Title: Atlanticare Medical Center v. Division of Medical Assistance
Citation: N/A
Docket Number: SJC-12828
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: July 21, 2020

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
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1030; SJCReporter@sjc.state.ma.us 
 
SJC-12828 
 
ATLANTICARE MEDICAL CENTER & others1  vs.  DIVISION OF MEDICAL 
ASSISTANCE. 
 
 
 
Suffolk.     February 10, 2020. - July 21, 2020. 
 
Present:  Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & 
Kafker, JJ. 
 
 
Medicaid.  Division of Medical Assistance.  Public Welfare, 
Medical assistance benefits.  Regulation.  Hospital, 
Medicaid reimbursement.  Medicare.  Judgment, Relief from 
judgment.  Practice, Civil, Relief from judgment. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
April 6, 2000. 
 
 
Following review by this court, 439 Mass. 1 (2003), a 
motion for relief from judgment, filed on September 28, 2018, 
was heard by Debra A. Squires-Lee, J. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Douglas S. Martland, Assistant Attorney General, for the 
defendant. 
 
Charlene E. Kent for the plaintiffs. 
 
 
                     
 
1 Salem Hospital; Lawrence General Hospital; Hale Hospital; 
Beverly Hospital; and Deaconess Waltham Hospital.  
2 
 
 
KAFKER, J.  In the instant case we are asked to revisit a 
decision issued by this court in 2003 involving State Medicaid 
reimbursements, in light of subsequent developments to the 
relevant Federal law.  At issue is the State's Medicaid program, 
MassHealth, which provides insurance for indigent residents of 
the Commonwealth.2  In Atlanticare Med. Ctr. v. Commissioner of 
the Div. of Med. Assistance, 439 Mass. 1, 3, 5 (2003) 
(Atlanticare I), this court affirmed a judgment declaring that 
part of a State Medicaid regulation, 130 Code Mass. Regs. 
§ 450.316(E) (1998),3 was inconsistent with the Federal Medicaid 
scheme.  The regulatory provision required health care providers 
to return payments to MassHealth where a third-party insurer was 
later identified as liable for the payment that MassHealth had 
already paid out.  Id. at 2.  We concluded that the Federal 
Medicaid scheme tasked the State Medicaid agency, not individual 
providers, with seeking reimbursement from liable third-party 
                     
2 At the time the original complaint was filed, the Division 
of Medical Assistance was designated as the "single State 
agency" responsible for administering the State Medicaid plan.  
See 42 U.S.C. § 1396a(a)(5) (State Medicaid plans must designate 
single State agency to administer plan).  In 2003, however, the 
Executive Office of Health and Human Services was deemed to be 
the single State agency responsible for administration of the 
program.  See G. L. c. 118E, § 1, inserted by St. 2003, c. 26, 
§ 308.  For simplicity, we will refer to the defendant as 
"MassHealth" throughout this opinion. 
 
3 The provision at issue in this regulation has since been 
moved from subsection (E) to subsection (F) of 130 Code Mass. 
Regs. § 450.316 (2019). 
3 
 
 
insurers, including Medicare.  Id. at 6-7.  We thus held that 
the State regulation impermissibly shifted the burden for 
seeking reimbursement onto health care providers, in violation 
of the Federal statutory scheme.  Id. at 14.  In so holding, we 
rejected the argument that MassHealth would be unable to 
directly seek reimbursement where the liable third party at 
issue was Medicare.  Id. at 11. 
Pursuant to our ruling in Atlanticare I, MassHealth began 
seeking reimbursements directly from Medicare, rather than from 
providers, where Medicare was identified as a liable third-party 
insurer.  The Center for Medicare & Medicaid Services (CMS), a 
division of the Department of Health and Human Services (HHS) 
that oversees the administration of Medicaid and Medicare at the 
Federal level, refused to issue reimbursements from Medicare to 
MassHealth, however.  See Daley v. Secretary of the Executive 
Office of Health & Humans Servs., 477 Mass. 188, 190 (2017); 
Massachusetts v. Sebelius, 638 F.3d 24, 25 (1st Cir. 2011) 
(Sebelius).  CMS maintained that Medicare funds could only be 
paid out to providers, not MassHealth, and that MassHealth could 
only obtain Medicare reimbursements by going through providers.  
Sebelius, supra.  MassHealth brought suit against CMS in Federal 
court, challenging this position.  Id. at 29.  In a 2011 ruling, 
the United States Court of Appeals for the First Circuit agreed 
with CMS's position, and held that the Federal Medicare scheme 
4 
 
 
prohibited State Medicaid agencies, including MassHealth, from 
receiving funds from Medicare.  See id. at 36.  At around the 
same time, a Federal Medicare regulation was amended to 
acknowledge the practice of State Medicaid agencies obtaining 
Medicare reimbursements through providers, rather than seeking 
such reimbursements directly from Medicare.  See 42 C.F.R. 
§ 424.44(b)(3) (2019). 
In light of the First Circuit's holding and the amendment 
to 42 C.F.R. § 424.44(b), MassHealth sought to modify the 
declaratory judgment and restore MassHealth's ability to obtain 
reimbursements from providers, rather than liable third parties.  
For the reasons discussed infra, we conclude that MassHealth has 
demonstrated a sufficient change in circumstances to warrant 
modification of the judgment.  We further conclude, however, 
that only a narrow modification of the judgment is necessary to 
allow MassHealth to seek reimbursement where the liable third 
party is Medicare.  Accordingly, we order that this case be 
remanded to the Superior Court for modification of the judgment 
in accordance with this opinion. 
1.  Background.  a.  Overview of Medicaid and Medicare.  
Medicare is a Federal program that provides health care benefits 
to the elderly and disabled.  See Briggs v. Commonwealth, 428 
Mass. 241, 243 (1999); 42 U.S.C. §§ 1395 et seq.  Medicare is 
supported entirely by Federal funds and is administered by the 
5 
 
 
Federal government.  See Briggs, supra.  Medicaid, by contrast, 
is a health care program designed to assist the needy and 
indigent.  See id.; 42 U.S.C. § 1396 et seq.  Unlike Medicare, 
Medicaid follows a model of "cooperative federalism" between the 
State and Federal governments (citation omitted).  See Harris v. 
McRae, 448 U.S. 297, 308 (1980) (McRae).  State participation in 
Medicaid is voluntary, but those States that choose to 
participate must develop a State plan in compliance with Federal 
requirements.  See Massachusetts Eye & Ear Infirmary v. 
Commissioner of the Div. of Med. Assistance, 428 Mass. 805, 812 
(1999).  State Medicaid plans must comply with requirements set 
forth in the Federal statutory scheme, as well as Federal 
regulations promulgated by HHS.  See id.  In exchange, "the 
Federal Government agrees to pay a specified percentage of 'the 
total amount expended . . . as medical assistance under the 
State plan . . . ."  McRae, supra, quoting 42 U.S.C. 
§ 1396b(a)(1).  Although States must comply with Federal 
requirements, Medicaid is designed to provide some flexibility 
to the States to formulate a plan tailored to each State's 
individual needs.  See Danvers Pathology Assocs., Inc. v. 
Atkins, 757 F.2d 427, 428 (1st Cir. 1985). 
Eligibility for Medicaid and Medicare are not mutually 
exclusive.  An individual who is both elderly and indigent may 
be "dual eligible[]" for both programs.  See Briggs, 429 Mass. 
6 
 
 
at 244.  See also Connecticut Dep't of Social Servs. v. Leavitt, 
428 F.3d 138, 141 (2d Cir. 2005) (Leavitt) ("Because elderly 
Americans are covered by Medicare, and poor Americans are 
covered by Medicaid, the elderly poor are covered by both 
programs.  These beneficiaries are known as 'dual eligibles'").  
Where an individual is dual eligible, and receives a health care 
service that could be covered by either Medicare or Medicaid, 
Medicare is to pay in the first instance.  See Leavitt, supra; 
42 U.S.C. § 1396a(a)(25)(A).  This is because Medicaid is 
designed to be a "payer of last resort."  Arkansas Dep't of 
Health & Human Servs. v. Ahlborn, 547 U.S. 268, 291 (2006).  
Under this principle, Medicaid is not to be used to fund a 
health care expense where another funding resource is available.  
Shweiri v. Commonwealth, 416 Mass. 385, 388–389 (1993).  The 
Federal statutory and regulatory scheme outlines two methods for 
ensuring that Medicaid remain the payer of last resort where 
another funding resource is identified:  "cost avoidance" and 
"pay and chase."  See Miller v. Gorski Wladyslaw Estate, 547 
F.3d 273, 278 (5th Cir. 2008). 
i.  Cost avoidance.  Cost avoidance is the primary method 
of ensuring that Medicaid funds are not used where another 
funding resource is available.  See id.  States are required to 
"take all reasonable measures to ascertain the legal liability 
of third parties . . . to pay for care and services available 
7 
 
 
under the plan" before paying out Medicaid funds.  See 42 U.S.C. 
§ 1396a(a)(25)(A).  A third party is defined as "any individual, 
entity or program that is or may be liable to pay all or part of 
the expenditures for medical assistance furnished under a State 
plan."  42 C.F.R. § 433.136 (2010).  Reasonable measures include 
the submission of a plan to the Secretary of HHS "for pursuing 
claims against such third parties."  42 U.S.C. 
§ 1396(a)(25)(A)(ii).  In accordance with these requirements, 
Massachusetts has promulgated a regulation mandating that 
providers make "diligent efforts to obtain payment first from 
other resources . . . so that the MassHealth agency will be the 
payer of last resort."  130 Code Mass. Regs. § 450.316 (2019). 
Where a State is able to establish the "probable existence" 
of third-party liability at the time when a claim is filed, "the 
agency must reject the claim and return it to the provider for a 
determination of the amount of liability."  42 C.F.R. 
§ 433.139(b)(1) (2019).  Once such a liability determination is 
made, "the agency must then pay the claim to the extent that 
payment allowed under the agency's payment schedule exceeds the 
amount of the third party's payment."  42 C.F.R. 
§ 433.139(b)(1).  Where probable third-party liability cannot be 
established, or where benefits are not available at the time the 
claim is filed, the State Medicaid agency is responsible for 
paying the claim.  See 42 C.F.R. § 433.139(c). 
8 
 
 
ii.  Pay and chase.  In the regular course, the 
Commonwealth's "diligent efforts" requirement ensures that 
MassHealth does not pay for health care services that could have 
been paid for by a third-party insurer.  See 130 Code Mass. 
Regs. § 450.316.  Instances arise, however, where a liable third 
party is identified after Medicaid has already paid the 
provider.  For example, individuals who are eligible for 
Medicaid may become retroactively eligible for Medicare as well.  
See, e.g., 42 C.F.R. § 406.6(d)(4) (2019) (individual who signs 
up for Medicare Part A coverage at some point after he or she 
first becomes eligible is entitled to retroactive benefits).  
Such individuals are referred to as "retroactive dual 
eligibles."  In such instances, Medicaid employs the secondary 
"pay and chase" method of handling third-party liability, which 
consists of the following: 
"in any case where such a [third-party] legal liability is 
found to exist after medical assistance has been made 
available on behalf of the individual and where the amount 
of reimbursement the State can reasonably expect to recover 
exceeds the costs of such recovery, the State or local 
agency will seek reimbursement for such assistance to the 
extent of such legal liability." 
 
42 U.S.C. § 1396a(a)(25)(B). 
Federal regulations further mandate that 
"if [a State Medicaid] agency learns of the existence of a 
liable third party after a claim is paid, or benefits 
become available from a third party after a claim is paid, 
the agency must seek recovery of reimbursement within 
[sixty] days after the end of the month it learns of the 
9 
 
 
existence of the liable third party or benefits become 
available." 
 
42 C.F.R. § 433.139(d)(2).4  Reimbursement is to be sought 
"unless the agency determines that recovery would not be cost 
effective in accordance with" 42 C.F.R. § 433.139 (f).  42 
C.F.R. § 433.139(d)(3).  Recovery is considered cost effective 
under 42 C.F.R. § 433.139(f) where "the amount [the State 
Medicaid agency] reasonably expects to recover will be greater 
than the cost of recovery."  42 C.F.R. § 433.139(f)(1).  A 
State's Medicaid "plan must specify the threshold amount or 
other guideline that the agency uses in determining whether to 
seek recovery of reimbursement from a liable third party, or 
describe the process by which the agency determines that seeking 
recovery of reimbursement would not be cost effective."  42 
C.F.R. § 433.139(f)(2). 
iii.  Approaches to pay and chase.  To address the 
implementation of pay and chase for instances of post-payment 
                     
4 A State agency may request a waiver of the sixty-day 
deadline for seeking reimbursement.  See 42 C.F.R. 
§ 433.139(e)(1).  In order to obtain a waiver of this 
requirement, however, a State agency must demonstrate that 
imposing the sixty-day requirement is not cost effective.  See 
42 C.F.R. § 433.139(e)(1).  In order to do so, the agency must 
provide "adequate documentation" to the Center for Medicare & 
Medicaid Services (CMS) as to the lack of cost effectiveness, 
examples of which include "costs associated with billing, claims 
recovery data, and a State analysis documenting a cost-effective 
alternative that accomplishes the same task."  42 C.F.R. 
§ 433.139(e)(1)(ii). 
10 
 
 
third-party liability, Massachusetts promulgated the following 
regulation:  "[i]f a third-party resource is identified after 
the provider has already billed and received payment from the 
MassHealth agency, the provider must promptly return any payment 
it received from the MassHealth agency.  The provider must bill 
all third-party resources before resubmitting a claim to the 
MassHealth agency."  130 Code Mass. Regs. § 450.316(F).  In 
other words, this regulation implements pay and chase by 
allowing MassHealth to void a provider's claim and recoup the 
money from the provider.  The provider is then left to seek 
payment from the third party itself, whether the third party is 
a private insurer or Medicare.  The instant litigation arose out 
of a challenge to the legality of this regulation. 
An alternative method for implementing pay and chase, and 
the one that MassHealth presently relies on, is known as demand 
billing.  Under this method of recovery, MassHealth requests 
that the provider submit a bill to Medicare and repay MassHealth 
once Medicare has paid the provider.  MassHealth contends that 
demand billing results in significant delays in recovery, and 
cannot be utilized where a Medicaid recipient becomes 
retroactively eligible for Medicare more than twelve months 
after the date of service, due to Medicare filing deadlines. 
b.  Procedural history.  i.  Initiation of suit and 
Atlanticare I.  In 1998, MassHealth brought enforcement actions 
11 
 
 
against the plaintiff hospitals, seeking reimbursement for 
Medicaid funds that had been paid out to the providers.  
Atlanticare I, 439 Mass. at 4-5.  As this court explained: 
"In the three years prior to [MassHealth]'s enforcement 
action, each hospital had provided medical services to 
individuals deemed eligible for Medicaid benefits.  It is 
undisputed that, in all but two instances not at issue 
here, the hospitals made diligent efforts to identify 
liable third-party insurers, in conformity with 
[MassHealth]'s due diligence regulation.  When the 
hospitals were unable to identify liable third-party 
insurers, they sought and received payment from 
[MassHealth].  Subsequently, in 1998, [MassHealth] informed 
the hospitals that it had identified third parties 
responsible for the claims, and, pursuant to the 
reimbursement regulation, ordered the hospitals to return 
the Medicaid payments to [MassHealth] and to rebill the 
liable third parties.  In some instances, Medicare was the 
newly discovered third party; the patients serviced by the 
hospitals in those instances had become retroactively 
eligible for Medicare benefits.  In those instances, no 
amount of 'diligent efforts' by the healthcare providers 
would have identified a liable third-party insurer -- 
Medicare -- as Medicare provided the insurance coverage 
retroactively, i.e., only after the healthcare services had 
been provided.  The remaining instances involved private 
insurers." 
 
Id.  MassHealth prevailed in the administrative decisions that 
ensued.  See id. at 5.  The hospitals sought review in Superior 
Court, arguing that Federal law mandated that the State Medicaid 
agency, rather than the health care provider, seek reimbursement 
from liable third parties.  Id. at 3, 5.  A judge in the 
Superior Court ruled in favor of the hospitals.  Id. at 3.  In 
so ruling, the judge "declared the regulation unlawful to the 
extent that it required the hospitals to return payments to 
12 
 
 
[MassHealth] and rebill liable third parties."  Id. at 5.  
MassHealth appealed, and this court transferred the case from 
the Appeals Court on its own motion.  Id. at 3. 
In March 2003, we issued a decision affirming the Superior 
Court's ruling and concluding that Federal law required 
MassHealth to seek reimbursements directly from liable third 
parties, including Medicare.  See id. at 5.  We held that "[t]he 
natural reading of the text of [42 U.S.C.] § 1396a(a)(25)(B) is 
that the State or local agency must seek reimbursement from a 
liable third party, provided it is cost effective to do so."  
Id. at 6.  We also based our holding on the legislative history, 
the corresponding Federal regulation, and the then-current 1990 
State Medicaid manual issued by the Health Care Financing 
Administration (HCFA).5  Id. at 8-10.  More specifically, we 
observed that 42 U.S.C. § 1396a(a)(25)(B) made numerous 
references to liable third parties, but made no mention of 
providers.  Atlanticare I, supra at 6-7.  The statute's 
legislative history also indicated that Congress contemplated 
seeking reimbursement from "liable third parties" (emphasis 
omitted).  Id. at 8.  The cost-benefit analysis mandated by the 
statute further implied that agencies would seek recovery from 
                     
5 The Health Care Financing Administration was the 
predecessor to CMS.  Massachusetts v. Sebelius, 638 F.3d 24, 28 
n.6 (1st Cir. 2011). 
13 
 
 
third parties, as the cost of seeking recovery from a provider 
would generally be de minimis.  Id. at 7.  Additionally, the 
corresponding Federal regulations made explicit reference to 
seeking reimbursement "from a liable third party" and similarly 
contained cost-benefit analysis provisions (emphasis omitted).  
Id. at 9.  Finally, the 1990 HCFA manual set forth a pay and 
chase method of reimbursement that required the State Medicaid 
agency to "seek recovery of reimbursement from the third party" 
(emphasis omitted).  Id. at 10. 
On this basis, we concluded that 42 U.S.C. 
§ 1396a(a)(25)(B) required State Medicaid agencies to seek 
reimbursement directly from the liable third party, not the 
health care provider.  Atlanticare I, 439 Mass. at 6-7.  We 
further stated that this interpretation of the statute "would be 
entirely unremarkable were it not for [MassHealth's] view, 
agreed to by the hospitals, that it cannot recover costs from 
the liable third party when that party is Medicare."  Id. at 11.  
This court explicitly rejected that view, as we were "not 
persuaded that it is impossible for [MassHealth] to obtain 
reimbursement from Medicare."  Id. 
ii.  Post-Atlanticare I developments.  A few weeks after 
this court released its decision in Atlanticare I, CMS issued a 
letter from the State Medicaid director clarifying CMS's policy 
as to the recovery of Medicaid payments for individuals who 
14 
 
 
become retroactive dual eligibles.  The letter indicated that, 
as a general matter, where Medicaid learns of a liable third 
party after a claim is paid, or where retroactive benefits 
become available after a claim is paid, State Medicaid agencies 
"must seek recovery from that third party."  The letter went on 
to explain, however, that where the liable third party is 
Medicare, neither the Federal statutory scheme nor Federal 
regulations prohibit a State Medicaid agency from recovering its 
payment directly from the provider.  The defendant promptly 
filed a petition for rehearing with this court in May 2003, 
citing to the April 2003 letter from CMS.  The petition was 
denied without further comment. 
CMS sent a letter dated December 30, 2003, to MassHealth in 
response to questions that MassHealth had posed to the agency.  
The letter explained CMS's position that the statute does 
require the State to seek recovery from the liable third party, 
but that where the liable third party is Medicare "there is no 
statutory authority under Medicare to allow a [S]tate to seek 
recovery and be paid directly from Medicare."  In such 
instances, CMS wrote, "the [S]tate may timely request the 
provider to submit a bill timely to Medicare." 
MassHealth filed an emergency motion to modify the 
declaratory judgment, in light of the April 2003 and December 
2003 letters from CMS, arguing that they constituted changed 
15 
 
 
circumstances warranting a modification of the declaratory 
judgment, pursuant to Mass. R. Civ. P. 60 (b) (5), 365 Mass. 828 
(1974).6  The Superior Court judge denied the motion, concluding 
that none of the arguments advanced by the defendant 
"establishes to this [c]ourt's satisfaction that there is no 
possible way for [MassHealth] to recover from Medicare."  The 
judge also concluded that MassHealth's proposed modification to 
the declaratory judgment was not suitably tailored to the 
changed circumstance, because it "does not resolve the problem," 
but simply shifts the administrative costs from MassHealth onto 
the providers. 
In July 2004, a declaratory judgment was entered in the 
Superior Court after rescript which provided in relevant part: 
"It is further DECLARED that [MassHealth] lacks the 
authority to implement 130 Code Mass. Regs. § 450.316(E) 
[now renumbered § 450.316(F)] to the extent that the 
regulation, by requiring hospitals to refund Medicaid 
payments to [MassHealth] after the hospitals have complied 
                     
6 Rule 60 provides in relevant part: 
 
"On motion and upon such terms as are just, the court may 
relieve a party or his legal representative from a final 
judgment, order, or proceeding for the following reasons: 
. . . (5) the judgment has been satisfied, released, or 
discharged, or a prior judgment upon which it is based has 
been reversed or otherwise vacated, or it is no longer 
equitable that the judgment should have prospective 
application . . . .  The motion shall be made within a 
reasonable time . . . .  A motion under this subdivision 
(b) does not affect the finality of a judgment or suspend 
its operation." 
 
Mass. R. Civ. P. 60 (b), 365 Mass. 828 (1974). 
16 
 
 
with [MassHealth]'s due diligence regulation (130 Code 
Mass. Regs. § 450.316) and received payment for their 
services from [MassHealth] and [MassHealth] subsequently 
learns that a third-party insurer (including Medicare) is 
responsible for payment for all or part of the hospital's 
services, is inconsistent with the Supreme Judicial Court's 
interpretation of 42 U.S.C. § 1396a(a)(25)(B)." 
 
iii.  First Circuit decision.  Subsequent to these 
proceedings, MassHealth attempted to recover reimbursements for 
retroactive dual eligibles directly from Medicare.  See 
Sebelius, 638 F.3d at 25.  CMS refused to reimburse MassHealth, 
however, maintaining its position that MassHealth must seek such 
reimbursements from providers, not Medicare.  Id.  The 
Commonwealth brought suit in Federal court.  See id.  A judge in 
the Federal District Court for the District of Massachusetts 
ruled that the Medicare statute prohibited MassHealth from 
recovering reimbursements directly from CMS.  Id. 
On appeal, the First Circuit affirmed the District Court's 
ruling.  In so doing, it emphasized that the Medicare statute 
required that a Medicare "payment for services furnished an 
individual may be made only to providers of services."  Id. at 
31, quoting 42 U.S.C. § 1395f(a).  Although recognizing that the 
statute was not explicit on "whether the Commonwealth, which is 
not a provider, may recover reimbursement directly from Medicare 
in cases of retroactive dual eligibility," the First Circuit 
concluded that "[i]n this statutory context, it is most natural 
to read reimbursement as a particular type of payment."  
17 
 
 
Sebelius, 638 F.3d at 31, 32.  As "[t]he Medicare statute 
equates reimbursement and payment and does not allow non-
providers to receive payments from Medicare," the Commonwealth 
could not recover directly from Medicare.  Id. at 31.  The First 
Circuit further noted that the Commonwealth "is not included 
among any of the express allowances in the Medicare statute for 
non-providers to receive payments."  Id. 
The First Circuit also provided an "alternative holding" 
that CMS's interpretation of its regulations as prohibiting 
direct reimbursement to State Medicaid agencies was entitled to 
deference.  Sebelius, 638 F.3d at 33.  In this regard, the First 
Circuit had a much more expansive record of the agency's 
interpretation than was presented to this court, including the 
letter dated December 2003, which stated that "there is no 
statutory authority under Medicare to allow a State to seek 
recovery and be paid directly from Medicare," as well as a 
letter from CMS to the Commonwealth dated June 2005 that 
reiterated that "there is no statutory authority for reimbursing 
Medicaid directly for services rendered to Medicare 
beneficiaries."  Id. at 34. 
Given the statutory language and CMS's regulatory guidance, 
the First Circuit determined that the Commonwealth could not 
seek direct reimbursement from Medicare but would instead need 
to utilize another means of recovery.  The First Circuit 
18 
 
 
determined that the Commonwealth could nonetheless recover 
reimbursements "by asking providers to return [S]tate Medicaid 
funds," as the Federal statutory scheme did not preclude 
MassHealth from doing so.  Id. at 32.  This procedure, known as 
demand billing, was apparently raised by CMS as a viable 
alternative to direct reimbursement from Medicare.  See id. at 
34.  The First Circuit also considered "CMS bound by its 
representation as to the mechanisms available for the 
Commonwealth to seek and recover reimbursement."   Id. at 36. 
In the wake of the First Circuit's decision, MassHealth 
began using demand billing to address the issue of retroactive 
dual eligibles.  As discussed, under this method of recovery, 
MassHealth requests that the provider submit a bill to Medicare 
and repay MassHealth once Medicare has paid the provider.  
According to MassHealth, this solution works, but only to a 
point.  Because Medicare requires that providers submit claims 
within twelve months of the date of service, MassHealth asserts 
that it cannot rely on demand billing where a Medicaid recipient 
becomes retroactively eligible for Medicare more than twelve 
months after the day of service, unless the State first voids 
the Medicaid payment. 
iv.  Amendment of Medicare regulation.  A few months before 
the First Circuit issued its decision, a Federal Medicare 
regulation pertaining to the deadline for filing certain 
19 
 
 
Medicare claims was amended, effective January 1, 2011.7  The 
amendment followed the passage of the Affordable Care Act, which 
had altered Medicare filing deadlines.8  See Pub. L. No. 111-148, 
                     
7 The regulation applies to both services furnished under 
Part A of Medicare as well as services furnished under Part B, 
where applicable.  See 75 Fed. Reg. 73170, 73450 (Nov. 29, 
2010).  See Briggs v. Commonwealth, 429 Mass. 241, 243 (1999) 
("Medicare Part A essentially covers hospital, post-hospital, 
and other inpatient services, and coverage is automatic. . . . 
Medicare Part B is a supplemental, voluntary insurance program 
providing coverage for physician and outpatient services" 
[citation and footnote omitted]). 
 
8 In their entirety, the two filing exceptions under 42 
C.F.R. § 424.44(b)(2)-(b)(3) (2019) provide: 
 
"(2) The time for filing a claim will be extended if CMS or 
one of its contractors determines that a failure to meet 
the deadline in paragraph (a) of this section is caused by 
all of the following conditions: 
 
"(i) At the time the service was furnished the beneficiary 
was not entitled to Medicare. 
 
"(ii) The beneficiary subsequently received notification of 
Medicare entitlement effective retroactively to or before 
the date of the furnished service. 
 
"(3) The time for filing a claim will be extended if CMS or 
one of its contractors determines that a failure to meet 
the deadline in paragraph (a) of this section is caused by 
all of the following conditions: 
 
"(i) At the time the service was furnished the beneficiary 
was not entitled to Medicare. 
 
"(ii) The beneficiary subsequently received notification of 
Medicare entitlement effective retroactively to or before 
the date of the furnished service. 
 
20 
 
 
§ 6404(a)(1), 124 Stat. 767 (2010).  The regulatory amendments 
allowed for new exceptions to the Medicare filing deadline in 
light of these statutory changes. 
The first exception provides that the filing deadline will 
be extended if the failure to meet the deadline is due to the 
fact that:  "(i) [a]t the time the service was furnished the 
beneficiary was not entitled to Medicare;" and "(ii) [t]he 
beneficiary subsequently received notification of Medicare 
entitlement effective retroactively to or before the date of the 
furnished service."  42 C.F.R. § 424.44(b)(2).  In such 
                     
"(iii) A State Medicaid agency recovered the Medicaid 
payment for the furnished service from a provider or 
supplier 6 months or more after the service was furnished." 
 
The extensions afforded to each exception are as follows: 
 
"(ii) If CMS or one of its contractors determines that both 
of the conditions are met in paragraph (b)(2) of this 
section but that all of the conditions in paragraph (b)(3) 
are not satisfied, the time to file a claim will be 
extended through the last day of the sixth calendar month 
following the month in which either the beneficiary or the 
provider or supplier received notification of Medicare 
entitlement effective retroactively to or before the date 
of the furnished service. 
 
"(iii) If CMS or one of its contractors determines that all 
of the conditions are met in paragraph (b)(3) of this 
section, the time to file a claim will be extended through 
the last day of the sixth calendar month following the 
month in which the State Medicaid agency recovered the 
Medicaid payment for the furnished service from the 
provider or supplier." 
 
42 C.F.R. § 424.44(b)(5). 
21 
 
 
instances, the filing deadline will be extended six months from 
the date that the beneficiary or provider is notified of 
retroactive Medicare entitlement.  42 C.F.R. § 424.44(b)(5)(ii). 
The second exception provides that the filing deadline will 
be extended if the failure to meet the deadline is due to the 
above two conditions, along with a third condition:  that the 
"State Medicaid agency recovered the Medicaid payment for the 
furnished service from a provider or supplier [six] months or 
more after the service was furnished" (emphasis added).  42 
C.F.R. § 424.44(b)(3).  In such instances, the filing deadline 
will be extended six months from the date "in which the State 
Medicaid agency recovered the Medicaid payment for the furnished 
service from the provider or supplier" (emphasis added).  42 
C.F.R. § 424.44(b)(5)(iii).  The reference to providers in 42 
C.F.R. § 424.44(b)(3) explicitly contemplates that State 
Medicaid agencies will recover a payment from a health care 
provider where an individual becomes retroactively dual eligible 
for Medicaid and Medicare.  This particular exception to the 
filing deadline is designed to allow for providers to recover 
from Medicare in such instances, where their claim would 
otherwise be barred by the passage of time.  The Commonwealth 
contends that our ruling in Atlanticare I, which requires 
MassHealth to seek reimbursement directly from Medicare, not the 
provider, precludes the use of this procedure. 
22 
 
 
v.  Proceedings leading to the instant appeal.  On 
September 28, 2018, the defendant filed a motion for relief from 
the judgment in light of the First Circuit's decision and the 
regulatory amendment to 42 C.F.R. § 424.44.  The motion was 
denied.  The defendant appealed, and we granted the defendant's 
application for direct appellate review. 
MassHealth seeks a modification of the declaratory judgment 
such that it may seek reimbursements from providers, rather than 
continuing to seek reimbursements directly from Medicare and 
other liable third parties.9  The agency estimates that it is 
unable to recover approximately $5.3 million per year in claims 
that should have been paid out by Medicare once a recipient's 
retroactive dual eligibility became known.  MassHealth also has 
indicated that it is unaware of any State that faces the same 
prohibition on recovering Medicaid payments directly from 
providers.10 
                     
9 Although MassHealth requests the ability to seek 
reimbursement from providers as a general matter, MassHealth 
contends that such a modification of the judgment would have 
"little, if any" impact on providers where the third-party 
insurer is not Medicare.  This is because MassHealth already has 
a direct right of recovery against non-Medicare insurers under 
G. L. c. 118E, § 22, and MassHealth contends that it has a 
general practice of seeking payment directly from the private 
insurers themselves, rather than from providers. 
 
10 CMS apparently represented to the First Circuit that the 
"standard procedure across the country" for recovering 
reimbursements from Medicare is to employ demand billing.  
23 
 
 
The agency contends that, in light of the First Circuit's 
ruling, it has been placed in an untenable position of 
attempting to follow two contradictory holdings:  this court's 
ruling in Atlanticare I that MassHealth must seek reimbursements 
directly from liable third parties, and the First Circuit's 
ruling that MassHealth is prohibited from seeking reimbursements 
directly from Medicare. 
2.  Discussion.  a.  Standard of review.  The defendant 
seeks a modification of the declaratory judgment pursuant to 
Mass. R. Civ. P. 60 (b) (5).  Rule 60 (b) (5) allows the court 
to relieve a party from a final judgment where "a prior judgment 
upon which it is based has been reversed or otherwise vacated, 
or it is no longer equitable that the judgment should have 
                     
Sebelius, 638 F.3d at 36 n.13.  By contrast, MassHealth asserts 
that it is aware of nine other States that seek reimbursement 
directly from the provider where Medicare is the retroactively 
liable third party:  Maine, Vermont, California, Ohio, 
Pennsylvania, Alabama, Wyoming, Michigan, and Minnesota.  
MassHealth has further indicated that it is unaware of any State 
that requires its State Medicaid agency to seek reimbursements 
from Medicare directly. 
 
It would appear, however, that a few States do in fact 
require their State Medicaid agency to pursue Medicare directly.  
See Tex. Government Code § 531.0392 (b) (2020) ("The commission 
shall obtain Medicaid reimbursement from each fiscal 
intermediary who makes a payment to a service provider on behalf 
of the Medicare program").  See also South Dakota Admin. Rules 
§ 22:02:02:10 (2020) ("[A] county must pursue the availability 
of a third-party payment source . . . such as Medicare").  
Exactly how that is done is not clear from the record or the 
regulatory language. 
24 
 
 
prospective application."  As the 1973 Reporter's Notes 
indicate, Rule 60 (b) (5) is designed to allow "relief from a 
judgment which was valid and equitable when rendered but whose 
prospective application has, because of changed conditions, 
become inequitable."  Reporters' Notes (1973) to Rule 60, Mass. 
Ann. Laws Court Rules, Rules of Civil Procedure (LexisNexis 
2019).  The rule "derives from the traditional power of a court 
of equity to modify its decree in light of changed 
circumstances."  Mitchell v. Mitchell, 62 Mass. App. Ct. 769, 
778 (2005).  The moving party thus bears the burden of 
demonstrating a "significant change in circumstances warranting 
revision" of the judgment (quotations and citation omitted).  
Great Woods, Inc. v. Clemmey, 89 Mass. App. Ct. 788, 795 (2016).  
See MacDonald v. Caruso, 467 Mass. 382, 388-389 (2014).  One 
example of such changed circumstances would be a "later change 
in the law[,] such as when a statute is amended."  Clean Harbors 
of Braintree, Inc. v. Board of Health of Braintree, 415 Mass. 
876, 884–885 (1993).  See Horne v. Flores, 557 U.S. 433, 447-448 
(2009) (under Federal analog, changed circumstances, such as 
"changes in governing law or its interpretation by the courts," 
may "warrant reexamination of the original judgment"). 
The resolution of motions for relief from judgment "rests 
in the discretion of the trial judge."  Wojcicki v. Caragher, 
447 Mass. 200, 209 (2006).  Accordingly, the "denial of a motion 
25 
 
 
under Rule 60 (b) will be set aside only on a clear showing of 
an abuse of discretion."  Murphy v. Administrator of the Div. of 
Personnel Admin., 377 Mass. 217, 227 (1979). 
 
b.  Timing of motion.  As a threshold matter, the 
plaintiffs contend that the defendant's motion is untimely.  The 
plaintiffs note that both changed circumstances cited by 
MassHealth -- the amendment to 42 C.F.R. § 424.44 and the First 
Circuit's ruling -- occurred in 2011, seven years before 
MassHealth sought modification of the judgment.  The motion 
judge observed that MassHealth "has offered no reason for having 
waited seven plus years to bring the instant [m]otion," but did 
not go so far as to conclude that the motion was untimely. 
A motion under Mass. R. Civ. P. 60 (b) (4)-(6) must be made 
"within a reasonable time," which is to be determined in light 
of all of the circumstances of the case.  Such determinations, 
however, are "addressed solely to the judge's discretion."  
Chavoor v. Lewis, 383 Mass. 801, 805 n.4 (1981).  "In 
determining whether a motion was filed within a reasonable time, 
a judge may consider the reasons for delay; the ability of the 
movant to learn of the grounds earlier; prejudice to the 
parties, if any; and the important interest of finality."  Owens 
v. Mukendi, 448 Mass. 66, 74 (2006). 
There is no set formula for determining what constitutes a 
"reasonable time" for the purposes of Mass. R. Civ. P. 60 (b) 
26 
 
 
(4)-(6).  It is indisputable that a significant period of time 
elapsed between the First Circuit's ruling and the filing of the 
Rule 60 motion in this case -- indeed a much longer span of time 
than we have deemed unreasonable in other cases.  See Owens, 448 
Mass. at 76-77 and cases cited (delays of two or three years 
found to be unreasonable).  We consider this delay troubling to 
say the least, particularly given that MassHealth's 
justification for its failure to promptly seek modification of 
the judgment is somewhat murky.  At oral arguments, MassHealth 
suggested that the passage of the Affordable Care Act in 2010 
prompted a sea change in health care that required MassHealth to 
focus on more fundamental Medicaid issues, such as changes to 
eligibility requirements, and that this contributed to the 
lengthy delay in addressing the reimbursement issue.  We 
understand that the delay also may be due in part to 
MassHealth's concern that it would be asking this court to 
reconsider one of its own decisions -- indeed a decision that 
was unanimous, and in which the court summarily denied a 
petition for reconsideration, even after further regulatory 
guidance from CMS. 
More importantly, however, we recognize that clear 
resolution of this issue is critical, given the substantial 
amount of public funds at stake and the need to avoid 
conflicting interpretations by this court and the First Circuit 
27 
 
 
that would lead to confusion and administrative deadlock.  Cf. 
United States v. 119.67 Acres of Land, More or Less, Situated in 
Plaquemines Parish, State of La., 663 F.2d 1328, 1331 (5th Cir. 
1981) (motion filed under Fed. R. Civ. P. 60(b)(6) should not be 
dismissed as untimely "[g]iven the significant governmental and 
public rights involved in this controversy").  Moreover, the 
risk of prejudice to the plaintiffs of delay is diminished by 
the fact that MassHealth is only seeking a prospective 
modification of the declaratory judgment.  In light of the 
important interests at stake, the need for clarity, and the 
diminished risk of prejudice to the plaintiffs, we conclude that 
the motion is not untimely in the highly unusual circumstances 
of this case. 
 
c.  Existence of changed circumstances.  The judge below 
found that MassHealth had failed to demonstrate changed 
circumstances warranting modification of the declaratory 
judgment.  The judge observed that the relevant statutory 
provision at issue in Atlanticare I, 42 U.S.C. 
§ 1396a(a)(25)(B), had not been amended since this court's 
ruling.  Additionally, the motion judge noted that this court 
was at least aware of the possibility that MassHealth might be 
unable to recover reimbursements directly from Medicare, but 
issued the Atlanticare I decision nonetheless.  Finally, the 
motion judge concluded that the reference to provider-based 
28 
 
 
reimbursement in 42 C.F.R. § 424.44 was too vague to constitute 
explicit recognition of a State Medicaid's agency ability to 
pursue reimbursement from a provider where the third-party 
insurer is Medicare. 
To determine whether MassHealth has demonstrated a change 
in circumstances warranting a modification of the declaratory 
judgment, we first look to the circumstances as they existed at 
the time of our ruling in Atlanticare I.  As discussed, in 
Atlanticare I, 439 Mass. at 11, this court rejected MassHealth's 
argument that it was not possible to seek reimbursements 
directly from Medicare.  A number of reasons motivated this 
conclusion.  First, we observed that neither party had 
identified a Federal regulation specifically applicable to 
instances "in which Medicare has acknowledged a mistake in 
denying liability for a claim or has agreed to pay a claim 
retroactively."  Id.  Second, we identified two Federal cases, 
New York State Dep't of Social Servs. v. Bowen, 846 F.2d 129 (2d 
Cir. 1988), and Michigan Dep't of Social Servs. v. Shalala, 859 
F. Supp. 1113 (W.D. Mich. 1994), that "rejected the rationale 
underlying [MassHealth's] position."  Atlanticare I, supra at 
11-12.  At the same time, MassHealth had "cited no case that 
supports the proposition that it cannot pursue reimbursement 
from Medicare in the circumstances of this case."  Id. at 13.  
Third, we stated that while the HCFA had issued a letter in 1991 
29 
 
 
reflecting a "general position" that State Medicaid agencies 
could not recover from Medicare, we considered it "of no 
consequence that HCFA has not yet adopted the reasoning of 
another court to the contrary."  Id.  Fourth, we observed that 
"nothing in the record . . . suggest[s] that [MassHealth] has 
ever attempted to recover reimbursement from Medicare, or that 
it has been rebuffed in any attempts to do so."  Id.  And 
finally, both parties had conceded at oral arguments that "it 
might be possible for [MassHealth] to recover from Medicare."  
Id. at 11 n.14. 
Although our reasoning was understandable at the time, 
postjudgment legal developments have altered the basis for each 
of the rationales cited.  First, while the parties were unable 
to identify a Federal regulation that specifically addressed 
retroactive Medicare liability in the context of retroactive 
dual eligibles, the amended version of 42 C.F.R. § 424.44 now 
does so, albeit obliquely.11  While § 424.44 pertains to the 
filing deadline for Medicare claims, rather than the ability to 
pay out funds to State Medicaid agencies, it explicitly 
                     
11 The oblique nature of the reference is unsurprising, 
given that Medicare, much like Medicaid, is an incredibly 
complicated statutory scheme.  See Schweiker v. Gray Panthers, 
453 U.S. 34, 43 (1981).  The law that established both programs 
is known for its "Byzantine construction," id., which makes it 
"almost unintelligible to the uninitiated."  Id., quoting 
Friedman v. Berger, 547 F.2d 724, 727 n.7 (2d Cir. 1976), cert. 
denied, 430 U.S. 984 (1977). 
30 
 
 
contemplates that State Medicaid agencies will seek 
reimbursement from providers, and providers will seek payment 
from Medicare.  See Tarin v. Commissioner of the Div. of Med. 
Assistance, 424 Mass. 743, 751 (1997) (Federal Medicaid 
regulations entitled to substantial deference).  CMS's Medicare 
claims processing manual, dated January 21, 2011, similarly 
makes reference to a State Medicaid agency "recoup[ing] the 
money it paid the provider or supplier."  The April 2003 letter 
issued by CMS less than a month after our holding in Atlanticare 
I further reiterates that neither the Federal statutory scheme 
nor Federal regulations prohibit a State Medicaid agency from 
recovering its payment directly from the provider where the 
liable third party is Medicare.  Even more explicit, however, is 
CMS's December 2003 letter to MassHealth, which states that 
"there is no statutory authority under Medicare to allow a 
[S]tate to seek recovery and be paid directly from Medicare."  
In such instances, CMS stated, "the [S]tate may timely request 
the provider to submit a bill timely to Medicare."  A June 2005 
letter further confirmed that "there is no statutory authority 
for reimbursing Medicaid directly for services rendered to 
Medicare beneficiaries."  Sebelius, 638 F.3d at 34. 
As to the two cases we cited in support of MassHealth's 
ability to directly seek reimbursement from Medicare, subsequent 
developments in the case law constitute a clear change in 
31 
 
 
circumstances from Atlanticare I.  In New York State Dep't of 
Social Servs., 846 F.2d at 130, upon which this court relied in 
Atlanticare I, the United States Court of Appeals for the Second 
Circuit held that the State Medicaid agency had standing to 
appeal from the denial of nursing home patients' Medicare 
claims.  We cited that case as suggestive of a State Medicaid 
agency's authority to seek reimbursement directly from Medicare.  
Atlanticare I, 439 Mass. at 11.  More recently, however, in the 
context of Medicare claims for home health care services, the 
Second Circuit deferred to CMS's position that such claims must 
be filed by providers, not Medicare beneficiaries or State 
Medicaid agencies.  Leavitt, 428 F.3d at 146.  See also 
Charlotte-Mecklenburg Hosp. Auth. v. North Carolina Dep't of 
Health & Human Servs., 201 N.C. App. 70, 77 (2009) ("only 
providers of services can submit Medicare reimbursement claims 
on behalf of Medicaid recipients later determined to be eligible 
for Medicare").  In so holding, the Second Circuit concluded 
that State Medicaid agencies could obtain reimbursements from 
providers using demand billing.  See Leavitt, supra at 149. 
Of course, the most obvious, significant change in the case 
law since Atlanticare I is that the First Circuit has now 
definitively stated that MassHealth may not seek reimbursement 
directly from Medicare.  Notably, although CMS's predecessor, 
HCFA, was not a party to Atlanticare I and did not submit an 
32 
 
 
amicus brief to the court, CMS was a party to the First Circuit 
litigation and was able to outline the agency's position 
unequivocally.  It is clear from the Sebelius litigation that 
CMS takes the position that State Medicaid agencies may not 
pursue reimbursement directly from Medicare. 
Finally, the record before us is now clear that MassHealth 
has attempted to recover from Medicare directly and has been 
unable to do so.  Initially, this was only because CMS took a 
stance that Medicare could not pay out funds to MassHealth, but 
CMS's view has now also been endorsed by the First Circuit.  In 
sum, post-Atlanticare I changes to the Federal law have made 
clear what remained ambiguous at the time of our prior decision 
-- that it is not possible for MassHealth to recover from 
Medicare directly. 
Despite these significant developments in the years since 
Atlanticare I, the plaintiffs reiterate that the language of 42 
U.S.C. § 1396a(a)(25)(B) has not changed, and the Federal 
Medicaid regulations in place at the time were adequate to 
indicate that direct recovery was not going to be possible.  For 
the reasons discussed supra, however, we consider the law to 
have changed significantly, or at least to have been 
significantly clarified, since our original decision. 
The plaintiffs also rely on our previous discussion of the 
cost-benefit analysis requirement in Atlanticare I, arguing that 
33 
 
 
this requirement would serve little purpose if State Medicaid 
agencies were allowed to seek reimbursement from providers, 
rather than from liable third parties.  The statute premises 
reimbursement on a finding that "the amount of reimbursement the 
State can reasonably expect to recover exceeds the costs of such 
recovery."  42 U.S.C. § 1396a(a)(25)(B).  As we observed in 
passing in Atlanticare I, if a State Medicaid agency is able to 
seek reimbursement from a provider, "realistically, there are 
few instances in which the cost of such recovery would exceed 
the amount of the recovery."  Atlanticare I, 439 Mass. at 7.  
Thus, we reasoned, if Congress intended to allow State Medicaid 
agencies to seek reimbursement from providers, this provision 
would be rendered "largely superfluous," as the cost-benefit 
analysis would reliably weigh in favor of seeking reimbursement.  
Id. 
Although the regulations are less than clear about which 
party's costs need to be considered, we recognize that 
MassHealth would be unlikely to consider reimbursement not cost 
effective if it could simply shift the costs of recovery to the 
providers.  With that consideration in mind, however, and after 
reviewing the regulations, we conclude that the costs to 
providers may and should be given consideration. 
The regulations indicate that seeking reimbursement is 
considered cost effective where "the amount [the State Medicaid 
34 
 
 
agency] reasonably expects to recover will be greater than the 
cost of recovery."  42 C.F.R. § 433.139(f)(1).  The regulations 
do not, however, define the scope of what fairly may be 
considered in calculating the "cost of recovery."  Further, 
where a State requests a waiver of the sixty-day deadline for 
seeking reimbursement due to lack of cost effectiveness, see 
note 4, supra, the regulation explains that providing adequate 
documentation of such would include "costs associated with 
billing, claims recovery data, and a State analysis documenting 
a cost-effective alternative."  42 C.F.R. § 433.139(e)(1)(ii).  
Albeit that these examples are in reference to requesting a 
waiver of the sixty-day deadline, we find these examples also to 
be illustrative of the kinds of information that may be 
considered in conducting a cost-benefit analysis for the purpose 
of seeking reimbursement; and two of the three examples provided 
easily could pertain to the costs associated with providers.  
Thus, we conclude that when MassHealth seeks to recover payments 
made to providers and require them to seek reimbursement from 
Medicare, any associated costs to providers of doing so may be 
properly considered. 
That being said, this factor does not change our analysis 
in this case.  In the original administrative proceedings from 
which this case originates, testimony was heard as to the nature 
of the burden placed on providers who had been tasked with 
35 
 
 
chasing after third parties for payment.  No evidence has been 
included in the record presently before this court as to the 
administrative cost that would be placed on providers of 
pursuing Medicare, or the extent to which such costs would be 
offset by the increased compensation rate from Medicare.  
Moreover, it is unclear to what extent the costs of recovery may 
be substantially alleviated by the use of computerized 
recordkeeping and data storage, something that is much more 
widespread now than at the time of our original decision. 
In sum, given subsequent developments in the Federal law –- 
primarily, the additional administrative guidance from CMS, the 
First Circuit's ruling in Sebelius, and the amendments to 42 
C.F.R. § 424.44 -- we conclude that it was an abuse of 
discretion to find that MassHealth had failed to show a change 
in circumstances since Atlanticare I.  Medicaid is designed to 
be a payer of last resort, and it would be "illogical to suggest 
. . . that the statutory and regulatory scheme of Medicare 
abrogates" this principle.  New York Dep't of Social Servs., 846 
F.2d at 134.  Because MassHealth cannot recover reimbursements 
directly from Medicare, the best way to harmonize these 
statutory schemes is to conclude that while State Medicaid 
agencies are generally expected to seek reimbursements directly 
from liable third parties, the State agency may instead seek 
reimbursement from the provider if the liable third party is 
36 
 
 
Medicare.  Cf. Leavitt, 428 F.3d at 146 (deference to agency 
interpretation particularly warranted where it provides 
"reasonable resolution of an apparent conflict" between two 
Federal regulations). 
 
d.  Modification of judgment.  Separate and apart from the 
issue of changed circumstances, the motion judge also concluded 
that the agency's proposed modification of the judgment was not 
"suitably tailored" to any such change in circumstances.12  The 
judge observed that while MassHealth relied on Medicare-related 
developments to justify its request for modification, MassHealth 
nonetheless sought a wholesale reversal of Atlanticare I as it 
pertained to all liable third parties. 
We agree that MassHealth's proposed modification sweeps too 
broadly.  In its motion, MassHealth requests modification of the 
judgment "so that MassHealth may resume enforcing a regulation 
(now codified at 130 [Code Mass. Regs.] § 450.316(F)) in order 
                     
12 The motion judge's reference to "suitable tailoring" 
derives from jurisprudence concerning the Federal analog to 
Mass. R. Civ. P. 60.  See Rufo v. Inmates of Suffolk County 
Jail, 502 U.S. 367, 391 (1992).  The parties adopt this standard 
in their briefing as well.  Under Fed. R. Civ. P. 60, once a 
moving party has satisfied its burden of demonstrating changed 
circumstances, the court must "determine whether the proposed 
modification is suitably tailored to the changed circumstance."  
Rufo, supra at 391.  We have cited to Rufo in the context of 
discussing Mass. R. Civ. P. 60, but we have never explicitly 
adopted a "suitable tailoring" requirement.  See MacDonald v. 
Caruso, 467 Mass. 382, 388 (2014).  For the purposes of this 
decision, we assume, without deciding, that suitable tailoring 
is required under our rule as well. 
37 
 
 
to pursue reimbursement from a previously-paid provider when a 
third party entity becomes retroactively liable."  Yet 
enforcement of the regulation as written would apply to all 
post-payment third-party reimbursements, not just those sought 
from Medicare.  As discussed supra, the changed circumstances 
that warrant a modification of the judgment pertain specifically 
to retroactive Medicare liability, not all third-party 
liability.  MassHealth has further failed to provide a rationale 
for modifying the judgment beyond its applicability to Medicare 
reimbursements.  Indeed, in its reply brief, MassHealth 
indicates that this is a nonissue for other third parties 
because MassHealth already has a direct right of recovery 
against non-Medicare insurers under G. L. c. 118E, § 22, and 
MassHealth has a general practice of seeking payment of 
liabilities due to third-party insurance coverage directly from 
the insurers themselves, rather than from providers. 
To determine the appropriate scope of modification of the 
judgment, we therefore examine the practical impact of the 
changed circumstances on the administrability of the final 
judgment.  In the wake of the First Circuit's ruling, MassHealth 
cannot recover reimbursements directly from Medicare for 
services provided to retroactive dual eligibles.  MassHealth 
currently utilizes demand billing instead –- a process by which 
MassHealth requests that the provider submit a bill to Medicare 
38 
 
 
and repay MassHealth once Medicare has paid the provider.  
MassHealth asserts that this solution does not permit MassHealth 
to pursue reimbursements where retroactive Medicare eligibility 
is discovered more than twelve months after the service was 
performed, in light of Medicare's twelve-month filing deadline.  
MassHealth notes that the Medicare filing deadline exception 
outlined in 42 C.F.R. § 424.44(b)(3), which is designed to 
address reimbursements to State Medicaid agencies, is contingent 
upon the State first voiding the Medicaid payment.13 
                     
13 Neither party addresses the Medicare filing deadline 
exception contained within 42 C.F.R. § 424.44(b)(2).  This 
exception is not contingent upon the voiding of the Medicaid 
payment, unlike the exception provided by 42 C.F.R. 
§ 424.44(b)(3), and triggers a six-month extension of the filing 
deadline from the date that the beneficiary or provider was 
notified of Medicare entitlement.  Indeed, CMS explicitly 
declined to "create an additional exception [to the regulation] 
to permit providers and suppliers to submit claims for services 
at the request of a Medicaid State Agency prior to the State 
Medicaid Agency actually recovering the payment," because CMS 
believed the exception under 42 C.F.R. § 424.44(b)(2) was 
sufficient to account for such instances.  75 Fed. Reg. 73448-
73449 (Nov. 29, 2010).  Title 42 C.F.R. § 424.44(b)(2) does not, 
however, provide as favorable of a filing deadline extension as 
42 C.F.R. § 424.44(b)(3).  This is because the six-month 
extension provided by 42 C.F.R. § 424.44(b)(2) commences as soon 
as the provider or beneficiary is notified of Medicare 
eligibility, while the six-month extension provided by 42 C.F.R. 
§ 424.44(b)(3) does not commence until MassHealth recovers the 
payment. 
 
We also note that neither party addressed the relevance of 
a Federal regulatory provision that appears to have contemplated 
that State Medicaid agencies would pursue a waiver of the sixty-
day deadline for seeking reimbursement where the liable third 
party is Medicare: 
39 
 
 
We conclude that changed circumstances justify the 
elimination of the restrictions imposed by Atlanticare I that 
declared that MassHealth does not have the authority to require 
that health care providers return payment to MassHealth in the 
event that Medicare is later identified as a liable third party.  
Those restrictions were imposed based on the incorrect 
assumption that MassHealth could and should pursue reimbursement 
directly from Medicare.  Given that MassHealth cannot pursue 
Medicare directly, and the permissible length of time for 
seeking reimbursements may be conditioned on whether MassHealth 
sought and received reimbursement from providers, see 42 C.F.R. 
§ 433.139(d)(2), we conclude that it is appropriate to modify 
the declaratory judgment to allow MassHealth to require 
reimbursement from providers where a health care service was 
rendered to an individual who retroactively became eligible for 
Medicare. 
As mentioned previously, the original declaratory judgment 
entered in this case provided as follows: 
                     
 
"An agency requesting a waiver of the requirements 
specifically concerning either the [sixty]–day limit in 
paragraph (d)(1) or (d)(2) of this section must submit 
documentation of written agreement between the agency and 
the third party, including Medicare fiscal intermediaries 
and carriers, that extension of the billing requirement is 
agreeable to all parties." 
 
42 C.F.R. § 433.139(e)(4). 
40 
 
 
"It is further DECLARED that [MassHealth] lacks the 
authority to implement 130 Code Mass. Regs. § 450.316(E) 
[now renumbered § 450.316(F)] to the extent that the 
regulation, by requiring hospitals to refund Medicaid 
payments to [MassHealth] after the hospitals have complied 
with [MassHealth]'s due diligence regulation (130 Code 
Mass. Regs. § 450.316) and received payment for their 
services from [MassHealth] and [MassHealth] subsequently 
learns that a third-party insurer (including Medicare) is 
responsible for payment for all or part of the hospital's 
services, is inconsistent with the Supreme Judicial Court's 
interpretation of 42 U.S.C. § 1396a(a)(25)(B)." 
 
The declaratory judgment is to be modified so as to excise the 
parenthetical "(including Medicare)" and to append the following 
statement to the end of the declaration:  "Notwithstanding the 
above, MassHealth retains the authority to implement 130 Code 
Mass. Regs. § 450.316(E) [now renumbered § 450.316(F)] if the 
third-party insurer is identified as Medicare.  In accordance 
with § 450.316(F), MassHealth may require a provider to 
reimburse MassHealth where a health care service was rendered to 
an individual who later became retroactively eligible for 
Medicare.  The provider must then bill Medicare before 
resubmitting a claim to MassHealth."  This modification shall be 
prospective only, applicable to reimbursements sought for 
services performed subsequent to the date of this decision. 
3.  Conclusion.  For the foregoing reasons, we conclude 
that changed circumstances require modification of the 
declaratory judgment entered pursuant to our holding in 
Atlanticare I.  Accordingly, we order that this case be remanded 
41 
 
 
to the Superior Court for modification of the judgment in 
accordance with this opinion. 
 
 
 
 
 
 
So ordered.