Thursday, April 8, 2010

Medicare's Name On The Check

In Florida, do insurance providers argue for Medicare to be a payee on a settlement check just because there is a Medicare lien to be paid back out of a settlement?

Connecticut Attorney

Our firm has been seeing the fact pattern of the settling party putting Medicare’s name on the check more and more in recent weeks, not only in Florida but around the country. 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. 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.

As evidence that it is not required under law to put Medicare’s name on the check, we look to Tomlinson v. Landers, 2009 WL 1117399 (M.D.Fla.). The case and memo are available here. This was 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.

If you have more questions about Medicare compliance, please feel free to give me a call to discuss further.

My best,
John Cattie