New Statute of Limitations for Conditional Payment Recovery to Begin on July 10th

At last, one of the components of the SMART Act is set to take effect on July 10, 2013. The SMART Act, also known as H.R. 1845, provides that: six months after enactment (signed by President Obama on January 10, 2013), an action for recovery of conditional payments cannot be brought unless it is less than 3 years after the date of the receipt of notice of a settlement, judgment, award or other payment by CMS/DHHS.

So what does this mean? This means that recovery of conditional payments is limited to three (3) years from the date of notice to CMS on any cases that settle after July 10th of this year, as long as CMS is notified of the settlement, judgment, or award. Three years after a case settles and notice is provided to CMS, you can finally rest assured that CMS won’t be looking for additional monies from that workers’ compensation, liability or no-fault case you settled.

Until the SMART Act, there was no clear statute of limitations for conditional payment recovery; although cases such as U.S. v. Stricker attempted to interpret it via case law. A clear statute of limitations through legislative reform to the MSP Act was needed as any case law which attempted to interpret what the Statute of Limitations would seemingly only apply to that jurisdiction where the case was decided. This could potentially create a lack of consensus among jurisdictions on a Federal issue which really should be determined through the legislative or executive branch rather than the judicial. The SMART Act accomplished this.

One great aspect of this new statute of limitations is that it is a self-enacting provision of the SMART Act. Unlike some of the other components of the SMART Act, CMS does not need to promulgate rules or post a proposed rulemaking in the Federal Register for this to begin. Therefore, PMSI highly encourages payers to take note of this new statute of limitations and ensure that CMS is noticed on the appropriate settlements so that payers can take advantage of the statute of limitations which will be effective on July 10, 2013 as a result of the SMART Act.

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