Medical Malpractice, Medicare Set Aside Arguments

Posted by Matthew Garretson

Question:
I thought I was quite secure in my understanding that the Medicare Set Aside rules ONLY apply to workers compensation recoveries. I have argued the matter before, and haven't had to challenge my mind on this for awhile.

However, after checking the statute and confirming the above opinion as statutorily sound, I have learned from an esteemed colleague that CMS has indeed asserted a Set-aside requirement out of a completed settlement in a non-workers’ compensation matter. The attorney who is dealing with this tells me he has spoken with the CMS rep, and has cited the statute and reg to her, and they still assert entitlement to this abomination. Have I been wrong? Is there some right to set aside in our med mal cases, etc.? If so, there may be a hell of a lot of changes I need to make in my demands or case selection.

-Missiouri Attorney

Answer:
I sent the message below in response to a Medical Malpractice Listserv posting related to this topic last month. It might be helpful:

It would be very rare that a Liability Medicare Set Aside (LMSA) would be required under those facts. The Medicare Set Aside obligation is unique as it applies to a liability settlement as opposed to the traditional application in a workers’ compensation (“WC”) settlement. A WC settlement (with its two distinct components - indemnity and medical damages) has a definitive shift of future health care obligation (from the carrier to Medicare) which carries a clear obligation to protect Medicare’s interest in cases involving a plaintiff entitled (or soon to be entitled) to Medicare. In WC settlements involving Medicare beneficiaries, federal regulations provide that the obligation for work-related injury medical expenses should not be shifted to Medicare from the responsible party. Accordingly, a portion of a Medicare beneficiary’s workers’ compensation settlement must be set aside to pay for the beneficiary’s future work related injury and / or illness. Federal regulations also provide that Medicare will not pay for any medical expenses for the work-related injury or illness until the amount allocated to future medical expenses is exhausted. Medicare has a formalized guidance and protocol established for workers’ compensation settlements to ensure the agency’s interests are protected. Formalized guidance and protocol, however, is not available for liability settlements.

Satisfying Medicare’s interest for future injury-related care in liability settlements has a myriad of variables which don’t exist in WC (economic and non-economic damages, derivative claims, and other factors confounding recovery including, but not limited to caps, and policy limits). These factors make it much more difficult for the Centers for Medicare & Medicaid Services (CMS) to determine the amount allocated for future medical expenses. The only liability cases wherein Medicare contends that it is clear an obligation exists is a case involving a Medicare beneficiary where there is a defined judicial allocation for future medicals (i.e. an interrogatory / verdict sheet with a definitive allocation for future medicals). These cases are obviously the exception and not the norm. More commonly, liability cases settle with a broad, general release. When we evaluate such cases, we employ the appropriate standard of “properly considering Medicare’s interest.” The determining factors include:

• Is the Client currently entitled to Medicare?
• Was it a pure Liability case? Was there any workers compensation component?
• What was plead & released (indemnity & meds only, specific allocations? Etc.)
• Has the settling parties properly satisfied Medicare’s conditional payments (date of injury through date of settlement?
• Who has been paying for injury related care?
• Will there be future injury related care (treatment, management, drugs)? (If not, obtain a treating physician letter)
• Will Medicare now (after the settlement) be absorbing the burden?
• What documentation exists concerning the types of damages being released? (Certainly the settling parties should heavily document their files and incorporate language into the settlement documents explaining how they have “considered Medicare’s interests.” Examples include: Complete analysis and allocation by qualified “MSA” professional / vendor and / or letters from treating physicians supporting that no future injury-related care is necessary or supporting small costs only)
  

Based upon the facts you provide (and assuming the liability settlement is below $1M in gross recovery), at face value your case does not look like an LMSA candidate. Of course, the appropriate measures need to be taken to reimburse Medicare for past injury-related care and I recommend that you memorialize in your file the internal evaluation in regards to the necessity of an LMSA. Also, given the clients age, I am also mindful of Medicare’s limited coverage of nursing home care – Certainly your client may exhaust the settlement proceeds on the nursing home care and may need to explore alternative nursing home coverage via Medicaid or other programs.

As a final note, for cases in which the above analysis does trigger a concern in a liability case, we typically gather the necessary case detail to generate a neutral damages / recovery evaluation. This evaluation produces a determination identifying the appropriate (if any) future medical allocation (FMA). At this point, we perform a future cost of care analysis (FCC) which will identify the injury-related care for which Medicare would otherwise pay. We then recommend the liability Medicare set aside of the lesser of the two numbers. Furthermore, we evaluate and provide a recommendation as to the need to pursue Centers for Medicare & Medicaid Services (CMS) approval. Again, such cases are the exception and not the norm.

I hope this information is helpful.

Medical Malpractice, Medicare Set Aside

Posted by Matthew Garretson

Question:
I need some advice. Here is my situation. I represent a lady (80 years old) who was given a medication to which she had a known and documented allergy. She has a terrible reaction, suffers multi-organ failure and a mini-stroke. She spends a week in the hospital and is discharged to a nursing home where she will live the rest of her life. I have reached a settlement with the doctor who prescribed the medication and the case is pending against the pharmacy that dispensed the medication.

I have a conditional payment letter from Medicare claiming $7,000. What happens if Medicare is paid the final amount of its claimed lien but the client suffers complications from the mini-stroke (i.e. - falls and breaks a hip) a year or more from now and is readmitted to the hospital and incurs bills of $50,000 which are paid by Medicare? Does the client (and my firm) risk Medicare coming after us for more money to pay these future bills which "might" be related to the negligence/original injury and settlement? Should all of the settlement proceeds go into a Medicare Set Aside Trust? Thanks for any and all suggestions.

-Virginia Attorney

Answer:
It would be very rare that a Liability Medicare Set Aside (LMSA) would be required under those facts. The Medicare Set Aside obligation is unique as it applies to a liability settlement as opposed to the traditional application in a workers’ compensation (“WC”) settlement. A WC settlement (with its two distinct components - indemnity and medical damages) has a definitive shift of future health care obligation (from the carrier to Medicare) which carries a clear obligation to protect Medicare’s interest in cases involving a plaintiff entitled (or soon to be entitled) to Medicare. In WC settlements involving Medicare beneficiaries, federal regulations provide that the obligation for work-related injury medical expenses should not be shifted to Medicare from the responsible party. Accordingly, a portion of a Medicare beneficiary’s workers’ compensation settlement must be set aside to pay for the beneficiary’s future work related injury and / or illness. Federal regulations also provide that Medicare will not pay for any medical expenses for the work-related injury or illness until the amount allocated to future medical expenses is exhausted. Medicare has a formalized guidance and protocol established for workers’ compensation settlements to ensure the agency’s interests are protected. Formalized guidance and protocol, however, is not available for liability settlements.

Satisfying Medicare’s interest for future injury-related care in liability settlements has a myriad of variables which don’t exist in WC (economic and non-economic damages, derivative claims, and other factors confounding recovery including, but not limited to caps, and policy limits). These factors make it much more difficult for the Centers for Medicare & Medicaid Services (CMS) to determine the amount allocated for future medical expenses. The only liability cases wherein Medicare contends that it is clear an obligation exists is a case involving a Medicare beneficiary where there is a defined judicial allocation for future medicals (i.e. an interrogatory / verdict sheet with a definitive allocation for future medicals). These cases are obviously the exception and not the norm. More commonly, liability cases settle with a broad, general release. When we evaluate such cases, we employ the appropriate standard of “properly considering Medicare’s interest.” The determining factors include:

• Is the Client currently entitled to Medicare?
• Was it a pure Liability case? Was there any workers compensation component?
• What was plead & released (indemnity & meds only, specific allocations? Etc.)
• Has the settling parties properly satisfied Medicare’s conditional payments (date of injury through date of settlement?
• Who has been paying for injury related care?
• Will there be future injury related care (treatment, management, drugs)? (If not, obtain a treating physician letter)
• Will Medicare now (after the settlement) be absorbing the burden?
• What documentation exists concerning the types of damages being released? (Certainly the settling parties should heavily document their files and incorporate language into the settlement documents explaining how they have “considered Medicare’s interests.” Examples include: Complete analysis and allocation by qualified “MSA” professional / vendor and / or letters from treating physicians supporting that no future injury-related care is necessary or supporting small costs only)
  

Based upon the facts you provide (and assuming the liability settlement is below $1M in gross recovery), at face value your case does not look like an LMSA candidate. Of course, the appropriate measures need to be taken to reimburse Medicare for past injury-related care and I recommend that you memorialize in your file the internal evaluation in regards to the necessity of an LMSA. Also, given the clients age, I am also mindful of Medicare’s limited coverage of nursing home care – Certainly your client may exhaust the settlement proceeds on the nursing home care and may need to explore alternative nursing home coverage via Medicaid or other programs.

As a final note, for cases in which the above analysis does trigger a concern in a liability case, we typically gather the necessary case detail to generate a neutral damages / recovery evaluation. This evaluation produces a determination identifying the appropriate (if any) future medical allocation (FMA). At this point, we perform a future cost of care analysis (FCC) which will identify the injury-related care for which Medicare would otherwise pay. We then recommend the liability Medicare set aside of the lesser of the two numbers. Furthermore, we evaluate and provide a recommendation as to the need to pursue Centers for Medicare & Medicaid Services (CMS) approval. Again, such cases are the exception and not the norm.

I hope this information is helpful.

Medicare Lien Question

Posted by Matthew Garretson & Mary Skinner

Question:
Matt, Read your very fine article on Medicare Reimbursements in AAJ Section Connection…

Question: I resolved a S/F case down here in Florida. Client was operated on at a private charitable hospital run by Catholic Health. Surgery was elective but needed to repair torn rotator cuff. Hospital took Medicare info at admission. A few weeks after surgery (Feb. ‘06), I wrote for hospital records, etc.

Hospital then filed lien for full amount of bill (27K). I called hospital attorney and was told that hospital did not have to file with Medicare and that they would wait as long as it took for me to settle the case.

In reading your article, I question whether this is correct. Our jurisdiction does have a hospital lien law that protects most hospitals. However, I was under the impression, perhaps incorrect, that if the provider was a participating provider that they could not bill the patient. Again, date of accident was Dec. ‘05 and date of service was in Feb. ‘06. Hospital says they had option of billing Medicare or filing lien and waiting for settlement (which did occur a year later). Thanks for your reply and citations, if available.

-Florida Attorney

Answer:
I am happy to try to help. Mary Skinner, our Manager of Medicare Services, may have some additional insights. Also, I wanted to make sure that you had seen [pages 2 and 3 of the document I sent you] that speak to this issue of Medicare’s new policy (May 2006) allowing providers to wait and bill the beneficiary for the actual charges. Previously, participating providers were required to bill Medicare. See CR 4024, Transmittal 49, updating Pub 100-05 Medicare Secondary Payer, April 7, 2006. I believe the hospital is correct. If your client hasn’t signed the settlement agreement yet, you might tell the hospital that client will not sign unless hospital submits to Medicare b/c that is the only way she can be ensured an acceptable net settlement. (i.e. telling the hospital that it has everything to loose). Hope this info helps.

-Matt Garretson


The hospital is correct, please see below. However, the hospital may not demand payment from the beneficiary until the beneficiary has possession of the settlement proceeds.

-Mary Skinner

Provider/Supplier Billing in MSP Liability Accident Situations

The following is to explain Medicare policy with respect to provider and supplier billing options when Medicare is secondary payer to liability insurance. This article pertains to liability insurance only and does not pertain to Med-Pay/no-fault insurance.

Where a provider/supplier has reason to believe that it provided services to a Medicare beneficiary for which payment under liability insurance may be available, the provider/supplier;

· Within the first 120-days, must bill only the liability insurer, unless it has evidence that the liability insurer will not pay within the 120-day period. If the provider/supplier has such evidence, it may bill Medicare for conditional payment, provided it supplies documentation to support the fact that payment will not be made within 120 days.
· After the 120-day period has ended, the provider may, but is not required to, bill Medicare for conditional payment if the liability insurance claim is not finally resolved.
· If the provider/supplier chooses to bill Medicare, it must withdraw claims against the liability insurer or any lien that was placed on the beneficiary’s settlement.
· If the provider/supplier chooses to continue its claim against the liability insurance settlement, it may not also bill Medicare. (Note: Medicare timely filing limitations in 42 CFR 424 continue to apply. If a provider or supplier chooses not to bill Medicare during the Medicare filing period, it may not bill Medicare after this period has expired even if it is unable to collect from the proceeds of the liability insurance settlement.)

The provider or supplier may not collect payment from the beneficiary until after the proceeds of liability insurance are available to the beneficiary. Liability insurance is not the primary payer until after payment is made by liability insurance. If the liability insurance payment is made to the beneficiary, the provider may accept money from the beneficiary only if the beneficiary voluntarily makes payment. The provider can in no way demand payment from the patient.

After receiving payment from the liability insurance company, the provider must submit an MSP bill. Providers should submit an MSP bill even if payment in full was received and Medicare will not be making any payment, as the patient’s Medicare utilization will be updated.

Providers/suppliers that choose to bill Medicare must accept the Medicare approved amount as payment in full and may charge beneficiaries only for deductible, coinsurance, and non-covered items or services.

Providers/suppliers that choose to pursue liability insurance may charge beneficiaries actual charges, up to the amount of the proceeds of the liability settlement but may not collect payment from the beneficiary until after the proceeds of liability insurance are available to the beneficiary.

Where a provider/supplier chooses to bill Medicare for conditional payment, it must cease all attempts to collect payment from the proceeds of the liability settlement (including any liens it may have placed against any settlement). The continued pursuit of collection of payment of actual charges from the proceeds of liability insurance after the provider/supplier has billed Medicare violates the provider/participation agreement. Therefore, the collection of actual charges from the proceeds of liability insurance after Medicare has paid for the services is an incorrect collection.

By submitting the assigned bill, the provider or supplier voluntarily gave up its right to collect actual charges for Medicare covered services from the beneficiary (either directly from the beneficiary after settlement of the liability claim or indirectly from the liability insurance payer). Hence the provider or supplier no longer has a right to be paid in excess of the Medicare allowed amount and can bill the beneficiary only for the applicable deductible, coinsurance amounts and any non-covered amounts. The provider or supplier, in accord with its assigned claim, must refund the beneficiary any amount collected in excess of the Medicare payment for the services and amounts for which the beneficiary is otherwise liable.

If a provider/supplier receives payment form a liability insurer after having already billed Medicare for the services, the provider should:

Return the payment to the liability insurer; or,
Forward any payment received from the liability insurance company to the beneficiary. The provider may retain only the amount of any unpaid deductible, coinsurance, or non-covered services.

The provider must notify Medicare regarding details of the liability involvement/payment and Medicare will then recover its conditional payment(s) from the beneficiary.

The provider should not submit an adjustment (XX7) or cancel (XX8) type of bill in an effort to refund Medicare for services subsequently paid by liability insurance. AdminaStar Federal will accept a refund in the form of a check if the provider chooses to refund the payment made by Medicare. However, if the provider chooses to refund the Medicare payment, the provider may only retain from the liability payment, an amount equal to Medicare’s allowed amount. The provider must refund to the beneficiary the balance of the liability payment in excess of the Medicare allowed amount plus any amounts for which the beneficiary is otherwise liable (such as unmet deductible, coinsurance, and non-covered services). Providers that choose to refund the Medicare payment should utilize the Liability Data Worksheet to insure the payment is applied to the correct patient account.

Submitting a Conditional Claim upon Denial from the Liability Insurer
If the provider/supplier receives a denial from the liability insurance company, it may bill Medicare conditionally using the most appropriate denial code. To submit a conditional claim, use one of the appropriate denial codes along with an occurrence code 24 (date of denial). If there has not been a payment and 120 days have passed since the liability insurer was billed, you may use the DA denial code. When using the DA code, you will not use the occurrence code 24.

Medical Malpractice, Pennsylvania Medicaid

Posted by Matthew Garretson

Question:
We have mediation next week in an FTCA baby case pending in the Western District of Pennsylvania. I would like to discuss successful approaches with Pennsylvania Medicaid either in lien reduction or pouring the lien into a Special Needs Trust for repayment upon death or any other successful strategy. If you know anything that would be helpful I would appreciate a minute of your time.

-Washington D.C. Attorney

Answer:
After the Ahlborn decision last year, many states have scrambled to changes their legislative framework for dealing with liens. A couple months ago, Pennsylvania issued a policy statement which amends Title 55 of the Pennsylvania Code, Chapter 259. The statement explains how the Department will interpret and apply the requirements of 62 P.S. §1409(b) to be consistent with the Ahlborn decision. Pennsylvania believes their existing law is facially consistent with Ahlborn. Therefore, the statement of policy is to formally document the Department’s interpretation and establish procedures. The policy announces that §1409(b)(11), which limits the Department’s reimbursement to one-half of the beneficiary’s net recovery, is consistent with Ahlborn. Other parts of the statement seem to be directed at arguments presumably presented by attorneys to the Department in the aftermath of Ahlborn. Specifically, that the Medicaid “beneficiary generally recovers the Department’s expenses as part of his tort claim unless the Department chooses to intervene in an action of sue separately.” This statement precludes attorneys from arguing that medical expenses were not considered in the settlement, therefore, barring the Department’s recovery under Ahlborn. Additionally, the state has effectively inhibited “equitable apportionment” arguments. The policy asserts that under Pennsylvania law a settlement conclusively establishes the settlement as full compensation for damages. That is the full report as I know it.

Reimbursement Claim by Medicare Supplemental Carrier

Posted by Matthew Garretson

Question:
Matt - I very much appreciate your input on the AAJ list serves on the various reimbursement issues that plague us all. I was wondering if you have any insight on reimbursement claims by private insurers serving as Medicare supplemental coverage (part D?). I have a 99-year-old assisted living resident who was allowed to walk out of the facility unattended and fell and broke her hip and arm. Most of the bills for treatment have been paid by Kaiser Permanente under her supplemental coverage. They have a standard reimbursement provision in the summary plan description which I can easily get around under Georgia's anti-subrogation law. Question is does Kaiser get to piggyback on the Medicare regs so that I have to deal with them? Thanks for any insights.

-Georgia Attorney

Answer:
This is a big area of confusion and is a gray area. We have been seeking clarification directly from CMS on this issue, because it is clear that the Part C providers are not part of the federal agency system. However, I believe this (see below) is the position that Kaiser will take.

40 – Medicare Secondary Payer (MSP) Rules

(Rev. 76, Issued: 10-28-05, Effective Date: 10-28-05)

A state cannot take away an MA organization’s right under Federal law and the MSP regulations to bill, or to authorize providers and suppliers to bill, for services for which Medicare is not the primary payer. The MA organization may exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations at 42 CFR Part 411, Subparts B through D.

I think that the anti-subro should apply to them b/c they are private entities. However, I haven't yet gotten CMS to concede the point.

Medicare "lien" news/Help needed

Posted by Matthew Garretson

Question:
Last week, in one of the Medicare "administrative waiver" cases I am processing, I received from CMS a complete waiver of any Medicare reimbursement claim, based solely on the language of the Medicare statute and the state court post-settlement allocation order that I have been harping on lo these many years. My waiver request was not based on the economic hardship provisions of the federal regs, nor did I provide any of the client's financial information demanded on the Medicare waiver request form (SSA-632-BK).While it is gratifying that CMS has now evidently conceded on the merits of my argument, it raises some significant procedural questions for the pending federal court action that I had hoped would clear up the issue once and for all. Specifically, this is the first case I know of where Medicare has waived its claim based exclusively on the legal proposition that the federal MSP statute does not allow for reimbursement because medical expense recovery was precluded by the state collateral source statute.Have you, or has anyone you know, ever received a full Medicare reimbursement waiver based solely on submission of an allocation order in a PI (not wrongful death) case? Please contact me if you know of any such cases. Your answer will have important implications for the pending declaratory judgment action against Medicare.

-New Jersey Attorney

Answer:
It is hard to comment too much without seeing the allocation which triggered the waiver. If the state court allocated no proceeds to medicals... then I am not surprised Medicare waived... that's what they often do.

Don’t get me wrong - I think it is great news… However, I don’t think it is yet a clear policy change…

The following always has been the rule: Medicare is bound by an allocation that has been designated by a court on the merits of the case. “The only situation in which Medicare recognizes allocations of liability payments to non-medical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designates amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court's designation.” Medicare Intermediary Manual, § 3418.7.

Then, when considering whether or not to grant a waiver, the following documentation is requested:

1) Proof of payment for accident-related out-of-pocket medical expenses
2) Procurement costs
3) Expenses and income information that demonstrates financial hardship (if the beneficiary is alleging financial hardship)
4) Physician statements, if permanent disability is stated
5) Any other pertinent information required to make our determination

If you submit a valid court order on the merits of the case with the Waiver application, the reviewer could consider it under #5 above.

Those are my initial thoughts….

Obtaining Reduction for Attorney Fee

Posted by Mary Skinner

Question:
Matt, As you may recall, my office has reached a business arrangement with yours for resolution of liens relating to our nursing home clients. One of my [cases] is far enough advanced in the lien resolution process that it would be counterproductive/non-economical to refer to you.

Would you please advise me of the legal authority for obtaining a one-third reduction for the attorney fee? I know this is commonly done but would like to cite some support in my letter. Further, can I submit my request for this further reduction with my challenge letter versus the charges not causally/temporally related, or is this accomplished as a two step process after exclusion of charges for causal/time issues?

-New York Attorney

Answer:
1. The legal authority regarding Medicare’s pro rata offset can be found in Title 42 CFR 411.37(c), it stipulates that Medicare will recognize a proportionate share of the necessary procurement costs incurred in obtaining the settlement.

2. As for disputing unrelated charges and requesting the final demand all at once, yes it can be done, however, please be aware that if Medicare does not agree with your argument and does not remove the claims in dispute they will issue you the final demand which must be paid within 60 days or interest will accrue. If you are still in disagreement with Medicare’s final demand amount you can request a re-determination and you would need to submit additional information Medicare that was not sent in your original request for removal of the claims. Should you have any questions please contact me.

Med Mal / Medicare

Posted by Matthew Garretson

Question:
I have a 73-year-old client who was rear-ended in a motor vehicle accident. He eventually has a Lumbar Laminectomy; his insurance co-tenders UM policy limits of $100,000 prior to any suit being filed. No BI available. His total medical bills are $148,000. Can he submit medical bills to Medicare that exceeded his available UM policy limits? At this point, no bills have been submitted to Medicare, all his medicals are on LOP's.

-Florida Attorney

Answer:
Absolutely. A client's personal insurance is considered primary to Medicare. Both underinsured motorist and uninsured motorist are included in the definition of liability insurance for Medicare reimbursement purposes. If the limits of the UM policy have been tapped, Medicare would now be primary.

Keep in mind however that some Medicare providers have up to 27 months to submit bills to Medicare for payment. So, if some of those providers submit their bills to Medicare and Medicare pays (even after the UM policy limits are tendered), Medicare would have reimbursement claims for services that they paid for that occurred between date of injury and date of tender of UM.

Hope this info helps.

Medicare Compromise

Posted by Mary Skinner, Matthew Garretson

Question:
Matthew - You have been very helpful in your posts about Medicare, and I wonder if I might ask your input on a matter I am handling. I have a case with serious injuries and serious liability problems. I have a firm offer and want to ask Medicare to compromise. I don't think a full waiver is likely (the offer is $500K and the Medicare payments are about $148K). What is the process for asking for compromise (i.e., whom do I contact and what information do they need?)? Also, are they doing anything at this point in auto cases on future set asides? I have heard they really are only doing them in [workers compensation] at this point. My [client] has no plans for future care at this point, and it seems doctors have done what they can. Thanks for any pointers or info you can provide.

-Minnesota Attorney

Answer:
In those situations where a beneficiary has received a firm binding settlement offer, Medicare may enter into pre-settlement discussions regarding compromise of Medicare's claim against that firm binding settlement offer. A beneficiary has no further appeal rights if CMS and the beneficiary agree to a compromise. Mary Skinner, our manager of Medicare services may be able to provide you with information regarding the forms and contact info for requesting compromise.

With respect to set asides, you are correct; they are generally only required in WC settings. It is a very rare fact pattern wherein I would suggest a set aside for a liability case. You can find further detail in an article I recently published, Medicare’s Reimbursement Claim — The Only Constant Is Change. Hope this info helps.

-Matt Garretson

All pre-settlement compromise requests must be in writing and sent to the MSPRC (Medicare Contractor), they will forward your request to the CMS Regional office. However, due to the backlog that the MSPRC is currently in, I recommend that you also send your request directly to the Regional Office for the state that your client lives in. I will provide you with the address of the regional office where you need to send the request if you provide me with the state that your client resides in.

When submitting your request, craft a compelling story. Provide them with the facts of the case, the injuries your client sustained, the effect the injuries have had on your client financially (out of pocket expenses, such as non-covered medicals, home renovations, etc.) and their quality of life prior to the injury and after. Also, advise them what your client would use the settlement proceeds for should they compromise their lien. Medicare believes strongly in equity for equity, so if you were to reduce your fee or absorb some of the case expenses Medicare would look more favorably on your compromise request. If possible, provide any evidentiary documentation to support your request. Should you have any questions regarding the above information please contact me.

-Mary Skinner

Priority Among Liens

Posted by Matthew Garretson

Question:
Is there priority among liens? For example, if there is an ERISA "lien" and a federal (military) lien, is there priority among the liens? Our client switched insurance during treatment and has these two liens and a state hospital (statutory) lien. It would seem that the statutory liens take priority over the contractual or ERISA lien. Any thoughts?

-Arizona Attorney

Answer:
The following statement, recently made by the Texas Supreme Court in the context of an ERISA lien dispute, is a concise illustration of the priority of liens:

“The three varieties of subrogation—equitable, contractual, and statutory—represent three separate and distinct rights that, while related, are independent of each other. Independent, however, does not mean co-equal. We generally adhere to the maxim that “equity follows the law,” which requires equitable doctrines to conform to contractual and statutory mandates, not the other way around. Where a valid contract prescribes particular remedies or imposes particular obligations, equity generally must yield unless the contract violates positive law or offends public policy.” See Fortis Benefits v. Cantu, — S.W.3d —-, 2007 WL 1861000 (Tex.) (Jun 29,2007).

Statutory liens – such as Medicare, Medicaid, or VA/military liens, should have first priority. Following this are contractual liens such as ERISA liens, which must be based upon contractual terms, so long as those terms do not run afoul of statutory language. After that are equitable liens (not in the context of Sereboff v. Mid Atlantic, which also uses the term to describe a contractual lien which meets the definition of “equitable relief”) founded not in contract or statute, but mere principles of equity.

In our practice, which heavily revolves around lien resolution, we have always taken the stance with ERISA lien holders that while their lien may be valid, it must take a back seat to statutory governmental liens held by Medicare and Medicaid. It has also generally been our practice that among statutory liens, Medicare and VA/military liens generally have first priority since they are federal, then Medicaid as pursued by the state government, and finally hospital liens which, although statutory, are also private and take a back seat to public funds.

I hope this information helps.

Medicare Lien Issue

Posted by Matthew Garretson

Question:
Matt- Just saw your very helpful posting on Medicare lien issues that seem to abound. Can you give me your opinion on whether Medicare will voluntarily reduce its lien if the parties agree that a portion of the medical bills are not related to the actual malpractice?

We have a case involving a perforated esophagus that would have required hospitalization and potentially one month worth of medical bills if the perforation was diagnosed timely.

The patient was diagnosed late and therefore became septic, suffered complications, an extended hospital stay of 4 four months and finally deceased. There's about $1 million in hospital bills.

How is it possible to get Medicare to recognize that a portion of the bills is not related to the negligence or that some portion of its lien should not be part of the case?

Thanks for your help.

-New Hampshire Attorney

Answer:
As a starting, Medicare may claim a right of recovery based upon what was pled and what was released. Once you get the conditional payment, you would pull dates and diagnosis that fall outside of those "moving papers". I would make it easy on them - give them specific dates and ICD-9 codes that are related to the underlying/preexisting injury and should be removed as well as specific dates and ICD's related to complications and extended stay. If the Medicare contractor fails to get their head around the logic, you might have more success kicking it off the front-line case workers desk and on the desk of a waiver/compromise specialist. Then, pursue waiver based upon fair and equitable or out of pocket expenses (certainly you have a compelling story for either/both arguments).

Also, since the client died, keep in mind that Medicare's pot to target is limited by any allocation between the wrongful death and survivorship components... Medicare Secondary Payor rules (42 USC § 1395y(b)(2), 42 CFR §§ 411.24, 28) limit recovery to medical expenses incurred by the decedent. Medicare recovery does not extend to state-created rights for the decedent's family to recover for his or her wrongful death, unless your state statutes provide that medical expenses are recoverable by the beneficiaries as part of their claims under the state's wrongful death statute.

Hope this info helps.

CMS/SSA Form SSA-632-BK for client waiver

Posted by Mary Skinner

Question:
I am a plaintiff's attorney in Orange County, California. Thank you for e-mailing me a copy of your recent FAQ's, “For Dealing With Medicare Reimbursement.” I particularly appreciated your FAQ # 17 entitled "Can the Medicare recovery amount be waived in favor of the beneficiary?"

I would appreciate your assistance in how to obtain a copy of the CMS/SSA Form SSA-632-BK in regard to my client's case. I need to submit it to the Medicare Reimbursement contractor as soon as possible.

I have settled my client's case for $60,000, which is the best I could do under the facts of the case. The CMS Payment Summary indicates total charges of $101,456.64 with conditional payments of $30,385.40. My client is in very bad financial shape and about to lose her home to foreclosure. If Medicare would waive their lien it would mean a lot to her.

Thank you for your time in this matter. I would appreciate your earliest response as my client is in severe financial distress.

-California Attorney

Answer:
Your client’s situation meets the criteria for a waiver based on good equity and financial hardship. I will email you the waiver form that must be completed and submitted to Medicare AFTER you have requested the final demand from Medicare, waivers cannot be reviewed until the final demand is issued. Also, when submitting the completed form you should also include a compelling story which defines the facts of the case, your client’s current situation and how the funds will be used by the client should a waiver be granted. If you need assistance please do not hesitate to contact me.

Medicare

Posted by Mary Skinner

Question:
My client slipped and fell and injured her shoulder resulting in a Medicare lien of over $18,000. We lost on MSJ and the tortfeasor paid her a nuisance of $2,500 not to appeal the case. I have applied for a waiver of that and am holding that amount in trust.

The attorney who referred the matter to me never processed the med pay of $5,000. The insurance company is willing to pay that now, but wants to put Medicare on the check. Is there authority that Medicare doesn't have a claim to this money? If so, could you refer me to that so I can process this for my clients?

-Ohio Attorney

Answer:
Medicare has a right to recovery.

The regulations regarding Medicare's right to reimbursement on conditional overpayments in liability situations can be found under 42 CFR s411.23, 411.24, 411.26, 411.37, 411.50, 411.52, and 411.54. It is important to note at this point that "liability insurance" means insurance (including a self-insured pan) that provides payment based on legal liability for injury or illness or damage to property. It includes, but is not limited to automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowners' liability insurance, malpractice insurance, product liability insurance and general casualty insurance.

These regulations also established that Medicare would be secondary to no-fault insurance, which is defined as "insurance that pays for medical expenses for injuries sustained on the property or premises of the insured." This insurance includes, but is not limited to automobile, homeowners, and commercial plans. This insurance is sometimes called "medical payments coverage," "personal injury protection," or "medical expense coverage." (42 CFR ss411.50)

Medicare

Posted by Mary Skinner

Question:
My client slipped and fell and injured her shoulder resulting in a Medicare lien of over $18,000. We lost on MSJ and the tortfeasor paid her a nuisance of $2,500 not to appeal the case. I have applied for a waiver of that and am holding that amount in trust.

The attorney who referred the matter to me never processed the med pay of $5,000. The insurance company is willing to pay that now, but wants to put Medicare on the check. Is there authority that Medicare doesn't have a claim to this money? If so, could you refer me to that so I can process this for my clients?

-Ohio Attorney

Answer:
Medicare has a right to recovery.

The regulations regarding Medicare's right to reimbursement on conditional overpayments in liability situations can be found under 42 CFR s411.23, 411.24, 411.26, 411.37, 411.50, 411.52, and 411.54. It is important to note at this point that "liability insurance" means insurance (including a self-insured pan) that provides payment based on legal liability for injury or illness or damage to property. It includes, but is not limited to automobile liability insurance, uninsured motorist insurance, underinsured motorist insurance, homeowners' liability insurance, malpractice insurance, product liability insurance and general casualty insurance.

These regulations also established that Medicare would be secondary to no-fault insurance, which is defined as "insurance that pays for medical expenses for injuries sustained on the property or premises of the insured." This insurance includes, but is not limited to automobile, homeowners, and commercial plans. This insurance is sometimes called "medical payments coverage," "personal injury protection," or "medical expense coverage." (42 CFR ss411.50)