Friday, January 29, 2010

Medicare Endorsement

I appreciate your informative website. I note in your 10/26/09 posting that you address two methods of obtaining Medicare's endorsement of a multi-party settlement check. You note that, where the check is sent to Medicare for deposit and refund of net proceeds, Medicare will wait 5 days before sending the refund check. MSPRC advises, however, that it may take up to 10 weeks after deposit of the multi-party check before they are given the go-ahead by CMS to pay the refund. In your experience, are they able to get the refund check turned around in 5 days or should I expect to wait the 10 weeks? Thanks, again, for such a great resource.

Louisiana Attorney

If a demand letter has been established on the case, then Medicare’s finance department would be able to apply the remitted check and issue a refund for the balance accordingly. The refund process would take at least the 10 weeks. If the demand has not been established, the check is still deposited but would remain in "unapplied check" status until there is an appropriate record set up in the system. In the later scenario, I would advise that you contact Medicare if the issuance of the check preceded the issuance of a demand. Unapplied checks have been known to sit at Medicare for an extensive period of time as the various departments are not always aware of each other's activities.

It would also be imperative for the Claimant’s Medicare number to be on the check so that it can be applied to the appropriate account. All of their systems are driven by this number and can slow down the process further if not provided.

If I can be of any assistance, please call me and I would be happy to discuss any further questions or concerns.

Carol Brown

Monday, January 25, 2010

Medicare's Name on Check

We have a judgement on a  jury verdict for millions of dollars.  We know of a medicare lien for $9,000 but it may be higher because we do not have a final figure.  Defendant wants to tie up the whole check for millions by putting Medicare on it as a copayee.  We say we will refuse check and that interest will continue to run on the whole judgement.  Are we right?  Support for our position.  I am aware of Tomlinson decison out of MDFL 2009.

Illinois Attorney

Our firm has been seeing this fact pattern more and more in recent weeks.  The reason for this increase is because those entities are misunderstanding their Medicare compliance obligations in light of the MMSEA.  They believe that, by putting Medicare’s (or Medicaid’s) name on the settlement check, Medicare’s interests (as well as themselves) have been fully protected.  This is neither the intent of the MMSEA nor is this the most effective way to protect Medicare’s interests. Putting Medicare's name on the settlement check does not equal absolute Medicare compliance.  In fact, there is no legal requirement to put Medicare’s name on the settlement check as a payee.  Medicare was not a party to the legal action, merely an entity entitled under the Medicare Secondary Payer Act to be repaid for conditional payments made from date of injury to date of settlement.

You have corrected noted Tomlinson as support for not putting Medicare's name on the check.  Tomlinson v. Landers, 2009 WL 1117399 (M.D.Fla.) involved an auto accident case which was being settled for the $100K policy limit where Medicare had made some conditional payments.  The defendant added Medicare’s name to the settlement check without discussing this prior with the plaintiff.  The plaintiff returned the check, asking that it be re-issued without Medicare’s name on the check. The defendant insisted that it had no choice under federal law (namely 42 CFR 411.24) but to put Medicare’s name on the check.  The plaintiff assured the defendant that Medicare would be reimbursed out of the settlement proceeds and agreed to indemnify defendant for any Medicare claims.  The defendant refused to remove Medicare as a payee on the check.

The court held that: 1) federal law does not mandate that a primary payer (i.e. the defendant) make payment directly to Medicare; 2) the defendant would not have violated federal law by omitting Medicare’s name from the check; and 3) a primary payer may be liable to Medicare if the beneficiary/payee does not reimburse Medicare for any amounts owed within 60 days.  In the end, plaintiff prevailed as the parties failed to reach a meeting of the minds with regard to this issue of reimbursing Medicare and the settlement was rejected.

As a practical matter, we know that Medicare prefers that settlement proceeds not be sent to them until the final claim determination (i.e. final demand) has been calculated.  The final demand is that conditional payment amount less procurement cost offset allowed by Medicare in that particular case.  This calculation cannot be performed until the final demand is requested from Medicare and this cannot be done until the settlement has been finalized.  Thus, putting Medicare’s name on the check is not only unnecessary, but impractical.  Tomlinson provides the case law behind the practical reasons for not putting Medicare's name on the settlement check.

John Cattie

8th Circuit Rules on Recovering Funds

The facts of the case:
1.Settlement proceeds have been disbursed to client and spent.
2.Attorney fees were deposited in our general account and eventually disbursed for expenses and salaries.

Does the 8th Circuit allow the plan under a constructive trust theory or any other theory to recover anyof the funds? Is it possible to trace such funds?

Missouri Attorney

The plan MAY be able to recover such funds from your client and even from yourself. I would first direct you to an article I recently wrote regarding a 6th circuit case. If you go to our website and look to the bar on the right you will see an article entitled "What you should learn from the Longaberger case". This article provides some insight into an ERISA situation which may be similar to the facts posed in your question.

First, the plan may have a right to seek recovery from your client. The plan's right will be dictated by the strength of the plan language. If there is strong language, i.e. there are no defenses such as the made whole doctrine and the plan's language creates the right to an equitable remedy, the plan may recover from your client. The plan also may have the right to offset its interest against your client's future benefits.

Second, if the plan provided you with notice and you failed to set aside such funds they may be able to seek recovery for a portion of their interest from you. This was the case in Longaberger.

Third, the fact that funds are disbursed is irrelevant and tracing is not required. An equitable lien does not require tracing or maintenance of a fund in order for equity to allow repayment. In Sereboff, the Supreme Court stated, "Barnes confirms that no tracing requirement of the sort asserted by the Sereboffs applies to equitable liens by agreement or assignment: The plaintiffs in Barnes could not identify an asset they originally possessed, which was improperly acquired and converted into property the defendant held, yet that did not preclude them from securing an equitable lien. Id. at 365, 126 S.Ct. 1869. The focus is on the fact that when those settlement proceeds were received, the plan's equitable interest can vest."

In conclusion, without knowing more facts it is hard to predict the plan's right of recovery. While Longaberger has raised considerable concern among PI attorneys it is important to remember that the facts of that case were very specific. While these scenarios are not common, it certainly does illustrate the importance of taking ERISA liens seriously and properly addressing any claims for which you have received reasonable notice. If you have any additional or follow up questions please do not hesitate to contact me and we can discuss further. Thank you.

Michael D. Russell

Friday, January 8, 2010

TriCare's Right Against Uninsured Motorist Funds

Does TriCare have a right of subrogation against Uninsured Motorist funds? I read a 1991 district court case out of Kansas, 773 F. Supp. 282, that appears to say that United States was not entitled under the Medical Care Recovery Act to the proceeds of an automobile victim's uninsured motorist benefits. If that is the case should that fact be verified with the Army through the act out of an abundance of caution?

Tennessee Attorney

I believe the analysis to this question is actually twofold. First and foremost, you are correct in your assertion that the United States does NOT have a right to the proceeds of first party insurance proceeds under the Federal Medical Care Recovery Act [§ 1(a)., 42 U.S.C.A. § 2651(a)]. The Court in Government Employees Ins. Co. v. Andujar, 773 F.Supp. 282, held that the United States did not have a direct right to UM proceeds under FMCRA. The FMCRA only gives the government the right to recover from the tortfeasor. In this case neither the injured party nor their insurer, were considered tortfeasors and thus the government did not have a right to recover on any settlement from the Uninsured/Underinsured motorist portion of an auto policy.

While, there is no direct right under FMCRA there MAY be a right under the express terms of the insurance policy and applicable state law. This second prong of the analysis requires an evaluation of the policy itself. If the government can qualify as an “insured” or “third party beneficiary” under the terms of the policy then they will have a right to these proceeds. In the aforementioned Andujar case the Court looked at the specific provisions of the policy. Because it was determined that GEICO’s automobile policy could not be interpreted to include the government as an “insured” (policy actually specifically excluded the government from this classification), the Court held that the government could not recover the proceeds under this alternative theory. Thus in your case I would recommend that you obtain the policy for further analysis. If and when you obtain the policy, we would be more than happy to review the express provisions and determine whether the government could be considered an “insured” with potential rights to the proceeds.

While it may not be necessary to alert the government initially, a proper evaluation of the beneficiary’s automobile policy would help to determine if the government would be able to recover any funds from such a settlement.

Our best,
Jon M. Carmack

Wednesday, January 6, 2010

CMS Issued New Alert

On December 29, 2009, CMS issued an alert providing guidance on registration for an entity that does not have a U.S. address and/or Tax Identification Number.

In sum, the alert states, “To accommodate foreign entities that do not have a U.S. address and/or a U.S. Tax Identification Number (TIN) or Employer Identification Number (EIN), CMS is modifying the existing registration process. Foreign entities are not required to register until April 1, 2010.”

The alert also notes, “Foreign entities will follow the same registration and reporting procedures, and have the same responsibility and accountability for data as domestic RREs. The delay in registration for foreign entitles does not change the July 1, 2009 reporting date requirements associated with “Ongoing Responsibility for Medicals” (ORM) or the January 1, 2010 reporting date requirements associated with “Total Payment Obligation to Claimant” (TPOC) amounts.”

To read the alert in its entirety, please visit: