Monday, December 29, 2008

Medicare reimbursement claim, interest

Posted by Mary Skinner

Question:
I resolved a case and held back 18.5k to resolve Medicare’s lien – this should have been plenty – but when I got the itemization, they want 21.5k. Some of these charges are clearly not related to my injury event. I sent an itemization of what I claimed was related and what I claimed was not, they sat on it forever, we called and called and then finally got someone. They said that they are charging interest on the full amount and they had no idea when they would get back with me. What do I do? Pay the 18.5k that I have in trust now to reduce the interest and hope they pay me back something?

-Alabama Attorney

Answer:
Medicare has 120 days to respond to a redetermination request and interest does accrue during that time. If it has been over 120 days there are ways that we can get them move on it. With that said, if you are certain that the 18.5K is the correct amount due Medicare (I can help you with the calculation if you aren’t) then I would reimburse Medicare – it will reduce the interest. I would be happy to discuss with you the options available.

Monday, December 22, 2008

Medicare

Posted by Matthew Garretson

Question:
I have a question regarding treatment provided to my client at Mt. Carmel.

The injury occurred in Dec. 2004; case was recently settled and we are waiting for Medicare claim. I recently contacted the US Attorney and they are working with us. While we are waiting, a rep from Mt. Carmel calls to tell me that they have learned that the injury was due to an automobile accident and for that reason they cannot bill Medicare. (My client has had several surgeries over a period of years, the last being fall 2008 to remove hardware from her lumbar spine.) The Mt. Carmel rep stated that they were compelled to return the payment they had received and apparently they have; my client has received a bill for $35,000. I have not yet seen the bill or asked for any explanation.

I have seen references regarding Mt. Carmel being a Medicare HMO, but I am not sure that is the source of the problem. Apparently Mt. Carmel billed Medicare and was paid but has refunded the payment and is billing my client. Any suggestions or insight would be appreciated.

Answer:
Take a look at MSP Manual § 40.2 - Billing in MSP Liability Insurance Situations. If I understand the info below, Mt. Carmel is the provider of service and assuming they are a Medicare provider, then once they submitted their claim to Medicare they are bound by their assignment agreement, therefore they lose all rights to pursue the settlement for actual charges. Since they returned the payment received they can only go after the beneficiary for the Medicare amount plus any coinsurance and deductibles.

The MSP Manual States as follows:
Physician and Other Supplier Charges to Beneficiaries for Services Covered By Medicare

The following applies to physicians and other suppliers who participate in Medicare:

• if the physician or other supplier bills Medicare, the physician or other supplier must accept the Medicare approved amount as payment in full and may charge beneficiaries only deductibles and coinsurance.

• if the physician or other supplier pursues liability insurance, the physician or other supplier may charge beneficiaries actual charges, up to the amount of the proceeds of the liability insurance less applicable procurement costs but may not collect payment from the beneficiary until after the proceeds of the liability insurance are available to the beneficiary.

Provider, Physician, or Other Supplier Bills Medicare and Maintains Claim/Lien Against the Liability Insurance/Beneficiary’s Liability Insurance Settlement

As cited above in B, providers, physicians, and other suppliers must withdraw all claims/liens against liability insurance/beneficiary’s liability insurance settlement (except for claims related to services not covered by Medicare and for Medicare deductibles and coinsurance) when they bill Medicare. You may learn of a situation where the provider, physician, or other supplier billed Medicare but did not withdraw the claim/lien. In such situations you must:

• Advise the provider, physician, or other supplier and beneficiary that the act of billing Medicare limits the payment that the provider, physician, or other supplier may receive for the services billed to the Medicare approved amount. This applies even if Medicare did not pay the claim or the provider, physician, or other supplier refunded the Medicare payment to Medicare.

Saturday, December 20, 2008

Nursing Homes, MSPRC Hardship

Posted by Matthew Garretson

Question:
I’m looking for insight as to what MSPRC-CMS thinks qualifies as “hardship” to reduce or waive a lien.

-Maryland Attorney

Answer:
While waiver decisions are made on the merits of an individual case, in our practice we see the following criteria as indicators:
· Medicare’s claim exceeds the settlement amount;
· Beneficiary sustained permanent injuries;
· There are non-covered, out-of-pocket accident-related expenses; or
· Beneficiary’s living expenses are equal to or higher than income.

In our experience, waivers are often denied if:
· Beneficiary receives large settlement (say north of $500K);
· Beneficiary’s income exceeds ordinary living expenses;
· After repaying Medicare and allowing out-of-pocket medical costs, the beneficiary will be left with a substantial amount of the proceeds; or
· Beneficiary has substantial assets.

Medicare may grant a full or partial waiver of its recovery amount with respect to the beneficiary. The criteria for a §1870 (c) waiver are 1) it requires the beneficiary be without fault and the recovery, 2) would effect financial hardship or be against equity and good conscience, Section 1870 (c) of the Social Security Act.

“Without fault” refers to the information the patient gave to the provider/supplier/physician or Medicare regarding the details of the accident. The information was correct and complete as far as he/she knew, and, when the Medicare payment was made, the beneficiary believed it to be the right payment for his/her claim.

With respect to the meaning of “financial hardship” in this context, Medicare will consider the impact of unforeseen severe financial circumstances existing at the time of Medicare’s claim as well as the impact of out­-of-­pocket medical expenses (even such items as home modifications and adaptive equipment) versus the beneficiary’s resources to meet these obligations. Medicare may grant a full or partial waiver if recovery would have an adverse effect on the beneficiary’s standard of living as it existed prior to the accident/injury/illness.

“Equity and good conscience” refers to the total impact upon the beneficiary of granting or not granting a full or partial waiver. In applying the standards of “equity and good conscience” possible factors which might be included could be: 1) the degree of financial hardship caused by the recovery, 2) the extent to which the beneficiary’s state in life would be altered, 3) Medicare’s recovery amount exceeds the settlement amount and, 4) the extent to which the beneficiary can meet non-­covered, out-­of-­pocket, accident­-related expenses, including the absence of Medigap insurance coverage.

I hope this information helps…

Wednesday, December 17, 2008

Protocols, LLC v. Leavitt and Workers' Compensation Cases

Posted by John Cattie

Question:
How will the ruling in Protocols, LLC v. Leavitt impact workers’ compensation cases?

Answer:
In Protocols, LLC v. Leavitt, 2008 WL 5188854 (10th Cir. (Colo.) Dec. 11, 2008), the 10th Circuit Court of Appeals recently found that Protocols, LLC has standing to claim it has been injured as a result of July 11, 2005 Memo issued by CMS. This ruling allows Protocols to pursue damages for claimed injuries suffered as a result of the July 2005 CMS Memo. Protocols alleges that it has a potential contingent liability hanging over it due to the publication of the July 2005 CMS Memo since it has admitted to arranging settlements that are contrary to what CMS has declared to be required. Given the timing of the decision of this case, and its results, this case may contribute additional confusion to the complex world of Medicare compliance rather than provide additional common law (case law) guidance. Prior to the Protocols case, decisions by CMS concerning WCMSAs were not considered to be appealable. By granting Protocols standing based on a contingent liability, the 10th Circuit may be setting the wheels in motion towards establishing due process as a part of the WCMSA procedures. However, since CMS Memos are meant to provide guidance related to an agency policy rather than being statutory or regulatory based, due process may not be in the offering. No one really knows whether due process is forthcoming as a result of this litigation, but the case may serve as a harbinger of things to come.

Win or lose, this ruling may not have an immediate impact on parties who settle workers’ compensation cases. The additional confusion it creates, however, makes it even more imperative that the new Congress give health care reform its full, undivided attention. President-elect Obama’s directions to Tom Daschle (Obama’s nominee for Director of the Dept. of Health and Human Services) are likely to set the table for the 2009 Congress to focus on Medicare reform. The combination of this ruling and the President-elect’s plans for Medicare reform may provide the necessary momentum to get HR 2549, a bill that directly addresses WCMSAs, out of the House’s SubCommittee on Health, where it has remained since June 5, 2007. A statutory solution, like HR 2549, to these non-statutory problems, would provide welcome clarity to the Medicare compliance arena.

Friday, December 12, 2008

SSI or SSDI Disability and Medicare Lien / Hospital Billing Codes

Posted by Matthew Garretson

Question:
I have a Social Security disability Medicare lien question that I hope you can help me with.

My client was a 40-year-old suffering from severe bipolar disease, and social security disabled. I don't know if it was SSI or SSDI. I do know she had a Rhode Island Medicaid card.

When she was hospitalized in Florida, she presented her RI Medicaid card for insurance coverage. I have cleared up any possible Medicaid liens, but want to make sure there is no Medicare lien, as I have been told that both could have used to pay the hospital bill. Does that make sense?

To no avail, I have made numerous attempts in the last 18 months to find out if there is a potential Medicare lien. I have been told I should get a conditional lien amount soon, but for all I know it could take another 18 months. Problem is that the defense wants to settle the case now. I don't see how I can do that until the Medicare issue is cleared up. Do you agree?

Is there is a way to determine from the itemized billing statement what the maximum lien could possibly be? There are 2 different figures for "contractual adj", and what does that term mean? Does it indicate payment received (from either Medicaid or Medicare), or does it definitively indicate an amount that was written off for some reason by the hospital? In the "type" column it for those 2 amounts it says "all".

Also, there is another entry for about 10% of the bill. Adding that to either "contractual adj" amount yields a total that is more than the entire bill. In the "type" column it says "Ins"), and it the "comment" column it says "ERA MC P". Is that some type of payment?

A bill requesting payment for difference between the larger "contractual adj" amount and the total bill was sent to my deceased client. Would my client be billed for that amount if Medicare had made any payments? It does not seem to in any way take into account the "ERA MC P" figure.

All help is appreciated. Thank you in advance.

-Rhode Island Attorney

Answer:
It is very common for individuals to have both Medicare and Medicaid for a variety of reasons. Perhaps Medicaid is paying the co-insurance and deductible for a person's Part A and Part B Medicare coverage. Or, perhaps Medicaid rolled them onto Medicare Part D for prescription drugs (which is a big number for individuals suffering from Bi-Polar disease and taking type 2 Anti-psychotic drug products.)

I am happy to have someone here take a look at the bill. Contact me next week if you would like.

Tuesday, December 9, 2008

Medicare

Posted by Matthew Garretson

Question:
I have a Medicare question. We have a case where arguably the medical treatment given to the deceased client, which was paid by Medicare, is not related to the medical malpractice. In the death compromise (approval) I asked the court to hold that none of the medical treatment was related and that there would no allocation in the settlement for past medical expenses. I put Medicare on notice and they didn't respond. My questions are as follows: Is this court determination binding? If not, is there a process for me to hold the money in escrow and get an administrative or other determination from Medicare?

-New York Attorney

Answer:
My general thoughts are as follows: As long as you have a judicial allocation based on the merits (i.e. fact-based determination on allocation), Medicare will follow the order. See excerpt from MSP Manual below:

50.4.4 – Designations in Settlements
(Rev. 1, 10-01-03)
In general, Medicare policy requires recovering payments from liability awards or settlements, whether the settlement arises from a personal injury action or a survivor action, without regard to how the settlement agreement stipulates disbursement should be made. That includes situations in which the settlements do not expressly include damages for medical expenses. Since liability payments are usually based on the injured or deceased person’s medical expenses, liability payments are considered to have been made “with respect to” medical services related to the injury even when the settlement does not expressly include an amount for medical expenses. To the extent that Medicare has paid for such services, the law obligates Medicare to seek recovery of its payments. The only situation in which Medicare recognizes allocations of liability payments to nonmedical 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 designate 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 does not seek recovery from portions of court awards that are designated as payment for losses other than medical services.

With respect to notice, how long ago did you put Medicare on notice and did you provide the MSPRC with a copy of the court order or just a letter advising?

Another consideration (if this is a wrongful death case in New York) is that NY does not allow for the recovery of meds under their wrongful death statute. New York WD Statute McKinney's EPTL § 5-4.1 Survival EPTL 11-3.3(a) Doe v. State, 155 Misc. 2d 286: this case interprets the survival act and defines the damages that are recoverable under the survival act and what is not. It also points to the wrongful death act as being for the beneficiaries and the estate has no part in those damages. The wrongful death act is for the survivors...i.e. spouse, minor children, etc.

Medicare Claim - Nursing Home Case

Posted by Mary Skinner

Question:
We settled a case for a client and got a final demand for Medicare as well as for Anthem. We paid those. The nursing home bills Medicare and Anthem in 6 month intervals. These liens were calculated (and the case settled) in between one of these intervals, so it is likely that when the nursing home bills Medicare again, some of the bill will related to services rendered prior to the settlement, but just not included on the lien statement that was paid (final demand).

So, the question is what should I tell my client? Will Medicare come back after the final demand is paid?

-Ohio Attorney

Answer:
Medicare is under no obligation to pay primary for any injury related care that occurred prior to settlement, even if the claims are submitted to Medicare after settlement. With that said, it is possible that Medicare will deny payment. Additionally, Medicare only pays for the first 100 days of nursing home care, unless the beneficiary is admitted to the hospital for at least 3 days. Once the beneficiary returns to the nursing home, the 100 day clock starts all over.

Monday, December 8, 2008

ERISA

Posted by Mark Taylor

Question:
I have a situation where the 5500 annual report is checked both under 9a and 9b (insurance and general assets of the sponsor). Would this be considered an insured plan subject to state law defenses or an self-funded plan not subject to state law defenses?

-Louisiana Attorney

Answer:
If both “Insurance” and “General Assets” are checked on the Form 5500, then it means that some of the plan’s benefits are self-funded and some are insured. This is very common. “Welfare Benefit” plans also include coverage for dental, life, disability, etc., so one aspect of the plan may be insured while another is self-funded.

What you have to do is look at the “Schedule A” that is attached to the Form 5500. There should be one Schedule A for every insurance policy that the plan carries, so there may be more than one attached. Thumb through all of them and look at line 7 to see what type of insurance was purchased. If 7a is checked, then it’s a health insurance policy. Then look at line 8, where the plan should (but they don’t always) declare exactly how much was paid in premiums for the policy and how much was paid out in benefits. This is great ammo to have if the plan claims to be self-funded.

However, if none of the Schedule A documents have line 7a checked for health insurance, then the insurance likely covers other aspects of the plan while the health benefits remain self-funded and exempt from state law.

Wednesday, December 3, 2008

Equitable Subrogation

Posted by Mark Taylor

Question:
What is equitable subrogation?

-New York Attorney

Answer:
“Equitable subrogation” means two different things, depending on whether ERISA is involved.

In the classic sense outside of ERISA, equitable subrogation is the legal theory which allows for subrogation even when there is no contractual term providing for it (as opposed to “contractual subrogation,” which relies upon such terms). Under the theory of equitable subrogation, an insurer who has paid for health care of an injured individual is equitably entitled to subrogate against the settlement of the injured person simply by virtue of the fact that the insurer, too, suffered a loss as a result of the tort. Under a theory of equity, some of the settlement should also compensate the insurer, regardless of what the insurance policy or contract might say. This is a state law theory, and many states apply it in some form.

However, when discussing an ERISA plan, “equitable subrogation” (really a misnomer – should be “equitable lien”) actually requires a contract, directly opposing the classical definition of the phrase. The reason for this requirement is thus:
  • ERISA allows only for “appropriate equitable relief” to enforce plan terms. See 29 U.S.C. 1132(a)(3) (ERISA’s civil enforcement statute).
  • Thus, by virtue of the specific wording of the statute, the plan document must contain a subrogation or lien provision to enforce – if it’s not there, it can’t be enforced under ERISA.
  • If the plan does contain a subrogation or lien provision, it can only be enforced through “equitable relief” as opposed to “legal relief.” See Mertens v. Hewitt Assoc., 508 U.S. 248 (1993).
  • In order to qualify as “equitable relief,” the plan subrogation provision must identify a specific fund, distinct from the injured person’s general assets, which can be recovered via equitable subrogation or an “equitable lien by agreement.” See Sereboff, 547 U.S. 356 (2006). Without such specifics within the contract language, no lien or subrogation right exists. See Popowski v. Parrott, 461 F.3d 1367 (11th Cir. 2006).

As such, for “equitable” recovery in the context of ERISA, you have to have a contractual lien right underlying it.

Hope that helps. Confusing stuff, I know.

Tuesday, December 2, 2008

ERISA Liens in the post-Shank Landscape

Posted by Matthew Garretson

Question:
As to the stop-loss, if there is an ERISA "self-funded" lien up to $50k for example, then an insurance carrier pays $100k for the P, there is only a "self-funded" lien up to $50k?

Answer:
That’s a valid argument, but one that’s relatively untested in the courts. If you argue that the plan should only be entitled to the self-funded portion, they will likely respond that 1) even though the plan may have been reimbursed by a stop-loss carrier, the plan still made the initial payment, and 2) the plan has reimbursement obligations of its own to the stop-loss carrier based upon the stop-loss contract.

Question:
Is my firm or client liable for reimbursement of any amount over $70,000 involving a self-funded ERISA lien if the Plan has stop-loss coverage that attaches at $70,000? Can I make a "made whole" argument against the stop loss carrier even though the Plan itself is self-funded? Or, can I argue that the plan is "double-dipping" by being paid out of the settlement proceeds as well as being paid by the stop-loss carrier?

Answer:
You can make that argument, although the plan will likely claim that it is not “double-dipping” because it has reimbursement obligations to the stop-loss carrier. Moreover, the way that stop-loss insurance should work would also work against you. Even with stop loss, the plan itself should be issuing the payments above $70k – but then it is reimbursed by the stop-loss carrier. As such, the plan could still claim that it made the full payments itself, and is entitled to a lien for the full amount. Then, the plan would have to satisfy any reimbursement obligations of its own out of the full lien amount. This is actually how stop-loss reimbursement should work – the plan should collect the lien from you and then turn around and repay the stop-loss insurer on its own. Unfortunately, many stop-loss insurers like to skip the plan and come after you directly when they have no legal relationship with your client. This is the possibility discussed in the presentation.

Question:
Does ERISA have any effect on employer long term disability liens, or only on healthcare liens?

Answer:
Good question. ERISA affects essentially all private employee benefits, including disability, health, dental, pension, profit-sharing, etc. So it will impact disability liens. However, those liens are still subject to ERISA’s requirements discussed in the presentation (e.g. the “specific fund” doctrine and “made whole” doctrine, etc.)

Question:
What is the statute of Limitations for collection of ERISA liens?

Answer:
There is no specific statute of limitations within ERISA itself for lien enforcement. As such, most courts apply the contract statute of limitations from the applicable state. See Harrison v. Digital Health Plan, 183 F.3d 1235 (11th Cir. 1999) as an example.

Question:
This thought just occurred to me. Since every litigant has a "property right" in whatever claims or causes of action he/she possesses, and ERISA is now interpreted/designed to allow the Plan, in certain circumstances, to effectively destroy this "property right," take ALL the money and give no compensation to the beneficiary or his attorney, why, then, would the ERISA "appropriate equitable relief" clause not be Unconstitutional as it violates the "takings clause" - taking private property (the beneficiaries' property right to recovery) for public use (for the benefit of the entire plan) without just compensation?

Answer:
An interesting thought. However, the principle of ERISA reimbursement, especially under Sereboff, is that whatever portion of the settlement is needed to satisfy a valid ERISA lien doesn’t actually belong to the plaintiff and isn’t a part of their damage – it belongs to the ERISA plan itself. Sereboff states that where an ERISA plan has sufficient language to enforce a valid lien, it creates an “equitable lien by agreement” and “constructive trust.” Relying upon an older case involving equitable principles, the Court invoked “the familiar rul[e] of equity that a contract to convey a specific object even before it is acquired will make the contractor a trustee as soon as he gets a title to the thing.” Sereboff, 547 U.S. 356, *363-364. Thus, I believe that a court would conclude that an ERISA plan isn’t depriving the plaintiff of his or her property rights, but merely enforcing its own.

Question:
What if it’s a self funded plan but administered by an insurance company?

Answer:
This is known as an “administrative services only” or “ASO” arrangement, and does not change the plan’s funding status. Many self-funded plans are managed in this way, and they are still considered self-funded under the law.

Question:
If the plan does not provide notice prior to settlement, can you avoid future subrogation by distributing the settlement and encouraging the client to spend the money immediately or commingle it with other assets so that there is no identifiable res to enforce the lien against?

Answer:
First, I would probably counsel against advising the client to actively seek to subvert lien enforcement – it smacks of bad faith and could lead to direct liability against you. See Great West v. Smith, 180 F.Supp.2d 1311 (M.D.Fla. 2002); Greenwood Mills, Inc. v. Burris, 130 F.Supp.2d. 949 (M.D.Tenn. 2001). So I would simply disburse the funds to the client, and if a potential lien might be out there, educate the client about the possibility that a lienholder may pop-up and that it will be the client’s responsibility to address any asserted liens.

Moreover, disbursing the funds certainly makes lien enforcement more difficult, but it probably doesn’t make it impossible. I would certainly argue that the settlement funds are gone and there’s no right to recovery, but it’s not absolute. Sereboff states that although there must be an identifiable fund, there is no strict tracing requirement. An ERISA plan can simply argue that despite the comingling of the funds, the identifiable fund did exist at one time and still remains in the client’s possession, so some reimbursement obligation might still exist. Several courts have found this to be true.

Question:
How do you identify a stop-loss carrier?

Answer:
Demand information on the role of the lienholder and its relationship to the plan.

Question:
The special needs trust in Shank was named as a defendant? (I don't see it in the caption). Is that how you distinguish Shank from Knudson?

Answer:
Yes, it was named as a defendant, and yes that is how it was distinguishable. An ERISA plan must pursue the settlement funds, so if they are being held in a trust, the trust must be named.
Question:
If a plan requires money from third party settlement and settlement is from UM carrier (first party benefits), does the ERISA plan get money back?

Answer:
Typically, yes. An ERISA plan may pursue UM and UIM benefits as well, so long as it contains the proper language. See Primax Recoveries Inc., v. Young, 83 Fed.Appx. 523 (4th Cir. 2003).

Question:
Can a valid ERISA plan sue the tortfeasor directly for its payments, or must it always get its money from the settlement funds?

Answer:
An ERISA plan can sue the tortfeasor directly as a real party in interest.

Question:
What was the cite re: state law applies to insured ERISA plans - FMC vs. ????. Also, I thought you said "state insurance code" - but state case law would apply as well, correct?

Answer:
FMC Corp. v. Holliday 498 U.S. 52 (1990). And yes, case law would also be applicable. Any and all laws regulating insurance.

Question:
If you have an insured ERISA plan in Washington state and state law applies, will the state made whole rule trump clear plan language to the contrary?

Answer:
Yes, because Washington (I believe) has an absolute made whole rule that applies regardless of plan language. But I also believe that Washington’s made whole rule is unique in that it also deals with issues of prejudicing a lienholder’s claim, so I would probably look at that particular rule closely when seeking to apply it.

Question:
At what point in the process of handling a case can you rely on the amount stated in the lien letter from Medicare?

Answer:
Unfortunately, the only number that is binding on Medicare is the final demand, which they will not produce until after settlement (they keep the meter running until then, so to speak). This simply means that when dealing with a Medicare lien, you need to start early and establish a dialogue, providing the caseworker with everything he or she needs to be as accurate as possible in the conditional payment summaries (the numbers they provide before settlement). Also, cross-check that number with the medical bills that you’re aware of – if some bills are missing from the conditional payment summary, then anticipate that the lien amount will grow as Medicare discovers those charges. But to really play it safe, I would calculate the total medical bills and plan as though that entire amount needs to be reserved for Medicare’s lien (although the lien most likely won’t be that large) to make sure that you’re not running afoul of any obligations to Medicare. Finally, always keep the client educated as to their obligations and yours when it comes to Medicare.

Question:
The Plan requires that the member and attorney sign a lien BEFORE any medical benefits are paid. The Plan then says we have a lien and therefore the Make Whole does not apply. (9th Cir.)

Answer:
ERISA plans can do this – requiring that both attorney and client sign a lien agreement. The plan can even condition the provision of injury-related benefits upon the signing of the agreement. If you have a lienholder using this approach, I would discuss the practical aspects of the case and the incentive for your client to settle if the lienholder is going to take it all under the agreement. Also, keep in mind that the agreement is still subject to the defenses discussed in the presentation.

Question:
Please re-explain importance of line 8 of the schedule A.

Answer:
Line 8 is where plans should (but don’t always) indicate what premiums have been paid for the subject insurance policy, and how much has been paid out in premiums. It makes it difficult for a plan to argue that it’s self-funded and that the other sections of the Form 5500 were filled out in error (which is a common excuse) because you have the amount, down to the dollar, that the plan paid for insurance. Something of a “smoking gun.”

Question:
On Derivative claims, (or any case) what happens if your suit does not seek reimbursement of the medical expenses? Made whole does not apply to self funded plans, correct?

Answer:
If your action doesn’t seek reimbursement of medical expenses, it probably doesn’t have any effect on the lien. Most ERISA plans have language granting them a lien on any settlement, regardless of how it may be characterized. However, if such language isn’t present in your particular case, you can try the argument. An interesting case that deals with this issue is Rhodia v. Bollinger out of the District of New Jersey (2008 WL 800502). It involved an ERISA claim in light of New Jersey’s modified collateral source rule which prohibited recovery of collateral sources. The district court reasoned that because the settlement didn’t contain any medical expenses, that they couldn’t be recovered by a lien. However, keep in mind that the decision was predicated on a strict collateral source rule, and is limited to New Jersey at this time. It is unlikely that other courts would universally reach the same result without a strong statutory directive as found in New Jersey, given the strength of ERISA lien rights – but it can certainly be argued if you have a difficult case.

Question:
Is exclusion in plan for coverage due to third party claim or lawsuit enforceable?

Answer:
Probably so. ERISA allows for liberal enforcement of plan terms. I would have a discussion with the plan administrator as to the plan’s intentions – especially if the client will need considerable care.

Question:
In Washington state, if the ERISA plan is an insured health plan and state law applies to the insurer, will the common law made whole doctrine in Thiringer trump clear plan language that says the made whole doctrine does not apply?

Answer:
Yes, an insured plan in Washington is always subject to the common fund doctrine regardless of its language.

Question:
How do you resolve removing a lien holder from a settlement check?

Answer:
Do your best to negotiate with the defendant to get the lienholder off the check. I know some attorneys who argue that placing a lienholder on the check is a violation of the settlement agreement, with some success.

Question:
Are plans provided to employees of a medical facility operated by a church group (such as Catholic Healthcare West) covered by ERISA?

Answer:
Maybe. ERISA doesn’t cover “church plans,” but whether a plan is a church plan is a fact-based question of 3 factors: (1) whether the religious institution plays an official role in the governance of the organization, (2) whether the organization receives assistance from the religious institution, and (3) whether a denominational requirement exists for any employee or patient/customer of the organization. See Chronister v. Baptist Health 442 F.3d 648 (8th Cir. 2006).

Question:
Are employer provided long term disability plans governed by ERISA? Or is LTD totally separate from employer based healthcare?

Answer:
LTD benefits provided by a private employer are covered by ERISA.

Question:
If the plan does not provide notice prior to settlement, can you avoid future subrogation by encouraging the client to spend the money immediately or by commingling it with other money and assets so that there is no identifiable res to enforce the lien against? What if the plan does provide notice prior to settlement? (I am in Missouri.)

Answer:
See answer to previous question on this subject:
Be aware that if the plan has provided notice of the lien prior to settlement (or at any time when you’re still involved), you DO NOT want to disburse the funds and encourage the client to spend the money quickly in order to avoid the lien. If you do, you might be directly liable to the plan. See Greenwood Mills, Inc. v. Burris, 130 F.Supp.2d. 949 (M.D.Tenn. 2001).
First, I would probably counsel against advising the client to actively seek to subvert lien enforcement – it smacks of bad faith and could lead to direct liability against you. See Great West v. Smith, 180 F.Supp.2d 1311 (M.D.Fla. 2002); Greenwood Mills, Inc. v. Burris, 130 F.Supp.2d. 949 (M.D.Tenn. 2001). So I would simply disburse the funds to the client, and if a potential lien might be out there, educate the client about the possibility that a lienholder may pop-up and that it will be the client’s responsibility to address any asserted liens.

Moreover, disbursing the funds certainly makes lien enforcement more difficult, but it probably doesn’t make it impossible. I would certainly argue that the settlement funds are gone and there’s no right to recovery, but it’s not absolute. Sereboff states that although there must be an identifiable fund, there is no strict tracing requirement. An ERISA plan can simply argue that despite the comingling of the funds, the identifiable fund did exist at one time and still remains in the client’s possession, so some reimbursement obligation might still exist. Several courts have found this to be true.

Question:
Are plans provided to employees of a medical facility operated by a church group (such as Catholic Healthcare West) covered by ERISA?

Answer:
Maybe. ERISA doesn’t cover “church plans,” but whether a plan is a church plan is a fact-based question of 3 factors: (1) whether the religious institution plays an official role in the governance of the organization, (2) whether the organization receives assistance from the religious institution, and (3) whether a denominational requirement exists for any employee or patient/customer of the organization. See Chronister v. Baptist Health 442 F.3d 648 (8th Cir. 2006).

Question:
I have a few questions related to a low liability limits, high medical expense case, and am having difficulty dealing with Ingenix on the lien. Ingenix claims the plan is self-funded, but refuses to provide a 5500. The SPD I was provided by my client's employer has a plan name and number not found on freeerisa.com.
1. Can a valid ERISA plan, which is claiming it is self-funded and is entitled to full recovery of its payments, sue the tortfeasor directly, or force the injured party to sue, in order to recover its payments?
2. Does the SPD have to have the correct plan name and number? In other words, does the name and plan number on the SPD have to correspond to the one(s) on freeerisa.com?
3. Is the best source for the 5500 always the plan administrator?

Answer:
1. The plan can sue the tortfeasor directly. The plan can’t directly force the client to sue or settle, but it may condition benefits upon the client’s cooperation with its lien efforts
2. Not really. There is no strict requirement as far as I know – plan numbers are just a mechanism to identify them quickly. Also, freeerisa.com hasn’t always been fastidious in its labeling of the plan information (you will find frequent spelling errors in an employer’s name as you search), but the Form 5500 documents, once you find them, should be accurate as they are pulled from the Department of Labor’s database.
3. If you can’t find it on freeerisa.com, then yes. The plan administrator is the only entity that has a statutory obligation to provide the Form 5500 to you. See 29 USC 1024.