U.S. Wins in Lawsuit Against Medicare if Administrative Remedies Are Not Exhausted
Roy Franco
June 6, 2011

Filing a lawsuit against Medicare to adjudicate the reimbursement claim owed under the Medicare Secondary Payer Act (MSP) requires navigation of a labyrinth of steps before it will be accepted by a Court. The starting point is a determination by Medicare of what it is owed which usually comes in the form of a Final Demand Letter from its contractor, the Medicare Secondary Payer Recovery Contractor (MSPRC). This letter is only issued after Medicare is presented with a settlement, judgment, or award of the claim by a party. If the amount contained in the Final Demand Letter is not acceptable, only the Medicare beneficiary has the right to appeal or request a waiver. That right must be exercised within 120 days of the Final Demand Letter and administrative in nature. Access to the District Court can only happen after the several levels of administrative appeals are exhausted which can take between 2 – 3 years. Attempts to circumvent this process usually fail.
This is evident in yet another recent decision by the U.S. District Court for the Central District of Illinois: Springfield Division. Plaintiff Marjorie R. Braucher, individually, and as Special Administrator of the Estate of Georgia Braucher, brought her suit to adjudicate the Medicare Lien and Approve Settlement Distribution between the Estate and surviving heirs. She argued that her authority to file suit against the U.S. was based on Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010), but her claim was struck down because of one important difference. The Bradley case came to federal court in an action for judicial review after there was a final administrative decision, whereas, plaintiff Braucher did not request any administrative hearings from Medicare.
In light of this important distinction, the court in Braucher v. Swagat Group, LLC, 2011 U.S. Dist. LEXIS 21190, ruled that it could only review MSPRC’s claim for reimbursement in a judicial review proceeding brought under 42 U.S.C. §§405(g) & 1395ff(b)(1)(A) because the Court otherwise lacks jurisdiction to make that determination 42 U.S.C. §§405(h) & 1395ii. The plaintiff must exhaust her administrative remedies before the Court can hear the matter under 42 U.S.C. §§ 405(g) and 1395ffIb)(1)(A). Until those administrative remedies are exhausted the Court lacks jurisdiction.
This procedural hurdle (requiring exhaustion of administrative remedies) against jurisdiction has been consistently upheld by the Courts. There have been exceptions, but very rare and narrow in scope. It either requires a situation where no administrative remedies exist, known as the Michigan exception, or where the powers authorized by the statute are patently being exceeded. Unless the case can be made for jurisdiction within these narrow exceptions, Medicare must hear the complaint first before any District Court can adjudicate it. This is a harsh reality, especially for an industry where access to the Courts to resolve disputes is easily accessible.
If you are considering litigation against Medicare, please contact us to discuss your particular situation. We specialize in claims involving MSP recoveries and would enjoy the opportunity to evaluate your particular issue. We will provide you with straightforward advice and perhaps some alternative recommendations that could allow proper mitigation of this exposure with minimal expense. Franco Signor LLC offers solutions for your MSP problems and we look forward to having our legal professionals help you.