Exhaustion of Administrative Remedies

A recent case, In re Asbestos Products Liability Litigation No. IV Maria Torres, No. 95-1173, 2014 U.S. Dist. LEXIS 24138 (E.D. Pa. Feb. 24, 2014), reiterates the principle that parties seeking to challenge Medicare’s recovery of conditional payment claims must exhaust their administrative remedies in order to be able to seek judicial review. In this case, Medicare had previously issued a formal demand for $24,585.13 and agreed to reduce its recovery to $12,292.00 after the plaintiff submitted a compromise request. Instead of going through Medicare’s administrative appeals process, the plaintiff then filed a motion for interpleader asking the court to hold that Medicare could not recover from the settlement because Medicare is not entitled to recover conditional payment claims from a surviving spouse who settles a claim under the Federal Employers Liability Act.
 
In opposing the plaintiff’s motion, the Department of Health and Human Services argued that the court did not have jurisdiction over the issue because the plaintiff had not exhausted her administrative remedies as required by the Medicare Act. The plaintiff, however, contended that the court had jurisdiction because she was seeking a determination that the Medicare Act did not apply, as she was arguing that Medicare was not entitled to recover from the settlement funds. Because the plaintiff’s claim was "wholly dependent upon determining whether or not CMS will correctly interpret the Medicare Act," the court held, the plaintiff’s claim did arise under the Medicare Act. Therefore, the court concluded, it did not have jurisdiction over the plaintiff’s claim because she had not gone through Medicare’s appeals process and exhausted her administrative remedies.