Jurisdiction Against CMS is Denied Even to Non-Medicare Beneficiary Claimants
Roy Franco
October 8, 2013

The recent case of Neff v. Sebelius, 2013 U.S. Dist. 143011 (U.S. Dist. Ct. MT), is an example of the importance of jurisdiction in pursuing grievances against the Centers for Medicare & Medicaid Services.  The facts are simple enough in this matter.  Plaintiffs, were non-Medicare beneficiaries and were participants in a global settlement involving asbestos claims.  These 15 plaintiffs presented wrongful death claims, and believed that the money owed them was not subject to any reimbursement claim under the Medicare Secondary Payer Act.  They therefore brought a declaratory action in U.S. District Court against CMS (Secretary Kathleen Sebelius) requesting their damages be exempt from any Medicare claim.  CMS moved to dismiss based on jurisdiction and won.

CMS prevailed because Plaintiffs failed to establish jurisdiction.  An allegation under the Federal Declaratory Judgment Act by itself is insufficient grounds.  An independent basis is required and a reference to the Medicare Act is not adequate as most claims under that law does not extend jurisdiction.   While sufficient basis alone to dismiss, the Court went further, to demonstrate to Plaintiffs that it was necessary to first channel their grievances to CMS and exhaust administrative remedies, before filing in Federal Court.  Under 42 U.S.C. Section 405 (g)-(h), Congress set up special rules which allows the Agency the opportunity to apply, interpret, or revise policies, regulations or statutes without possibly premature interference by different individual courts.  Why Plaintiffs were subject to this channeling process was an easy question for the Court to answer.  The Medicare Secondary Payer Act allows CMS to seek reimbursement from a primary plan, and entities that receive payments from primary plans.  Since Plaintiffs were part of a global settlement, the payment is from a primary plan and is subject to CMS recovery.

Franco Signor Commentary:  We are seeing more and more litigation attempting to interpret the Medicare Secondary Payer Act.  To successfully launch an action, be certain jurisdiction in Federal Court can be established.  Also, consider carefully settlement strategy when resolving these cases.  Most wrongful death actions for the survivors don’t allow for the allegation of medicals related to the decedent, damages are limited to the loss of society, comfort and welfare.  If these Plaintiff has settled outside of the global resolution, the result would be different here. In this case, the “global” nature of the settlement placed all the funds at risk.  Before your next settlement, call us to discuss your possible options.