by Vincent A. Toreno, Esq.

President Obama signed the Strengthening Medicare And Repaying Taxpayers (SMART) Act on January 10, 2013 and this Act provides that an action to recover conditional payments must be brought within three years of the receipt of notice of a settlement, judgment, award or other payment by CMS. This provision went into effect on July 10, 2013. As noted in recent articles in PMSI Settlement Solutions and Business Insurance, before the SMART Act was signed into law, there was no clear statute of limitations for conditional payment recovery. Now, however, recovery of conditional payments is limited to three years from the date of notice to CMS for cases that settle after July 10, 2013. This provision provides certainty to employers, insurers and other payers that once the three year time period lapses, CMS can no longer seek additional funds in connection with the settlement of a workers’ compensation or liability case.

Additionally, the SMART Act allows for discretion when assessing penalties for noncompliance. Prior to the SMART Act, the Medicare Secondary Payer provided for mandatory penalties for noncompliance of up to $1,000.00 per day with respect to each claimant. The SMART Act now provides that the non-complying party “may” be subject to penalties, thus allowing for leniency in assessing penalties against insurers or employers that failed to report settlements. The change in the statutory language could make a big difference for an employer that accidentally failed to report a settlement to CMS. Medicare now has the ability to exercise its discretion in assessing penalties where an employer can demonstrate they were making good faith efforts to comply with reporting requirements. This is great news for employers!