Wednesday, March 31, 2010

Defense Reporting Obligations

Question
By receiving "supplemental" interrogatories from defense firms; is there an obligation to report to Medicare to satisfy insurance companies' obligations? You already answered that plaintiffs do not need not sign authorizations. Can you list what information plaintiffs are required to provide. I can understand name, date of birth, HIC# and whether enrolled in Medicare and receiving Medicare benefits. Do we have to give Social Security numbers? How about answering whole series of questions re Social Security Disability? Questions re end state renal disease and Lou Gehrig's disease? Thanks for your help!

New Jersey Attorney

Answer
Thank you for reaching out to us with your question. There is much confusion surrounding the requirements under Section 111.

The information that the defense is allowed to obtain to determine Medicare entitlement includes the following:

• First letter of first name
• First six characters of last name
• Gender
• Date of birth; and
• Health Insurance Claim Number (HICN) OR the Social Security Number (Medicare prefers that the HICN be used, if available)

The above information is what the defense needs to query the Medicare system to determine whether the claimant is a Medicare beneficiary. The response that Medicare will provide to the defense will only include whether there was a match and the claimant is a beneficiary; or that there was no match. The defense will not receive information about when the claimant became entitled or why they are entitled. The defense is allowed to query the system as soon as they receive notice of a claim, but the trigger date for reporting is whether the claimant is a beneficiary on the date of the settlement.

There is additional information that the defense needs for the Section 111 reporting if there is a settlement with a Medicare beneficiary. This information does not need to be provided to the defense until there is a settlement. There is no reason why the defense needs information about a claimant’s disability or illness. This is protected information and is not required for Section 111 reporting. Click here to view the list of the data points that are needed for the query and also for the reporting.

Please let us know if you need anything further.

My best,
Marlene Wilson

Tuesday, March 30, 2010

New Reporting Requirements for Insurers

Question
Here is the latest I am hearing from defense counsel. They are saying that “at the early stages of the case (and by mail or phone request, so they don't have to do it by written discovery) they call or write and ask for the full name, birth date, social security #, etc. of the plaintiff" because of the new Medicare reporting requirements.

What is this about? Is it legit? Does Medicare run the business of personal injury law practice now?

West Virginia Attorney

Answer
Insurers now have to report all settlements with Medicare beneficiaries to CMS in the quarter following settlement. In order to determine which settling claimants are Medicare entitled, they have to submit 4 data points to a Query system, which will simply tell them Yes or No as to Medicare entitlement. The four data points are Name, DOB, SS# or Medicare #, and Gender.

It is in your and your clients best interest to provide these initial data points as early as possible so that the insurance company (or self insured entity), otherwise known as the Responsible Reporting Entity (RRE) can search the query system and determine your client’s Medicare status well ahead of settlement. This will help move things along at settlement time. We also advise firms to stipulate with defense at the time of settlement as to the 50 or so data points they will ultimately report to CMS (Medicare) post settlement IF your client is Medicare entitled. The collaborating as to the injury information is critical to ensure the RRE is not reporting different injuries to CMS than what you/your client have satisfied in payment of the tort recovery obligation.

Assuming the insurance company is not requesting anything more than those 4 data points noted above, they are not overstepping at this stage of litigation. Some firms provide them with “limited use” language that says you are providing them for the sole purpose of determining Medicare entitlement so as to allow the RRE to find out whether they will have to report in accordance with Section 111 reporting requirements.

Please let me know if you want more detail, and I can provide offline. Additionally, our website has an entire section regarding MMSEA (Section 11 Insurer Reporting Requirements) and exactly what it requires of RREs (and more importantly what it DOES NOT require).

My best,
Tate G. Johnson, Esq.

Monday, March 29, 2010

Plan Language Inquiry In The Longaberger Case

Question
I have read with interest, your article on the Garretson Firm Resolution Group website regarding the Longaberger case and its meaning.

I do have a question - suppose in the liability case I did not seek medical expense recovery and settled the case for pain and suffering only. Would the plan still have a claim for reimbursement? I see the wording of the sample given in the article refers to "any recovery" but have any courts weighed in this aspect?

Thanks for your time.

Answer
That is a very good question. Courts have weighed in on this matter and generally they will defer to the express language of the policy and the fact that ultimate discretion will lie with the administrator in interpreting plan language. In using the words "any recovery" it is a pretty safe bet that this includes recoveries which do not specifically provide for past medicals. Many plans do not stop there and will actually have additional provisions that state that regardless of how a settlement is allocated they will still have a right of first recovery and the participant must not do anything to prejudice the plan's rights. Thus the allocation technique is most effective when dealing with plans that limit their rights to recoveries for medical expenses. This is less common but something that we still see. This discussion really emphasizes the importance of carefully evaluating the plan language.

While this may seem to be a bit unjust I believe that this type of issue will be fought out in the coming years. Particularly in the scope of the meaning of "appropriate equitable relief" (as designated by ERISA) and states which limit or prohibit the recovery for medical expenses.

Thanks for the question and please let me know if you have any follow ups.

Michael Russell

Thursday, March 25, 2010

The 50 Data Points

Question
What are the 50 data points?

Answer
The 50 data points are comprised of the following data categories:

1) Injured party data;
2) Primary plan data;
3) Injured party attorney data;
4) Incident data; and
5) Settlement data.

The particular data points to be reported will change depending on the case-specific facts, and may be as many as 131 data points in rare cases. For more information, including the detailed list of data points, visit our website at www.garretsonfirm.com.

Sylvius von Saucken

Wednesday, March 24, 2010

TRICARE Statutory Obligation For Attorney Fees

Question
My client is a 72 year old retiree who suffered serious injuries in a car accident. In addition to Medicare, she has TRICARE through the Air Force. The Medicare lien has been resolved reasonably. I am now trying to resolve the TRICARE lien, but the Air Force, unlike Medicare, will not compromise the lien to account for one-third of the attorneys' lien. The Air Force states that "5 U.S.C. sec. 1306 prohibits the payment of counsel fees by the United States."

Would you please provide any legal authority to support a one-third reduction of the TRICARE medical lien for attorneys' fees? In Vermont, it is standard practice for this reduction of an insurance lien. The insurer must pay its proportionate share of procurement costs (attorneys' fees and expenses). Thank you.

Answer
TRICARE derives the authority to assert a subrogation claim under the Federal Medical Care Recovery Act (FMCRA), 42 U.S.C. §§ 2651-2653, which authorizes recovery of the reasonable value of medical care furnished or paid for by the United States under circumstances creating tort liability for such medical care in a third party. 32 C.F.R. § 199.12(b). Unfortunately there is no statutory reference under the FMCRA which requires the government to reduce its reimbursement claim based upon attorneys’ fees and costs associated with the settlement.

It has been our experience that while TRICARE does not have a statutory obligation to reduce for procurement costs they will consider such a reduction in the context of hardships (financial/physical). The issue is that each TRICARE office usually has its own guidelines and procedures for reduction consideration. While this can make the process unpredictable, we have found that submitting information and addressing hardships is an effective means of gaining reduction rather than pushing the single concept of procurement costs.

However it also worth noting that in a case where the injured party pursued the tort claim and the government passively waited for reimbursement, at least one court has required an equitable reduction in the government’s claim. Mosey v. U.S., D.Nev.1998, 3 F.Supp.2d 1113. While this case involved a VA patient rather than a TRICARE beneficiary, it dealt with the same regulatory scheme under which the government seeks recovery, the FMCRA. The Court held that a balance of equities test should be applied in such circumstances. While this case and VT law may not be controlling they may be persuasive especially in the context of any hardships your client may have endured. I am also not aware of any law which prohibits the US from taking such a reduction.

Please let me know if you have any follow up questions and thank you for the question.

Michael Russell

Tuesday, March 23, 2010

Query Access System

Question
Can a plaintiff's lawyer get into the QUERY ACCESS system? If so, how? If not, how do we develop a system that will satisfy carriers and our client?

Answer
The CMS Query Access system is a tool developed by CMS for use by those entities that have registered as an RRE. CMS recognized the difficulties an RRE would have in truly determining who is a current Medicare beneficiary versus who is not a current Medicare beneficiary. Since the reporting obligation under the MMSEA only ripens when the injured individual is a current Medicare beneficiary at the time of settlement, judgment, payment or other award, the RRE needed a way to know when it must report settlements to Medicare. Unfortunately, plaintiff attorneys do not have access to the Query Access System unless they are somehow registered as an RRE. Instead, the way you can develop your system that will satisfy carriers and your clients is to have a standard operating procedure in place at your firm for every case, understanding that formal verification / resolution of Medicare conditional payments remains a plaintiff obligation. To do that, we recommend enhancing your case intake to capture essential information about your client’s government benefits as well as capturing the data points which the RRE will have to report. Capturing this information up front will allow you to start the process of verification / resolution early while simultaneously assisting the settling party responsible for payment to satisfy its reporting obligation by showing that party, at time of settlement, you already started this process. In so doing, you will be moving the case towards settlement as opposed to having these Medicare compliance issues chill the settlement negotiations.

Sylvius von Saucken

Monday, March 22, 2010

Wrongful Death Statue

Question
In our state, wrongful death awards belong to the family and are not subject to claims of the estate -- and the medical expenses incurred by the decedent prior to death are not part of the measure of damages. I am trying to discuss/communicate with MSCRP to get an acknowledgment that the insurance company can pay the settlement without having Medicare liability. Fax communication with MSPRC regarding this issue is going nowhere. Any pointers?

Answer
If a wrongful death statute does not permit recovering medical damages, Medicare has no claim to the wrongful death payments. When a liability insurance payment is made pursuant to a wrongful death action, Medicare may recover from the payment only if the State statute permits recovery of these medical expenses. Generally, if the statute permits recovery of the deceased's medical expenses, Medicare may pursue its payments, even if the action fails to explicitly request damages to cover medical expenses. Thus, in that event, even if the entire cause of action sets forth only the relatives and/or heirs damages and losses, then Medicare may still recover its payments. When State law permits a full recovery of medical damages but limits the amount of the recovery which is payable to creditors as a result of past medical expenses, Medicare may recover against the entire tort recovery, up to the full amount of past Medicare payments. However, when state law limits the amount of the past medical expenses that may be recovered from the tortfeasor and responsible insurer, Medicare may recover only up to that amount (or the amount of the settlement, if the settlement is less than or equal to Medicare's claim.)

Unfortunately, you will still need to report the case to Medicare and provide them with the documentation advising them they do not have any interest in the settlement based on your state’s WD statute, which includes providing them with a copy of the statute. You might also refer them to their own policy under the Medicare Secondary Payer Manual, Section 50.5.4.1.1- Wrongful Death Statutes, which is where the above instructions are derived.

Sylvius von Saucken

Tuesday, March 16, 2010

Medicare Conditional Payments & Medicare Set-Asides Issues

Question
My client has never used Medicare as he is covered under his wife's policy. The insurance company is asking to verify that Medicare will have no future interest or current interest. I went on mymedicare.gov an looked up to see if any payments were ever made under the Medicare Policy and found not a single claim made. I gave that to the adjuster but that was not sufficient. Is there an easy way to get a letter that says no payments and no future interest, so my client can get money?

Minnesota Attorney

Answer
Not to worry because you are not alone in having the insurer asking for this information. What the insurer is looking for is a letter directly from Medicare stating that it has not paid anything in the form of conditional payments (date of injury to date of settlement). It is also looking for information directly from Medicare regarding any future interest that should be satisfied. While Medicare will issue a letter regarding the conditional payments paid, it will not issue a letter about the future interests.

The appropriate way to obtain that letter from Medicare about conditional payments is to establish a tort recovery record with Medicare and request a conditional payment listing. Upon receipt, that can be provided to the insurer as evidence that Medicare has not paid anything. Though Medicare will not issue a letter about any future interests, you are still under the obligation to "consider and protect" Medicare's future interest under the Medicare Secondary Payer statute. To do that, you need to ask and answer the question "Is a Medicare Set-Aside necessary under these case specific facts?" If yes, then determine the proper amount to set aside. If no, then document your file to show how you arrived at that conclusion.

We can assist you with regards to all action steps described above. At your convenience, I would be happy to discuss with you how GFRG can help your client maintain absolute Medicare compliance.

My best,
John Cattie

Medicare Supplemental Insurance - Parts A & B

Question
Are the Medicare Supplemental Insurances (such as AARP) medical bills included in the subrogation when we pay back Medicare? If not, am I assuming correctly that we are required to contact such insurance provider for their subrogation?

Thanks.
Charleston Attorney

Answer
The MSP Statute is intended to cover reimbursement for Medicare’s program (including Parts A and B). Recent (2003) regulations now may include Medicare Parts C and D. However, supplemental coverage would not be included in your Medicare conditional payment summary, so you are quite correct – you would contact the insurance provided to determine their reimbursement right, noting the Medicare Parts A and B might have covered as much as 75% of many medical bills (depending on the client’s adjusted gross income), but the supplemental coverage would have made co-pay and other payments. For example, the Medicare Part A deductible is $1,100 for 2010. Where your client, as a Medicare beneficiary, would have been responsible for a deductible or co-pay, depending on the terms of the supplemental coverage, this may be the part of the injury-related medical expenses you are looking for.

Sylvius von Saucken, J.D.

Monday, March 15, 2010

CMS Right Of Action To Assert A Claim

Question
Does Medicare presently have the power to assert a claim against a tortfeasor and / or its liability carrier? The tortfeasor settled a BI claim with a liability carrier. Now they want to withhold payment until the Medicare lien is resolved. I am concerned about its exposure. Should we disburse funds without resolving the Medicare lien, which we have no intention of doing given our and our client's exposure? I was under the impression that the tortfeasor / liability carrier had no exposure to Medicare until July 1, 2010. Am I incorrect in this assumption?

Georgia Attorney

Answer
Yes, 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.

We have seen an increase in the number of liability carriers that want documentation from the plaintiff that Medicare's interest is being protected. It has always been that in the event that reimbursement is not made to Medicare as required by 42 USC 1395y(b)(2)(B)(I), action may be brought against any entity responsible for payment (and may collect double damages from insurance companies), or any entity that has received a third-party settlement. Under 42 CFR 411.24(g), this includes attorneys whose fees are paid from settlement proceeds.

The tortfeasor / carrier always had exposure, however since the MMSEA act the defense seemed to have been awakened to the fact that they can be held liable if Medicare is not reimbursed.

CMS has recently issued an extension of the first reporting date from April 1, 2010 to January 1, 2011. Any settlements made on or after October 1, 2010 will be reportable.

Mary Skinner

Friday, March 12, 2010

Settlement Proceeds Question

Question
Your blog / posting concerning subrogation was most informative. It leads me to a question, if you don’t mind.

My client is receiving $12,000; $3,000 of that is medical subrogated by BCBS. In her Chapter 7 bankruptcy (now discharged) she listed the possible PI claim as exempt property to the maximum we could exempt (about $20,000).

Although we never listed BCBS as a creditor, case law holds that in a no-asset Ch 7, creditors who were not noticed are discharged. (I have a lovely 5th Cir opinion on that.)

This brings me to my question. You wrote:

They can treat the subrogation carriers as creditors in a Ch 7 or a Ch 11; provided however, they put the settlement money into the estate.

“Into the estate” gives rise to my question: does that mean she cannot exempt the medical subrogation money? Is this over and above that $20,000 already “in the estate” and exempted? It would seem that she has already put all possible money into the estate by claiming the $20,000 exemption.

I really appreciate your help and thank you in advance.
Texas Attorney

Answer
Where you have listed the settlement proceeds on Schedule B and exempted it on Schedule C, my position is that provided the $12,000 represents your client’s gross settlement proceeds, you have already included the amount held back for medical subrogation.

If not, what is the client’s gross settlement amount, as that could bear on a determination whether the client identified the assets as belonging to the bankruptcy (Ch 7) estate. If it turns out that combined, the $3,000 subrogation amount is included as part of the exempt amount, I would feel comfortable paying BCBS out of the settlement proceeds exempted from the bankruptcy estate, if there is a contractual requirement to do so (outside of the bankruptcy context).

Sylvius von Saucken

Thursday, March 11, 2010

Private Insurance Reimbursement Question

Question
I recently came across your Longaberger Practice Tip. I represent a PI Plaintiff in a case against a restaurant for an allergic reaction (mushrooms) suffered by my client. I settled the case for $30,000 (about $12,000 are meds) and meds paid by the insurance company. I have received no notice of lien/reimbursement of any sort and I am quite sure that they are not even aware there is a 3rd party claim. Do I need to notify them or can I pass the funds? Thanks.

KY Attorney

Answer
Thanks for the question and I am happy to provide some insight into the matter. While I cannot definitively say what your obligations may by I can tell you what considerations can be taken into account.

First and foremost, as a Kentucky attorney I am sure you are aware of KRS 411.118. While O'Bryan v. Hedgespeth, 892 S.W.2d 571 (Ky. 1995), found (3) to be unconstitutional, it can certainly be argued that the remaining subsections still apply including (2) which requires claimant OR their attorney to notify any parties that are believed to hold subrogation rights by certified mail. GEICO v. Winsett, 153 S.W.3d 862 (Ct. App. 2004). However it is worth noting that it has been held that this statute will not apply to an ERISA plan. Humana Health Plans, Inc. v. Powell, 603 F. Supp.2d 956 (W.D.Ky. 2009).

Second, Kentucky Rule of Professional Conduct 1.15(c) states that “in the course of representation a lawyer is in possession of property in which both the lawyer and another person claim interests, the property shall be kept separate by the lawyer until there is an accounting and severance of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separate by the lawyer until the dispute is resolved.” The issue here is whether you have received reasonable notice of a just claim. From the facts of your question it would appear that you have not received any notice and thus you arguably have no duty to withhold for BC.

Third, the Longaberger case involved a case where there was clear notice (correspondence back and forth). The Court did not say that identifying such an obligation was the duty or responsibility of the attorney. However, when dealing with an attorney who admitted that he had notice of the plan’s interest as a first priority lien the court was quick to hold the attorney liable. That does not appear to be the case here.

Finally, the client’s interest and decision needs to be considered. While there may not be an affirmative obligation to notify for you, there are certainly going to be contractual consequences for your client, including the potential loss of future benefits and personal liability. These consequences should be discussed with the client. Ultimately the decision needs to be made by you and the client. If the client chooses not to notify it may be a good idea to obtain an informed consent agreement. If the client chooses to notify and you need more information on our lien resolution services, please let me know

Please let me know if you have any questions and I am always happy to discuss.

Michael Russell

Wednesday, March 10, 2010

Medicare Set Aside Arrangement Terms

Question
My client is a Medicare beneficiary who suffered a neck injury in a Motor Vehicle Accident. Their auto insurance has paid for treatment to neck thus far. Adverse driver policy limits are $25,000 and case will probably settle for less than that. It is unknown if he or she will need any future neck treatment. How do you recommend we deal with MSA issues in such a small case? Also, can you direct me to a site which shows how to establish an MSA?

Wyoming Attorney

Answer
The Medicare Secondary Payer Act (42 U.S.C. Sec. 1395y(b)) requires that settling parties consider and protect Medicare's interests. However, that statute does not advise us how to properly protect Medicare's future interests. In fact, we do not even have a statutory definition of "Medicare Set Aside Arrangement" or "MSA" at this point. While CMS has provided guidance as to how to protect its future interests in workers' compensation cases (via 12 policy memos to date), it has not provided even a single memo to date about how to protect its future interests in a tort case. Absent any law or guidance on point about how to protect Medicare's future interest in a liability case, absent a definitive allocation to future meds in the settlement release (or a line item for future meds in a jury verdict form), a MSA is not appropriate in a liability settlement. Considering Medicare's future interests rarely means paying Medicare money in the form of a MSA in a liability settlement.

Having said that, you will want to document your file and memorialize how you did consider and protect Medicare's future interest, arriving at the conclusion that a MSA was not appropriate. That documentation can be in several forms, including an MSA evaluation from a neutral third party entity operating in the compliance space or a note from the treating physician indicating that the claimant does not require any future injury-related care that would otherwise be covered by Medicare. With regards to information about how to establish a MSA, I would lead you to Affiance Partners out of Cincinnati, OH. There website is www.affiancepartners.com

I would be happy to discuss your case specific facts with you further at your convenience as well as talk about the MSA obligation in general.

My best,
John Cattie

Tuesday, March 9, 2010

Medicare Settlement Term Date Question

Question
If one previously entered into an agreement with Medicare on past and future liens on various cases but the funding of the settlement occurs after 1/1/2010 are these new requirements applicable and will funding be delayed?

Answer
Your answer depends on the settlement terms. Our position concerning conditions precedent to settlement funding is that if the settlement agreement is complete before 1/1/2010, but the timing of payment, as an administrative matter occurs thereafter, that settlement should not be reportable. If, on the other hand, there is the potential of funds reverting back to the paying parties, or there is a condition, such as minor settlement approval, that if not met, would preclude any payment from occurring, in that case, when the final condition precluding payment has been satisfied, you have a reportable event under the MMSEA.

Sylvius von Saucken

Monday, March 8, 2010

Settlements Involving Medicare Beneficiaries

Question
I settled a medical malpractice case involving a Medicare recipient. No claim has been received from Medicare. The insurance company wants to withhold part of the payment until I clear with Medicare. I understand that the only settlements after Oct. 1, 2010 are to be reported. Is this settlement still subject to a lien?

Puerto Rico Attorney

Answer
Yes, any settlement that involves a Medicare beneficiary must be reported and Medicare's interest protected and reimbursement made for any conditional claims they have made for injury related care.

Under the MSP laws (42 U.S.C. § 1395y(b)), Medicare does not pay for items or services to the extent that payment has been, or may reasonably be expected to be, made through a no-fault or liability insurer or through Workers' Compensation (WC). Medicare may make a conditional payment when there is evidence that the primary plan does not pay promptly, conditioned upon reimbursement when the primary plan does pay. Once the MSPRC has information concerning a potential recovery situation, it will identify the affected claims and begin recovery activities. Insurers/WC carriers (as applicable), beneficiaries, and representatives/attorney(s) are required to recognize the obligation to reimburse Medicare during any settlement negotiations.

The first step in the process of reporting the case to Medicare is to contact the Coordination of Benefits Contractor (COBC) at 1-800-999-1118.

The COB will then establish the record and forward it to the Medicare Secondary Payer Recovery Contractor (MSPRC). Once the case has been established you must send the MSPRC proper proof of representation in order for the MSPRC to release information regarding conditional payments for injury related care they may have made.

Medicare's recovery claim runs from the "date of incident" through the date of settlement/judgment/award. Medicare has both a direct priority right of recovery and subrogation rights based upon Federal law; Medicare's recovery claim is superior to the recovery claims of any other entities.

The reporting of settlements after October 1, 2010 is concerning Medicare, Medicaid and SCHIP Extension Act of 2007, or the MMSEA. The MMSEA statute (42 USC 1395y(b)(8)), the insurance company may have to report certain information to Medicare once a claim is settled. That reporting obligation arises in those cases where the injured individual is a current Medicare beneficiary at the time of settlement. The insurance company, generally referred to as a Responsible Reporting Entity or RRE, faces a $1,000 per day per claimant penalty under the statute if they are found to be out of compliance.

Regards,
Mary Skinner

Medicare Liens

Question
Thank you for your blog re Medicare liens. I hope I am reading 411.37 wrong. We have a client that has over $100,000.00 in Medicare bills. If we settle for the limits of $50,000.00, then we can only get procurement costs and the balance goes to Medicare? Would there be any money left for the plaintiff? Please tell me that I am reading this section wrong!

California Attorney

Answer
Unfortunately, you are not reading it incorrectly. If Medicare payments equal or exceed the amount of the liability insurance payment, judgment or settlement amount, then Medicare recovers the total amount of the settlement minus procurement costs.

Having said that, there are remedies with the MSP provisions that would allow for reduction of Medicare's reimbursement and enable the client to put some money in their pocket.

Waivers

A waiver can be considered based on Section 1870 (c) of the Social Security Act and 42 CFR 404.501-404.515. A waiver can be requested based on financial hardship due to the accident, or based on equity and good conscience. The request must be made in writing to the lead Medicare contractor only after settlement has been reached.

A waiver may only be considered after settlement has been finalized and proof of settlement has been forwarded to the MSPRC. If the beneficiary is deceased, a waiver can only be requested by a surviving spouse or a legal dependent entitled to benefits under Title II or Title XVIII of the Social Security Act. It should be noted that prompt repayment to Medicare will avoid accruing interest charges. You will retain your right to dispute, appeal, or request waiver of the debt.

Compromises

A compromise can be considered based on Federal Claims Collection Act and 42 CFR 401.613.

1. Litigative risk
2. Inability to pay
3. Cost to collect Medicare's claim will exceed amount of recovery

A compromise can be requested before or after settlement. The beneficiary, spouse, immediate family member, or attorney may request a compromise. If the request is post-settlement, settlement information must be submitted in writing before your request will be processed.

I hope this helps.
Mary Skinner

Friday, March 5, 2010

Medicare Provider Question

Question
A Medicare client was injured in auto/pedestrian accident and sought medical treatment at a local hospital. The hospital does not file a claim with Medicare. Instead, the hospital files a hospital lien against the injured client. Is the hospital obligated to file this claim with Medicare, or, can the hospital recover the full amount asserted in the statutory hospital lien?

Oklahoma Attorney

Answer
When a Medicare provider of services learns that a beneficiary received services that may be payable by a payer primary to Medicare, the provider is required to pursue payment from the primary payer for a period of 120 days following the date of treatment. At the end of the 120 day period, if the insurer has not made payment, the provider may choose to bill Medicare or continue to wait for payment from a future insurance settlement. If the provider chooses to bill Medicare, then it becomes the MSPRC’s responsibility to recover Medicare’s conditional payments if a settlement occurs at some point in the future. The provider of service is not required to send the bill to Medicare if they choose to pursue payment from a possible future insurance settlement.

That being said, a provider may either:

• Bill Medicare for payment and withdraw all claims/liens against the liability insurance/beneficiary’s liability insurance settlement (liens may be maintained for services not covered by Medicare and for Medicare deductibles and coinsurance); or

• Maintain all claims/liens against the liability insurance/beneficiary’s liability insurance settlement.

Additionally,

• If the provider bills Medicare, the provider must accept the Medicare approved amount as payment in full and may charge beneficiaries only deductibles and coinsurance.

• If the provider pursues liability insurance, the provider 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.


I hope this was helpful.
Mary Skinner

Thursday, March 4, 2010

TriCare Subrogation Claim Question

Question
When a third-party tortfeasor’s personal liability policy limits are insufficient to compensate the victim for his non-medical expense damages (i.e. past and future pain and suffering, physical impairment, disfigurement and lost wages)and pay the government's subrogation claim, whose claim to the homeowner's insurance proceeds have priority? Is this the victim or the governments’ responsibility? Must the victim first be made whole for his non-medical expense damages before the government can he or she recover medical expenses to pay for the victim's medical care? Or can the government deplete the available liability insurance monies in satisfaction of its subrogation claim and leave the victim wholly uncompensated for his non-medical expense damages? In other words, if payment of the government's subrogation claim will leave nothing to compensate the victim for his non-medical expense damages, does the government get it all and the victim get none? How are the answers to these questions different, if at all, if the victim settles with the tortfeasor before Tricare benefits have been paid to the health care providers?

Answer
TriCare derives the authority to assert a subrogation claim under the Federal Medical Care Recovery Act (FMCRA), 42 U.S.C. §§ 2651-2653, which authorizes recovery of the reasonable value of medical care furnished or paid for by the United States under circumstances creating tort liability for such medical care in a third party. 32 C.F.R. § 199.12(b).

Under the circumstances of your question, I would cite the case of Commercial Union Ins. Co. v. US, 999 F.2d 581 (C.A.D.C). The Court here stated that FMCRA is silent as to priority of government's right to recover from tortfeasor medical expenses it incurred on behalf of injured employee over injured employee's right to recover non-medical damages from tortfeasor. The Court also pointed out that 42 USC 2652(c) allows the injured party to recover damages for those damages not covered under FMCRA and giving the government priority would essentially render this section useless. Ultimately the Court held the interpleaded fund would be distributed on ratable basis, such that each claimant received share of fund proportionate to their share of total judgment figure, since FMCRA was silent on question of priority of claimants' rights and since “equity is equality.” While the circumstances of this case may vary from your question, the case certainly provides some guidance.

It is also worth noting that in a case where the injured party pursued the tort claim and the government passively waited for reimbursement, courts have required an equitable reduction in the government’s claim. Mosey v. U.S., D.Nev.1998, 3 F.Supp.2d 113. As a general matter, in our experience, the government is willing to take such matters into consideration and may adjust accordingly so the injured party receives some compensation.

If a settlement took place prior as mentioned in your second question, the priority determination would arguably be the same. Please let me know if you have any questions. Thank you for the question.

Michael Russell

Wednesday, March 3, 2010

ERISA & Non-ERISA Plan Language

Question
I have a non-ERISA policy. My client lives in Ohio, therefore, N. Buckeye v. Lawson applies with regard to plan reimbursement language and the make-whole doctrine. The pertinent language is as follows: "We will have the right to be reimbursed to the extent of benefits we paid for the illness or injury if the covered person subsequently receives any payment from any third party. The covered person shall promptly reimburse Golden Rule from the settlement, judgment or any payment received from any third party. We have a lien on all money received by a covered person in connection with the loss equal to the amount we have paid. We have a right to be reimbursed in full regardless of whether or not the covered person is fully compensated by any recovery received from any third party by settlement, judgment, or otherwise."

Does this language satisfy the Lawson requirements and trump the make-whole doctrine? If settlement funds are released to the client, which includes money for the lien, does an attorney in Ohio have any personal liability? I am aware of what Longaberger states for the ERISA plan. Thanks for your insight.

-Ohio Attorney

Answer
Thank you for the question. Before diving into the question, I want to emphasize one point of differentiation between an ERISA policy and a non-ERISA policy. Often we see the mistake of referring to self-funded Plans as "ERISA Plans" and insured Plans as "non-ERISA Plans." In reality, both insured Plans and self-funded Plans are both ERISA-covered. ERISA defines an employee welfare benefit plan as a plan, fund, or program; established or maintained; by an employer, an employee organization, or both through the purchase of insurance or otherwise, for the purpose of providing medical, surgical, or hospital care or benefits or benefits in the event of sickness, accident or disability, for its participants or their beneficiaries. The only exceptions are individual plans, government plans, and religious group plans. ERISA expressly preempts state laws insofar as they relate to employee benefit plans (29 U.S.C. 1144(a)). HOWEVER, under ERISA this preemption does not apply to those laws which regulate insurance, banking, or securities (29 USC 1144(b)(2)(A). This is known as the savings clause. Thus an insured plan which can be subject to state insurance law can still be considered to be an “ERISA” plan. Obviously, the policy in question here could be a government or individual policy and thus it would be “non-ERISA”.

With regard to the Lawson case, the Court held that “unless the terms of a subrogation agreement clearly and unambiguously provide otherwise” the made whole doctrine will apply. The Court essentially adopted the federal common law approach. The plan language cited in your question gives the plan to right to reimbursed regardless of whether the covered person is fully compensated. While this language differs from Lawson (irrespective of whether settlement reimburses for all injuries) it is similar if not clearer than the language in Lawson. An argument can always be made but it would seem the language in your case would satisfy the requirements of Lawson.

With regard to personal liability of the attorney there are several factors to consider. First and foremost, Ohio does not have an affirmative notice law which requires your client to notify the insurer. Secondly, Ohio has adopted ABA rule 1.15(e) which states “When in the course of representation a lawyer is in possession of funds or other property in which two or more persons, one of whom may be the lawyer, claim interests, the lawyer shall hold the funds or other property pursuant to division (a) of this rule until the dispute is resolved. The lawyer shall promptly distribute all portions of the funds or other property as to which the interests are not in dispute.” If you have received notice of the insurer’s interest this is certainly a consideration. Finally, an important aspect of the Longaberger case was the fact that ERISA controlled and thus the court did not really analyze the priority of the attorney’s fee lien in comparison with that of the health plan. If this a non-ERISA policy and state law applies then Ohio law would control the priority here.

As a final note, in cases where the insurer or plan has not put you on notice of their interest and funds are disbursed to a client, I would strongly recommend that before releasing funds you sit down with your client and explain to them any contractual consequences which arise from the language of the policy.

I hope you found the response helpful and please let me know if you have any follow up questions.

My Best,
Michael Russell

Tuesday, March 2, 2010

Does MMSEA Require A Verification Process?

Question
Does MMSEA require an updated verification process or one that you did earlier (a year ago or so)?

Answer
Great question, especially if there is a client who is not yet a Medicare enrolled beneficiary at the time you start negotiations. CMS (Medicare) advises that the RRE (insurer or self-insured, or payer of the settlement or judgment) needs to update their QUERY right up until a payment event (sign settlement agreement, receive court order) occurs.

Sylvius von Saucken

Monday, March 1, 2010

Social Security Disability Insurance Qualifications For Medicare Set-Asides

Question
What suggestion do you have when you have an injured worker who will likely qualify for SSDI within 30 months of a Workers’ compensation settlement, has a WC settlement of 110k being negotiated, has a physician who says that knee replacement will be needed, and a claimant who refuses to have knee replacement.....we want to reduce set aside amount.

Answer
The fact that the injured worker will qualify for SSDI within 30 months of the WC settlement does not necessarily mean that a MSA is appropriate. In fact, the 30 month period of time to which you refer is really linked to an injured individual’s “reasonable expectation” of Medicare entitlement, not SSDI entitlement. According to the CMS Policy Memos, a person possesses that “reasonable expectation” if one of the following 5 characteristics are true: 1) he/she has an open, active application for SSDI pending; 2) he/she has applied for SSDI, that application was denied and they anticipate appealing that denial; 3) he/she has applied for SSDI, that application was denied, and they are actively appealing the denial; 4) he/she is at least 62.5 years old; or 5) they possess an End Stage Renal Disease condition but are not yet a current Medicare beneficiary. If the injured individual does not meet the above mentioned criteria and is not a current Medicare beneficiary, then a MSA is not appropriate. In addition, when considering Medicare’s future interests, starting with the question what part of the settlement has been allocated to future costs of care will lead you to the right answer. Starting with what should the MSA amount be, is like the tail wagging the dog – you need to identify the allocation issues first (see 42 C.F.R. §411.46(d)(2)).

Sylvius von Saucken