers’ (corporate tort defendants) differently than attorneys, who have a ‘express contractual agreement’ with the Medicare beneficiaries – namely, the attorney-fee agreement between them.

This outcome means that all of Medicare’s claims for reimbursement in this case were dismissed. It is also interesting in that the settlement money pool ($300 Million in all) was funded over a period of years (the corporate defendants are scheduled to contribute additional funds to the settlement fund over a period of nine years – in fact they are still paying into the settlement fund (and will continue to pay until 2013).

For carriers and corporate defendants – this means that MSP has a three-year statute of limitations from the date the settlement is approved by the workers’ compensation court or state court.

Get articles delivered to your inbox, once a month.

Subscribe Today!