Noteworthy Case Law-Cecelia Taransky vs Secretary of the United States Department of Health and Human Services

Cecelia Taransky vs Secretary of the United States Department of Health and Human
Services (US DHHS); et al (2014 US. App. LEXIS 14408(3rd Cir.7-29-2014)

The Taransky vs Secretary US DHHS case discussed the degree of deference that CMS
should give to a Court’s allocation order. The appeal involved the interaction of the MSP
Act with the New Jersey Collateral Source Statute (NJCSS). The NJCSS provides that
a tort plaintiff cannot recover damages from a defendant when she has already received
funding from a different source. Taransky claimed that reimbursement to CMS would be
inequitable, since her settlement did not allow for any medical expenses. She also argued
that a tortfeasor cannot be a “primary plan” from which the government may recover
under the MSP.

By way of background, it is important to note that during settlement negotiations,
Taransky’s attorney sought conditional payment information from Medicare on several
occasions. After settlement was reached, Taransky filed a motion with the New Jersey
Superior Court requesting an apportionment of the settlement proceeds between the
various damage elements. This motion was intended to allow Taransky to secure
documentation relevant to “anticipated administrative proceedings with CMS”. The New
Jersey Court entered an order on November 20, 2009 finding that the settlement did not
include any Medicare expenses.

Taransky disputed Medicare’s conditional payment demand through CMS’ administrative
procedures. The Administrative Law Judge found against Taransky, ruling that the
Government may be reimbursed from the proceeds of a tort settlement. He also refused to
recognize the state court’s allocation order because it was “not made on the merits”.

The Appellate Court ruled against Taransky finding that the MSP Act authorizes the
Government to seek reimbursement from her settlement. Neither the NJCSS nor the
Superior Court’s allocation order of the settlement prevented her from obtaining damages
for medical expenses. The Government also did not need to recognize the allocation
order because it was not on the merits. The Appellate Court noted that a court order is
“on the merits” when it is delivered after the court has heard and evaluated the evidence
and the parties’ substantive arguments” Taransky’s motion requesting apportionment of
the settlement proceeds was not intended to resolve any issues in her suit. It was sought
“only to the extent necessary to obtain specified documentation relevant to anticipated
administrative proceedings with the federal Centers for Medicare and Medicaid
Services”. In light of this, the order in question was “the antithesis of one made on the
merits”.