Qualified Settlement Fund

Posted by Sylvius Von Saucken

Question:
After a very large settlement was confected a few days ago involving a single plaintiff brain damage case, plaintiff’s counsel has now requested the defendants agree to fund the money into a QSF. While the plaintiff’s request comes late in the day, I am trying to decide if this is good or bad for the underwriters I represent in London. Specifically, my concerns are:

1. Is a QSF process available in a single plaintiff case as I thought it was created for mass tort litigation?
2. Can my defendant insurers fund the money into the QSF and get a complete release with no recourse relative to any handling or decisions made by the administrator and plaintiff counsel on how to handle the funds?
   

Your assistance in addressing these questions is greatly appreciated. Thanks.

-Louisiana Attorney

Answer:
Answer to Question 1: QSFs are available for single plaintiff cases provided there are multiple claimants (as opposed to plaintiffs). For example, a case can settle between one plaintiff that involves more than one claimant where that plaintiff has subrogated parties to satisfy as part of his/her settlement. Although there is still some debate about whether or not QSFs are available for single plaintiffs/claimants, provided there is more than one entity legally entitled to receive settlement proceeds, your case may not be a single claimant case. The Treas. Regs. (Section 1.468B-1(c)(2), et seq.) talk of “one or more contested claims” and an event (or series of events) giving rise to “ at least one claim asserting liability.” Accordingly, the regulatory language focuses on the claim or claims, not the number of claimants. Consequently, if it can be established by plaintiffs’ counsel that there are more than one claimant (as opposed to plaintiff), a QSF may be available and appropriate.

Answer to Question 2: Absolutely. We have served as QSF Administrators in countless mass tort and single event cases. As part of our standard process, when we have served as QSF Administrator we have provided defendant insurers with releases concerning the administration and handling of the funds. Simply put, defendant insurers can remain as involved as they desire when dealing with QSFs. However, the key to ensuring those releases are effective is to take part in the release process and where necessary, even request the QSF Administrator’s signature on the release document that transfers funds from the defendant insurers’ accounts to those of the QSF Administrator’s.

Since our firm has a QSF practice group, we would be happy to vet any QSF documents, choice of administrator or even review the plaintiffs’ explanations for why a QSF is an available settlement option as part of an overall due diligence process.

Tricare

Posted by Sylvius Von Saucken

Question:
Do you know of a regulation or code that says once Tricare is paid back on its subrogation/reimbursement right, the insured is entitled to future medical coverage by Tricare for problems that now arise out of the accident?

-Wyoming Attorney

Answer:
Tricare’s scope of recovery only looks to past medical expenses paid by Tricare on a conditional basis but for which a third party later takes into account as part of settling with an injured service person. Unlike Medicare and its statutory guidance for workers’ compensation cases, Tricare does not yet incorporate a similar future cost of care analysis. This is because the enabling statute does not speak in terms of future care, but rather in terms of reasonable costs of treatment already provided).

The U.S. military’s rights arise under the Medical Care Recovery Act (42 U.S.C. Sections 2651-53). The MCRA states that when the Federal Government provides treatment or pays for treatment of an individual who is injured or suffers a disease, the Government is authorized to recover the reasonable value of that treatment from any third party legally liable for the injury or disease. The statute provides an independent right of recovery, but only for those payments actually made. The statute does not contemplate any recovery for future payments to be made. (32 C.F.R. Section 757.14(a) and (d)).

Finally, because there is a three year statute of limitations under 28 U.S.C. 2415 (measured from the date of initial federal treatment), any future care provided by a military treatment facility would continue to run into enforcement problems (with respect to future recovery issues because the first date of treatment starts the statute running).

Setting aside the statute, its practical application is as follows: Tricare, in its own third party forms (Form DD 2527), speaks of “suspending” benefits until the form is completed and Tricare, as contactor, received additional information. Claims are denied if the form is not completed within 35 days from date of letter (from Tricare). Suspension of benefits is consistent with the statutory meaning. In our opinion, any reading of the statute or Tricare rules to contemplate payment for injury-related care not yet provided (post-settlement) as a military service person’s obligation, is inconsistent with the express terms of the MCRA.

Please let us know if you have any follow up questions.

Nursing Home Case, Medicare Final Demand

Posted by Matthew Garretson

Question:
Any thoughts on what should be done, if anything, when a final demand is issued that does not include charges that were originally listed on the conditional payment letter? Some of the missing charges were initially disputed but not removed on the 2nd conditional payment letter, and some of the charges were never disputed.

-Michigan Attorney

Answer:
Based upon our experience, it is Medicare’s procedure that when they receive a request for Final Demand they do a final canvassing and review of all claims. It is not uncommon for Medicare to include additional related claims or remove claims they have determined to be unrelated, thus changing the amount of the original conditional payment summary. It is only have after this final process is completed that the Final Demand issued.

Malpractice Case, Medicare & Medicaid Liens

Posted by Matthew Garretson

Question:
Matt, I think you would be the one with an answer to a unique situation about which we have questions.

We are handling a legal malpractice case against a plaintiff’s lawyer for the handling of a nursing home neglect case. The deceased nursing home patient had Medicare and then Medicaid. We have realized that neither of those entities was properly notified during the course of the underlying nursing home abuse case. Now that we are handling a legal malpractice case, we are wondering if Medicare and Medicaid have rights to assert a lien in the present action.
Do you have any guidance to offer? I would greatly appreciate it.

-North Carolina Attorney

Answer:
Based upon our research and handling of these cases in the past, our internal consensus is that if the malpractice is related to an underlying personal injury case, then Medicare would have the right to reimbursement. This is based upon the assumption that the complaint in the malpractice case articulates the personal injury damages (and assuming a release would as well). In our experience, the only time that Medicare would likely accept that it has no reimbursement claim in a malpractice case related to personal injury is if there is a court order on the merits of the case stating that the damages being paid are for elements other than medical expense. The same would hold true to Medicaid (i.e. a court order on the merits or perhaps even the parties’ mutual understanding based upon what has been pled and released). I hope this helps.

Naming Medicare as Payee on Check

Posted by Matthew Garretson

Question:
What do I do if the liability insurer demands that they will only settle the case if Medicare’s name is put on the check?

-New York Attorney

Answer:
When Medicare is named as a payee on a check, all other payees must endorse the check. The check is then sent to the Medicare Secondary Payer Recovery Contractor for deposit. The Medicare Secondary Payer Recovery Contractor will distribute any excess funds it has collected over and above the debt. The bad news is that although the check will be endorsed and deposited into Chase bank within 24 hours of receipt, it can take up to 15 weeks for the refund.

CMS Operating Rules

Posted by Sylvius Von Saucken

Question:
If a claimant is not a current Medicare beneficiary, is not expected to become a Medicare beneficiary within 30 months following the settlement, and the total settlement amount is less than $250,000, will Medicare still want to review the settlement?

-Ohio Attorney

Answer:
The CMS review thresholds provided by the Patel memorandum are not static. As CMS has told us in the past, the review thresholds are subject to adjustment and may be modified at any time. So, the answer depends on whether the claimant is expected to become a Medicare beneficiary within 120 days of the date that the Coordinator of Benefits Contractor receives settlement information. While prior CMS Memoranda imply that Medicare’s position is that they waive any interest in the settlement (see CMS Memos dated 7-23-01, 4-22-03, and 5-23-03), on 12/19/08, CMS posted “Operating Rules” on its website in an effort to share more information with the workers’ compensation industry and workers’ compensation MSA submitters. These Operating Rules, though partially redacted, provides further insight to the question.

With the Operating Rules as guidance, we note that “if the TSA (Total Settlement Amount) is between... $25,001 and $250,000, the case is eligible for review only if the claimant is entitled to Medicare according to the WCCCS (Workers’ Compensation Case Control System) before the PSD (Proposed Settlement Date).” Upon further review of the definition of PSD in section 3 of the Operating Rules, CMS defines it as the later of COBC receipt date plus 120 days or a certain redacted pricing date plus 3 months. So, if the claimant receives a letter from the COBC that falls within this time frame, the claimant would be eligible for Medicare before their defined PSD, this makes the settlement (and MSA) reviewable. In that case, then clearly, Medicare would not be foregoing any interest (if they are asking for review).

Note that this is a change to how CMS approval is determined for WCMSAs, but does not change the fact that an MSA evaluation is needed where due to settlement there is a permanent burden shift of future injury-related care over to Medicare.

Medicare Appeal

Posted by Mary Skinner

Question:
I’m contacting you in the hopes that you can provide us with some advice regarding an old file we have. Our firm has been in contact with Medicare for about five years trying to resolve Medicare’s lien for one of our clients who received a $40K settlement from Howmedica in 2004. On several occasions the firm requested waiver documents and even offered payment in June 2006, but Medicare would never provide a final lien amount. Fast forward to two years later and Medicare finally provided a lien amount with interest along with waiver forms. These forms were sent to our client and not to our firm. Our firm then forwarded our client’s completed waiver form to Medicare. Then in December 2008, our client received another letter from Medicare denying the waiver and providing the lien amount owed plus interest. While Medicare’s letter advises a copy was sent to our firm, we have never received a copy of the 12/11/08 letter. We obtained a copy from our client. It states that Medicare’s conditional payments were $18,998.65 and the procurement costs were $17,875.14. After allowing $8,490.09 as Medicare’s share of the procurement the amount due to Medicare is $10,508.56 plus interest – which is now $11,570.36. She was denied a waiver because her “circumstances do not fall within the criteria used to grant a waiver.” At this time, we are considering filing an appeal in an attempt to at least get the interest removed from the lien amount. Our question to you is whether you believe there is any chance of a successful appeal or should we just pay the lien in order to stop further interest from accruing? Thank you for any information you can provide.

-Florida Attorney

Answer:
I’m happy to give you some insight. First and foremost, regardless of whether or not you file an appeal, make reimbursement to Medicare. Interest will accrue until Medicare is paid the principal and interest they are demanding. As for the appeal, you will need to provide additional documentation to support the reason for your original waiver request or documentation to support one of the other criteria for a waiver. The criteria for waivers are: out of pocket expenses, financial hardship and equity and good conscience. Based on the information you provided (settlement amount and the demand amount) it is an equitable split, therefore the criteria of equity and good conscience are no longer applicable. However, if there are circumstances where you could argue financial hardship or out of pocket expenses you may appeal the waiver. As for being successful in getting Medicare to waive the interest, you would need to prove that Medicare was at fault and the interest was accrued in error. With that said, Medicare’s demand letter is clear in stating that reimbursement must be made within 60 days of the issue date of the demand or interest will accrue regardless of whether or not a waiver is being requested.

Governmental immunity?

Posted by Matthew Garretson

Question:
I represent a handicapped client who was injured by the negligence of a RTA employee. The adjuster is of the opinion that no one, including Medicare, is entitled to reimbursement for payment of medical bills since RTA is a governmental agency. I am of the opinion that governmental immunity does not apply to federal liens such as Medicare and ERISA. Please advise as to which of us is correct with authority for same.

-Ohio Attorney

Answer:
Without researching, I would say it is unlikely that immunity applies, for the simple reason that political subdivisions generally use insurance companies and have plan administrators who are responsible for health insurance payments and coverage issues. Under that structure, the "plan administrator" would fall within the definitions of ERISA and likely the MSP statutes. This is really a question of the ERISA and MSP definitions of what constitutes a plan for recovery purposes and what RTA actually uses. My experience is that in this battle the Feds always win. My rationale follows:

Medicare has both a direct priority right of recovery and subrogation rights based upon Federal law. CMS has a direct right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency, or a private insurer that has received a third party payment, 42 CFR 411.24. Additional regulations regarding reimbursement of conditional payments can be found in 42 CFR §411.23, 411.26,411.37,411.50,411.52, and 411.54. Medicare's recovery claim is superior to the recovery claims of any other entities. Medicare will not honor a settlement that may have been made to prevent Medicare from recovering its payment.

In addition to judicial decisions establishing the Federal right of recovery, Congress, in enacting the Deficit Reduction Act of 1984 (Pub. L 98-369), specifically established the right of the United States to bring direct legislative action against any entity responsible for primary payment and clarified the ability of the United States to be subrogated to "any right of an individual or any other entity to payment."

Another modification to the enforcement abilities of the United States in regard to Medicare as a secondary payer came about with the passage of the Omnibus Reconciliation Act of 1986 (Pub. L. 99-509, Stat, 1974(1986). This act amended 1862(b) of the Social Security Act to create a private cause of action for damages " in law or plan, automobile or liability insurance policy or plan or no-fault insurance plan, group health plan, or large group health plan" which has been deemed primary and "fails to provide from primary payment (or appropriate reimbursement)..." 42USC ss1395(b), 1985. In Colonial Penn Ins. Co. v. Heckler, 721 F. 2d 432 (3rd Cir. 1983) and Abrams v. Heckler, 582 F. Supp 1155 (S.D. New York 1984). These cases recognized the congressional intent to establish Medicare as a residual rather than primary payer, and recognized that any State Law, which would interfere with this intent, would be superseded.

Does Medicare Recognize Ahlborn?

Posted by Matthew Garretson

Question:
Has anybody been successful getting Medicare to recognize the Supreme Court’s decision in Arkansas Dept. of Health and Human Serv. V. Ahlborn, 547 U.S. 268 (2006) (Medicaid must reduce its claim on personal injury recovery by the percentage that the plaintiff reduced its claim in accepting a settlement)? I just got Medicare’s written determination to an appeal, stating that it doesn’t recognize Ahlborn as that case involves Medicaid which is statutorily different than Medicare.

-Maryland Attorney

Answer:
Medicare does not recognize Ahlborn; however it has always been Medicare’s policy to accept a court-ordered allocation on the merits of the case. Below is an excerpt (albeit more info than you probably want) from an article I wrote last year (footnotes omitted):

Arguments against Applying Ahlborn to Medicare—Differing Statutory Language
It can be argued that because Medicaid third-party liability provisions differ greatly from Medicare third-party liability provisions, Ahlborn should not apply to cases involving Medicare. Unlike Medicaid, the Medicare statute is not based on an assignment of rights—payments are made conditionally, and are subject to full recovery when a third-party payer is held to be responsible for Medicare-related services and items. In addition, Medicare is not limited to recovering only from the portion of a settlement that is allocated to health care items and services, nor does the Medicare statute contain an anti-lien provision. Glibly stated, the intent behind the Medicare Secondary Payer (MSP) legislation was not to protect Medicare beneficiaries from having to repay certain conditional payments made on their behalf.
When third-party liability is alleged, Medicare makes a payment conditioned on being reimbursed from any recovery from an insurance policy (including a self-insured plan) covering the liable third party. The MSP legislation does not limit The Centers for Medicare and Medicaid Services’ (CMS’s) right of reimbursement to its right of subrogation. The statutory framework provides CMS with an independent right of recovery against any entity that is responsible for the payment of, or that has received payment for, Medicare-related items or services. This independent right of recovery is separate and distinct from CMS’s right of subrogation and is not limited by the equitable principle of apportionment (from which the benefits of Ahlborn flow) stemming from the subrogation right. See Zinman v. Shalala, 67 F.3d 841 (9th Cir. 1995).

In Zinman, certain Medicare beneficiaries argued that because CMS is a subrogee, its recovery must be limited to the pro-rata share of an insurance settlement that includes payment for medical expenses. However, the right of Medicare to receive full reimbursement was upheld (even though a beneficiary receives a discounted settlement from a third party).
Holding that the right of Medicare to recover is not limited by the equitable principle of apportionment, the Ninth Circuit Court of Appeals reasoned:

It is clear from the statute that the references to “item or service” are intended to define the payments for which Medicare has a right to reimbursement. Nothing in this language, however, compels the conclusion that Congress intended to limit the amount of recovery for a conditionally paid “item or service” to a proportionate share of a discounted settlement. The beneficiaries’ reliance on 42 U.S.C. §§ 1395y(b)(2)(B)(i) and (ii) is misplaced.

The Ninth Circuit further stated:

[T]o define Medicare’s right to recover its conditional payments solely by reference to its right of subrogation would render superfluous the alternative remedy of the independent right of recovery contained in section 1395y(b)(2)(B)(ii). We decline to construe the statute in a way that would render clear statutory language superfluous.

In sum, the Ninth Circuit confirmed CMS’s position that MSP legislation allowed for the full reimbursement of conditional Medicare payments.

The only situation in which Medicare may recognize 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 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 does not seek recovery from portions of court awards that are designated as payment for losses other than medical services—that has always been the rule. However, the allocation must be supported by a court order. As the court reasoned in Zinman:
[T]he injured victim alleged a variety of damages, some capable of precise computation, some not. Such allegations are not uncommon. [CMS’s] ability to recover the full amount of its conditional payments, regardless of a victim’s allegations of damages, avoids the commitment of federal resources to the task of ascertaining the dollar amount of each element of a victim’s alleged damages. . . . Apportionment of Medicare’s recovery in tort cases would either require a factfinding process to determine actual damages or would place Medicare at the mercy of a victim’s or personal injury attorney’s estimate of damages.

Because liability payments are usually based on the injured or deceased person’s medical expenses, liability payments are assumed/considered to have been made “with respect to” medical services related to the injury even when the settlement: (1) does not expressly include an amount for medical expenses; or conversely, (2) when the allocation is done by the parties absent an order or other adjudication on the merits. Absent a court order, any intellectual or legal arguments directed to the lead recovery contractor for Medicare might be met with the classic “huh?” or “what?” response. The Medicare Secondary Payer Recovery Contractor (MSPRC) holds the majority of the deck and, some would argue, display indifference because they are governed by a clear statutory framework. If thrown a curveball, the MSPRC might simply move your client’s file to the bottom of the stack and defer the matter until later. Thus, trying to use Ahlborn to assist in determining the amount of Medicare’s reimbursement is likely a dead end.

Arguments in Favor of Applying Ahlborn to Medicare—Similar Statutory Obligation and Purpose Arguments in favor of applying Ahlborn to Medicare present the flip side of the statutory difference position noted above: Ahlborn should apply to repayment claims made by Medicare even though the statutory language differs from the Medicaid statute, because the basic elements of the reimbursement obligation are the same under all of the major government-funded health care programs. Medicaid, the Medical Care Recovery Act (MCRA), and the Medicare Secondary Payer Act (MSP) share a common legislative purpose—specifically, to ensure that the obligation to pay is secondary to the obligation of another plan of insurance when both are responsible for payment for medical care. All three provide their respective health care program with similar reimbursement rights to meet that purpose.

The MSP third-party liability provisions contain language that is similar to the language of the Medicaid Act that was interpreted in Ahlborn and the MSP repayment and enforcement provisions are similar to those of Medicaid:

A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means . . .

Tort litigation has seen the application of MSP because in many situations a defendant has liability insurance to compensate victims for injuries that the defendant may have caused. When the primary insurance plan (i.e., the defendant’s liability policy) is not expected to be able to pay promptly (possibly because liability has not been established), Medicare may pay for the medical items and services for the victim, subject to a right of reimbursement. MSP allows the government to waive any provision of the Act when it is determined that “waiver is in the best interests of the program.”

In addition, under both statutes—Medicaid and MSP—the government’s repayment rights are limited to medical costs, while the injured party’s right to recover for other damages remains intact:

1. Medicaid: State assigned “rights . . . to payment for medical care from any third party”
2. MSP: Reimbursement from primary plans having “responsibility to make payment with respect to such item or service”
   

Thus, while the common goal of both statutes—having the government be the payer of last resort (to keep government health care costs as low as possible) rather than the primary payer—should be noted, it can be argued that these statutes construe the reimbursement obligation narrowly to just the medical costs recovered by the plaintiff.

Medicare Cap or Daily Limit?

Posted by Mary Skinner

Question:
I have a client who became a quadriplegic after a motor vehicle accident. He is in an in-patient rehab facility. Medicare advised that he is approaching his $1 million cap and will have to pay for future in-patient care – they have to start paying $20,000 per month going forward, as he is approaching 100 days.

If there is a cap or daily limit, does it only apply to the in-patient rehab facility? He happens to live one mile from the facility. If he has to move home, will Medicare pay for outpatient rehab at the same facility? Will they pay for transportation? Will they pay for a home health aide?

-New York Attorney

Answer:
Medicare covers certain skilled care services that are needed daily on a short-term basis (up to 100 days) in a Medicare-certified skilled nursing facility. Medicare will cover skilled care only if there is a qualifying hospital stay. This means an inpatient hospital stay of three consecutive days or more, not including the day of discharge. Admission to the SNF must be within a short time (generally 30 days) of leaving the hospital and require skilled services related to the hospital stay. After discharge from the SNF, if there is another admission to the same or another SNF within 30 days, another three-day qualifying hospital stay is not necessary to get additional SNF benefits.

The benefit period payments are as follows:
Days 1 – 20: $0 for each day
Days 21 – 100: $128 for each day
Days over 101: 100%

A benefit period begins the day of admission to the hospital or skilled nursing facility. The benefit period ends when there has been no hospital care (or skilled care in a SNF) for 60 days in a row. If there is an admission to a hospital after one benefit period has ended, a new benefit period begins. The inpatient hospital deductible for each benefit period applies. There is no limit to the number of benefit periods you can have.

Additionally, if a beneficiary leaves the Medicare certified part of the SNF then therapy services in the While you are in the Medicare-certified part of the facility, your therapy services in the non-certified part of the facility ARE LIMITED to a specific dollar amount per year UNLESS they are therapy services are from an outpatient hospital.

With that said, if the client could move home, Medicare will pay for the outpatient therapy, but there are caps on outpatient therapy. For physical therapy and speech language pathology services combined, the limit on incurred expenses is $1810 for calendar year 2008. For occupational therapy services, the limit is $1810 per year. The 2009 caps will be slightly higher.
Medicare only pays for ambulance transportation.

Medicare will help pay for home care however there are limits on the number of days per wk or hours per day. In addition, the attending physician certifies that the beneficiary is homebound, meaning it takes a considerable and taxing effort to leave the home; and they need skilled physical, speech or occupational therapy services, or skilled nursing on an intermittent (less than seven days a week) or part-time(less than eight hours a day) basis. If only skilled nursing is required the beneficiary must either need it fewer than seven days a week (even as little as once every 60 to 90 days) or daily (seven days a week) for a short period of time (usually two to three weeks); and a doctor certifies the need for home care, and care is received from a Medicare-certified home health agency (HHA).

Wrongful Death Proceeds

Posted by Matthew Garretson

Question:
Matt,
An associate suggested I give you a call. I have a proposed limits offer from the client's UM carrier that is far less than the liens from Medicare and Aultcare. I can show that the client was not conscious after the accident although she did not die immediately, hence the high treatment costs and the resulting lien. My understanding was always that wrongful death benefits cannot be touched by creditors. The probate court would probably characterize the proceeds that way, and the insurance company may also be willing to put language in the release that they are paying the limits to the wrongful death beneficiaries for the wrongful death. Is that enough? What is the best way to approach Medicare and Aultcare? No action has been filed. Husband was driving and caused the accident that injured the wife. Two adult surviving children. Any thoughts?

-Ohio Attorney

Answer:
We would be happy to assist. Here are some thoughts - The allocation should work for Medicare, but I doubt it will work for Aultcare (we would need to review the policy language and we are happy to do so). With respect to Medicare, it can only recover from the survivorship portion. With respect to allocation, however, Medicare is not bound by an allocation that has not 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. Thus, Medicare will not be bound by the terms of a private settlement agreement, and may still seek recovery from such a settlement, regardless of its terms.

The rules as I know them are as follows:

(1) Recovery Limited to state created rights. 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 the Ohio statutes provide that medical expenses are recoverable by the beneficiaries as part of their claims under Ohio’ wrongful death statute.

(2) Ohio’s Wrongful Death Act. Ohio provides a cause of action whenever the death of a person is caused by wrongful act, neglect or default, and the act, neglect or default would have entitled the injured party (had he or she not died) to maintain an action for damages against the liable party. ORC § 2125.01.

(3) From Which Claim Are Past Meds Recoverable? Under Ohio law, medical expenses paid by Medicare (on a conditional basis) are not recoverable from the wrongful death “estate”. Instead, a wrongful death action may be brought for the “exclusive benefit” of the decedent’s heirs. Recovery for wrongful death extends only to compensatory damages which include: loss of support; loss of services; loss of society; loss of prospective inheritance, and; mental anguish. ORC § 2125.02(B). No provision is made for recovery of the decedent’s medical expenses.

(4) Ohio Survival Act. Recovery of a decedent’s medical expenses must be pursued through a separate action on behalf of the decedent’s estate. Compensatory damages which include past medical expenses (paid by Medicare) are recoverable under Ohio’s Survival Act. ORC § 2305.21. Actions which survive death include actions for “injuries to the person.”
a. Survival action allows for recovery of damages for injuries sustained by deceased up to time of death. Jones v. Wittenberg University, 534 F.2d 1203 (6th Cir. 1976) (Applying Ohio law; reversed on other grounds)
b. In contrast with wrongful death actions, survival actions are not concerned with the wrong to the beneficiaries, but rather the wrong to the decedent. Jones v. Wittenberg University, 534 F.2d 1203 (Applying Ohio law; reversed on other grounds)

(5) Is there any authority for this Medicare lien recovery position? Yes.
a. In United States Fidelity & Guaranty Co. v. Decker, 122 Ohio St. 285 (Ohio 1930), the Ohio Supreme Court ruled that assets gained through a wrongful death action are not the assets of the estate. “It is not property which belonged to the decedent in his lifetime, and the claim did not come into existence until his death.” As such, the proceeds do not belong to the estate, but must be distributed to the beneficiaries.
b. In Fogt v. United Ohio Ins. Co., 76 Ohio App. 3d 24 (Ohio App. 1991), the Ohio Appellate Court held that, as wrongful death proceeds are not considered full assets of the estate, they “may not be used…to satisfy the decedent’s general or contracted debts.” See also State ex rel. Goldberg v. Mahoning County Probate Court, 93 Ohio St. 3d 160 (Ohio 2001).

(7) What do we learn from these cases? Decker and Fogt demonstrate that, in Ohio, recovery from a third party liability settlement (or award) under the Wrongful Death Act is:
-received by individuals to whom Medicare gave no benefit and not intended to reimburse for past medical expenses paid by Medicare;-not fully considered to be a part of the estate, and may not be used to satisfy the debts of the estate.

Proceeds allocated to or resulting from an action under the Survival Act include: -compensatory damages such as past medical expenses, which are allocated to the decedent’s estate, under which Medicare stands in the same shoes as that of any other general creditor.

AND… while Medicare does not expressly limit its right of recovery to exclude wrongful death portions of an award, Medicare is only recovering for medical expenses paid. To that extent, Medicare’s recovery right will follow the estate within which those same medical expenses are claimed as a measure of damages. To the extent that Ohio statutes provide for the measure of damages in both a survival action and a wrongful death action, Medicare will follow Ohio law.

Mary Skinner, our Manager of Medicare Services, can probably answer a host of questions for you on this. We would be happy to resolve both the Medicare and Aultcare issue for you.

Medicare

Posted by Matthew Garretson

Question:
Mr. Garretson,
We currently have a case in which the client had Medicare; we received their initial statement showing an estimated lien amount of $8,486.31. When the case settled, we contacted Medicare for their final lien amount with all applicable reductions. They then sent us a final lien amount for $50,009.45. We immediately filed an appeal, but were unable to pay the full amount by the 60 day imposed deadline. After repeated inquiries to Medicare to check the status of the appeal, we have now been told it has been transferred to an outside facility. Medicare failed to meet their 60 day deadline to respond to our appeal and we have been advised the outside facility does not go by Medicare’s deadlines and just handles cases in the order received.

We are currently incurring an 11% interest rate on the balance due since we did not repay Medicare by the deadline and there appears to be no end in sight as to when we will get a response from them.

Please let me know if you have any advice regarding this issue or if you might be able to assist in some way with Medicare. If so, please let me know your fees for services.

I look forward to hearing from you.

-South Carolina Attorney

Answer:
I spoke with Mary Skinner and Mark Maughan in our office. Here is there assessment:

1) If you are withholding any funds, you should apply those withheld funds to the outstanding balance. If you don’t get a favorable outcome it will at least reduce the amount of interest. If you do obtain favorable decision, then the money will be reimbursed.
2) Medicare has 120 days to respond to any waiver/appeal (60 days to pass it to the Qualified Intermediate Contractor and they have 60 days to respond). Once 120 days have passed, you can seek involvement of a supervisor for case to be expedited.

Please do not hesitate to contact Mark or Mary (704-366-8996) if you would like to discuss further.

Medicare Lien

Posted by Matthew Garretson

Question:
I have a case that is in suit and nearing settlement, but we have been having trouble convincing Medicare to remove unrelated medical charges from its claimed subrogation amount. Has anyone had success with bringing Medicare into the suit to defend its lien? Should we move to amend the complaint to add Medicare as an Involuntary Plaintff or use some other procedure? Does anyone have such a motion they would be willing to share?

-Ohio Attorney

Answer:
If the claims in question include injury-related diagnosis codes but the date of service was primarily for the treatment of other unrelated conditions, then you will need to send in medical documentation to support your position (doctor notes/or letter, admission/discharge summary etc.) and request to remove the claims. If you provide documentation to get the claims removed and the MSPRC still doesn't remove the claims, the next move would be to go directly to the appropriate Regional Office for assistance. You will have better luck with that approach then bringing Medicare into the suit.

CMS Operating Rules

Posted by John Cattie

Question:
How do CMS WCMSA review contractors review submitted MSAs?

Answer:
On 12/19/08, CMS posted “Operating Rules” on its website in an effort to share more information with the workers’ compensation industry and workers’ compensation MSA submitters. These Operating Rules, though partially redacted, provide insight to how CMS WCMSA review contractors review submitted MSAs.

With the Operating Rules as guidance, we share one MSA submitter’s story to illustrate the fluidity in this area of law. A worker’s compensation claimant settled a case for $250,000 or less and was not then a current Medicare beneficiary, but would become one in February 2009. An MSA evaluation was provided, but the submitter doubted its reviewability based on prior CMS guidance which indicates these types of cases do not need CMS approval. Upon review, the CMS review contractor deemed this MSA reviewable because it was greater than $25,000.

Prior to the Operating Rules this would be a curious result. According to the Operating Rules, “if a TSA (Total Settlement Amount) is between… $25,001 and $250,000, the case is eligible for review only if the claimant is entitled to Medicare according to the WCCCS (Workers’ Compensation Case Control System) before the PSD (Proposed Settlement Date).” Upon further review of the definition of PSD in section 3 of the Operating Rules, CMS defines it as the later of COBC receipt date plus 120 days or a certain redacted pricing date plus 3 months. Because the MSA submitter received a letter from the COBC dated 12/8/08, the claimant would be eligible for Medicare before their defined PSD, making the MSA reviewable. Note that this is a change to how CMS approval is determined for WCMSAs, but does not change the fact that an MSA evaluation is needed where, due to settlement, there is a permanent burden shift of future injury-related care over to Medicare.

The morale of this story is that the CMS review thresholds provided by the Patel Memorandum are not static. As CMS has told us in the past, the review thresholds are subject to adjustment and may be modified at any time.