Tuesday, October 26, 2010

Novel Decision on Statute of Limitations for Medicare Recovery Actions

In the case of United States v. Stricker et al., the United States District Court for the Northern District of Alabama ruled on the applicable statute of limitations in a Medicare recovery action.

This matter involved a suit instituted by the government against the tortfeasors, plaintiff attorneys, and insurers that were involved in a $300 million toxic tort settlement reached in 2003.

Notably, the Medicare Secondary Payer Act does not indicate a deadline for filing a claim for recovery.

Therefore, the relevant statute of limitations for the government’s claims is governed by the Federal Claims Collection Act (FCCA). See 28 U.S.C. § 2415.

The parties in this matter argued over whether the FCCA’s six (6)year or three (3)year statue of limitations applied.

The Strickler court held that the claim against the corporate defendants was based in tort, and therefore, a three (3)year statute of limitations applied, which resulted in the dismissal of these claims which were not filed until 2009, i.e. six (6) years after the underlying event.

The court in Strickler also held that the government’s claim against the attorney defendants was based on contract law, and therefore, the six (6) year statute of limitations applied to those claims. The court reasoned that the defendant attorneys acted as agents pursuant to the contractual relationship between the government the Medicare beneficiaries, and the attorneys’ obligation to pay their clients monies allegedly owed to the government for Medicare reimbursement arose from an express contractual relationship with the Medicare beneficiaries.

The court further held that when the statutes of limitations periods began to run was different for the two groups of defendants. As to the corporate defendants, the cause of action arose at the execution and court approval of the settlement. In contrast, the cause of action as to the attorney defendants arose was held to start when payment of the settlement was made.

I send thanks to Allen Henry of State Farm for bringing this apparent case of first impression to my attention. I also cite to the Medicare Secondary Payer Act Blog which can be found at http://themedicarespa.com/.

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