Question
If the last know exposure is prior to December 5, 1980, is the plaintiff required to notify CMS?
Answer
See answer below. If the plaintiff or plaintiff's attorney can show, by uncontroverted evidence that the last date of exposure occurred on or before the effective date of the MSP statute (Dec. 5, 1980), Medicare does not have a right of reimbursement, and the RRE does not have a duty to report. However, we have advised both parties to settlement that "wordsmithing" will not remove a duty where one exists, so plaintiffs have to be ready to stand by their screening process, and defendants must be able to reasonably rely on that process if they are to take the position no reporting need occur.
Answer: Provided you have a formalized screening process designed to prove the last date of exposure occurred on or before December 4, 1980, a Responsible Reporting Entity will not have a reporting obligation under the MMSEA. Medicare may have a recovery claim only where there was asbestos exposure on or after the effective date of the MSP statute, December 5, 1980. Medicare's claim would be for all Medicare reimbursed services on or after December 5, 1980, which are related to the liability settlement, judgment, or payment. Medicare's recovery claim is based upon specific Medicare reimbursed services rather than some percentage of the liability settlement, judgment, or payment. Further, Medicare has stated in liability recoveries, (but not Workers Compensation), that "If the asbestos exposure ended before December 5, 1980, Medicare will not pursue recoveries from asbestos liability settlements, since the MSP liability provisions were not effective until that date." However, please note that once a post-1980 exposure date is determined, Medicare requires that exposure claims are submitted based on the "date of first exposure."
Sylvius von Saucken, Esq.
Thursday, June 17, 2010
Tuesday, June 15, 2010
How Do You Analyze ERISA Plans To Determine A "Lien"?
Question
I was perusing your blog and noticed a comment on Missouri being an anti-subrogation state but that such is preempted by ERISA. While I agree with that general statement, I have a puzzling question. As an attorney for an insurance company, I consistently see lawyers asking me to ignore the ERISA "lien" (which I call a subrogation interest rather than a lien). If I tell them I must honor ERISA's "lien", they tell me the deal is off. I'd like to be assured that the plan cannot sue the insurance company if I refuse the honor the "lien," but no attorney has been able to convince me.
My position has always been that Knudson prohibits the plan from suing the insurer for not including the plan on the settlement check as they have no remedy at law. However, some plan will provide me with a signed "lien" which appears to voluntarily executed. If a plan asserts that the anti-subrogation status of Missouri is preempted by ERISA, is the Plan held to the sole remedy of equitable relief in that they cannot assert an action at law against the insurer for not honoring the purported lien? Or, can the plan assert that they have a voluntary lien agreement (which Missouri recognizes under Ford v Allstate, 2 SW3d 810) with the beneficiary for which the tortfeasor's insurance company must honor or face an action at law for not honoring it? In other words, can they choose not to opt for preemption where it benefits them even though we would have to analyze the ERISA qualified plan to determine whether they have legitimately obtained a non-voidable lien?
Missouri Attorney
Answer
Thank you for the question. I will admit that the situation presented can be difficult to wrap one's head around and I can certainly understand the confusion. That said, I think we can break things down to gain a clearer perspective. Simply put, I believe there are two approaches that a health plan could utilize to seek recovery; one under ERISA and another under state law contract/lien principles. From your inquiry it is apparent that you are well versed in this subject matter and it is hoped that some of the more basic material below does not bore you as elementary knowledge. Because of the complex nature of these issues I find it is always better to be as complete and thorough as possible.
Before diving into the analysis I also want to point out that I am in complete agreement with your approach of referring to ERISA interests as an interest rather than a "lien". When GFRG refers to an "ERISA lien" it is more a term of convenience than an accurate legal statement. We both know the term "lien" has a significant legal meaning and using the phrases subrogation or reimbursement interest is more appropriate.
First Approach: ERISA (a plan may seek "appropriate equitable relief")
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 and if an ERISA plan is in fact insured you can use state law defenses such as the anti-subrogation approach of Missouri. (Missouri "" Travelers Indem. Co. v. Chumbley, 394 SW 2d 418"¦ health plans are barred from seeking recovery through subrogation or reimbursement because under MO law a claim for personal injuries is not assignable).
To avoid the state prohibition through preemption, an ERISA plan would need to prove that it is self-funded. This can be done through various documentation including the summary plan description, the annual Form 5500, and if need be an affidavit from the plan administrator.
Assuming that an ERISA plan has validated its self-funded status and its corresponding right of preemption, the plan is entitled to appropriate equitable relief as provided under ERISA and Sereboff, 126 S.Ct. 1869 (2006). As you correctly state in your inquiry, the sole remedy is equitable relief and they cannot assert an action at law under ERISA. Thus a plan may seek its right of subrogation or reimbursement as provided in its plan language so long as that language seeks recovery from a specific fund (third party proceeds) and a specific portion of said fund (amount of benefits paid under plan). The plan could not seek an action at law against a third party insurer under ERISA.
Second Approach: State Law ("lien on proceeds")
This approach would be applicable in a case where a plan has obtained a voluntary lien agreement. Please note that this response is dealing directly with a health plan rather than a provider who has a voluntary lien. I believe that a lien granted to a provider for services should be evaluated in a different manner.
There are two important considerations when looking at an ERISA plan's right when a voluntary lien agreement is involved. First and foremost, the lien agreement is almost certainly a direct product of the plan's summary plan description language dealing with subrogation/reimbursement. For a valid reimbursement agreement to be utilized a plan arguably must have some reference or requirement in its plan language to such an agreement. Why? If there was no reference such a reimbursement agreement would be void for lack of consideration since the plan is already obligated to pay for the benefits. If on the other hand there was a reference then the agreement was just another specific term in the plan language regarding subrogation/reimbursement. I truly believe that an ERISA plan would have a very difficult time differentiating this separate agreement from its subrogation/reimbursement rights under the plan language.
The second consideration is the Ford v. Allstate case, 2 SW 3d 810. The Court here allowed a lien on a claim (rather than an assignment of the claim) for personal injury. What is important to note is that this case dealt with a lender who was granted a lien for adequate consideration. It is also important to note that in fn. 3 the Court specifically mentions that had this case dealt with subrogation the analysis and results may have been different. Furthermore the Schweiss v. Sisters of Mercy case, 950 SW 2d 537, addresses reimbursement provisions and the fact that such agreements imposed by health plans would be invalid as against public policy under MO state law.
While a health plan could assert a right under MO law and the theory of a voluntary lien, it appears that such an approach would be difficult to differentiate from its rights under ERISA. It has been our experience that the ERISA right of recovery is always preferred and plans will take this over state created remedies. The reason is that state law will have greater protections for the plan participant and the right of action under state law can be harder to prove/proceed under.
I hope you found this analysis helpful and please let me know if you have any additional questions or comments. Thanks for the inquiry.
My Best,
Michael D. Russell, Esq.
I was perusing your blog and noticed a comment on Missouri being an anti-subrogation state but that such is preempted by ERISA. While I agree with that general statement, I have a puzzling question. As an attorney for an insurance company, I consistently see lawyers asking me to ignore the ERISA "lien" (which I call a subrogation interest rather than a lien). If I tell them I must honor ERISA's "lien", they tell me the deal is off. I'd like to be assured that the plan cannot sue the insurance company if I refuse the honor the "lien," but no attorney has been able to convince me.
My position has always been that Knudson prohibits the plan from suing the insurer for not including the plan on the settlement check as they have no remedy at law. However, some plan will provide me with a signed "lien" which appears to voluntarily executed. If a plan asserts that the anti-subrogation status of Missouri is preempted by ERISA, is the Plan held to the sole remedy of equitable relief in that they cannot assert an action at law against the insurer for not honoring the purported lien? Or, can the plan assert that they have a voluntary lien agreement (which Missouri recognizes under Ford v Allstate, 2 SW3d 810) with the beneficiary for which the tortfeasor's insurance company must honor or face an action at law for not honoring it? In other words, can they choose not to opt for preemption where it benefits them even though we would have to analyze the ERISA qualified plan to determine whether they have legitimately obtained a non-voidable lien?
Missouri Attorney
Answer
Thank you for the question. I will admit that the situation presented can be difficult to wrap one's head around and I can certainly understand the confusion. That said, I think we can break things down to gain a clearer perspective. Simply put, I believe there are two approaches that a health plan could utilize to seek recovery; one under ERISA and another under state law contract/lien principles. From your inquiry it is apparent that you are well versed in this subject matter and it is hoped that some of the more basic material below does not bore you as elementary knowledge. Because of the complex nature of these issues I find it is always better to be as complete and thorough as possible.
Before diving into the analysis I also want to point out that I am in complete agreement with your approach of referring to ERISA interests as an interest rather than a "lien". When GFRG refers to an "ERISA lien" it is more a term of convenience than an accurate legal statement. We both know the term "lien" has a significant legal meaning and using the phrases subrogation or reimbursement interest is more appropriate.
First Approach: ERISA (a plan may seek "appropriate equitable relief")
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 and if an ERISA plan is in fact insured you can use state law defenses such as the anti-subrogation approach of Missouri. (Missouri "" Travelers Indem. Co. v. Chumbley, 394 SW 2d 418"¦ health plans are barred from seeking recovery through subrogation or reimbursement because under MO law a claim for personal injuries is not assignable).
To avoid the state prohibition through preemption, an ERISA plan would need to prove that it is self-funded. This can be done through various documentation including the summary plan description, the annual Form 5500, and if need be an affidavit from the plan administrator.
Assuming that an ERISA plan has validated its self-funded status and its corresponding right of preemption, the plan is entitled to appropriate equitable relief as provided under ERISA and Sereboff, 126 S.Ct. 1869 (2006). As you correctly state in your inquiry, the sole remedy is equitable relief and they cannot assert an action at law under ERISA. Thus a plan may seek its right of subrogation or reimbursement as provided in its plan language so long as that language seeks recovery from a specific fund (third party proceeds) and a specific portion of said fund (amount of benefits paid under plan). The plan could not seek an action at law against a third party insurer under ERISA.
Second Approach: State Law ("lien on proceeds")
This approach would be applicable in a case where a plan has obtained a voluntary lien agreement. Please note that this response is dealing directly with a health plan rather than a provider who has a voluntary lien. I believe that a lien granted to a provider for services should be evaluated in a different manner.
There are two important considerations when looking at an ERISA plan's right when a voluntary lien agreement is involved. First and foremost, the lien agreement is almost certainly a direct product of the plan's summary plan description language dealing with subrogation/reimbursement. For a valid reimbursement agreement to be utilized a plan arguably must have some reference or requirement in its plan language to such an agreement. Why? If there was no reference such a reimbursement agreement would be void for lack of consideration since the plan is already obligated to pay for the benefits. If on the other hand there was a reference then the agreement was just another specific term in the plan language regarding subrogation/reimbursement. I truly believe that an ERISA plan would have a very difficult time differentiating this separate agreement from its subrogation/reimbursement rights under the plan language.
The second consideration is the Ford v. Allstate case, 2 SW 3d 810. The Court here allowed a lien on a claim (rather than an assignment of the claim) for personal injury. What is important to note is that this case dealt with a lender who was granted a lien for adequate consideration. It is also important to note that in fn. 3 the Court specifically mentions that had this case dealt with subrogation the analysis and results may have been different. Furthermore the Schweiss v. Sisters of Mercy case, 950 SW 2d 537, addresses reimbursement provisions and the fact that such agreements imposed by health plans would be invalid as against public policy under MO state law.
While a health plan could assert a right under MO law and the theory of a voluntary lien, it appears that such an approach would be difficult to differentiate from its rights under ERISA. It has been our experience that the ERISA right of recovery is always preferred and plans will take this over state created remedies. The reason is that state law will have greater protections for the plan participant and the right of action under state law can be harder to prove/proceed under.
I hope you found this analysis helpful and please let me know if you have any additional questions or comments. Thanks for the inquiry.
My Best,
Michael D. Russell, Esq.
Friday, June 11, 2010
Asbestos Exposure Claims
Question
The vast majority of cases, at our firm, are asbestos exposure cases. Are defendants required to report when the last exposure alleged is prior to December 5, 1980?
Answer
Provided you have a formalized screening process designed to prove the last date of exposure occurred on or before December 4, 1980, a Responsible Reporting Entity will not have a reporting obligation under the MMSEA. Medicare may have a recovery claim only where there was asbestos exposure on or after the effective date of the MSP statute, December 5, 1980. Medicare's claim would be for all Medicare reimbursed services on or after December 5, 1980, which are related to the liability settlement, judgment, or payment. Medicare's recovery claim is based upon specific Medicare reimbursed services rather than some percentage of the liability settlement, judgment, or payment. Further, Medicare has stated in liability recoveries, (but not Workers Compensation), that if the asbestos exposure ended before December 5, 1980, Medicare will not pursue recoveries from asbestos liability settlements, since the MSP liability provisions were not effective until that date. However, please note that once a post-1980 exposure date is determined, Medicare requires that exposure claims are submitted based on the date of first exposure.
Sylvius von Saucken, Esq.
The vast majority of cases, at our firm, are asbestos exposure cases. Are defendants required to report when the last exposure alleged is prior to December 5, 1980?
Answer
Provided you have a formalized screening process designed to prove the last date of exposure occurred on or before December 4, 1980, a Responsible Reporting Entity will not have a reporting obligation under the MMSEA. Medicare may have a recovery claim only where there was asbestos exposure on or after the effective date of the MSP statute, December 5, 1980. Medicare's claim would be for all Medicare reimbursed services on or after December 5, 1980, which are related to the liability settlement, judgment, or payment. Medicare's recovery claim is based upon specific Medicare reimbursed services rather than some percentage of the liability settlement, judgment, or payment. Further, Medicare has stated in liability recoveries, (but not Workers Compensation), that if the asbestos exposure ended before December 5, 1980, Medicare will not pursue recoveries from asbestos liability settlements, since the MSP liability provisions were not effective until that date. However, please note that once a post-1980 exposure date is determined, Medicare requires that exposure claims are submitted based on the date of first exposure.
Sylvius von Saucken, Esq.
Wednesday, June 9, 2010
ERISA Liens
Question
I was wondering where Florida attorneys stand as to their liability for the payment/non-payment of clients ERISA liens? If a settlement is reached must we pay the lien? Are we required to hold it in trust? If we disburse to the client will we be liable to the plan? I am well aware of the Longaberger case in the 6th Circuit but was unable to find any controlling precedent in Florida. I am also aware of Florida's rule 5-1.1 regulating trust accounts (basically a copy of ABA MRPC 1.15) requiring disputed funds to be held in trust.
Also, if the plan language is well crafted what tools may I use to attempt to negotiate the lien down?
Answer
Thank you for the inquiry. Your questions hits upon several good points. First and foremost, if an ERISA plan is asserting a valid and legitimate reimbursement interest ("lien") in your client's settlement proceeds then arguably that interest should be satisfied. To have a valid and legitimate interest, the ERISA plan must have plan language which seeks an equitable right to reimbursement. ERISA plans are limited to seeking appropriate equitable relief. 29 U.S.C. § 1132(a)(3)(B). An ERISA plan has a right of reimbursement which sounds in equity if the plan language imposes a constructive trust or equitable lien upon a third party recovery. To qualify as equitable the plan language MUST 1) specify that recovery will be made from an identifiable fund and 2) specify that recovery must be limited to a specific portion of said fund. If either of these requirements are not met in the plan language, the plan does not have an equitable right to recovery and thus they do not have a reimbursement interest under ERISA. See Sereboff, 126 S.Ct. 1869 (2006). Thus it is important to make sure the plan is seeking an equitable remedy.
Some of the considerations for resolving this interest.
- Ethical Obligations. Florida Rule 5-1.1 and holding disputed funds in trust. An ERISA plan is no different than any other claimant.
- Client Contractual Considerations. If the interest is not resolved or the plan participant does not cooperate according to the terms of the plan, the participant may subject themselves to legal action and additionally they may face a future set off or complete loss of future benefits.
- Constructive Trust Consideration. The Longaberger case was not about imposing liability on the attorney as much as it was about the plan's equitable right. The Longaberger plan had a first priority right to the settlement proceeds. Because the attorney received a third of those proceeds the attorney was responsible for reimbursing the plan one third of its lien. The plan did not seek damages or a cause of action against the attorney but rather it sought the recovery of funds. While Longaberger is a sixth circuit case with very specific facts it certainly should serve as a cautionary tale to attorneys in every circuit.
In negotiating the reimbursement interest I would recommend a careful evaluation of the plan language. As mentioned above, the plan must have specific language to establish its right. Furthermore, equitable doctrines such as made whole and common fund may apply depending on the plan language and whether you are applying state or federal law (applicable law is based upon the funding of the plan; self-funded plans enjoy federal preemption while insured plans can be limited by state insurance law). Additionally, there can be other weaknesses in the plan language such as requiring third party liability or limiting the reimbursement to medicals recovered.
As a general matter I would encourage you to take a proactive approach and deal with the ERISA plan on the front end. It is important to remember that the plan's right of reimbursement does not come into existence until the settlement or verdict is reached. Prior to this time they only have a right to subrogate and this is the last thing that many of these plans and their agents want to get involved with. Because the interest is not "perfected" until settlement we take the approach that a case should not be settled unless the interest is resolved. If you were dealing with a self-funded ERISA plan with draconian language the only leverage you may have is the threat of walking away and thus the plan would receive nothing. If the case settles this opportunity is lost and the plan has an enforceable right.
As you can see this is a complex area of the law which is constantly changing. Because of this you may encounter a lien or a government benefits issue that demands experience and expertise not commonly available inside of a personal injury firm (such as healthcare billing and coding expertise). To ensure the proper evaluation and favorable resolution of such a matter, your client may require the consultation or retention of outside assistance to advise and address the issue. Your fee agreement should provide for this at your discretion, and stipulate that any reasonable costs may be passed along to the client. In this manner the cost can be placed on the client and both you and the client can be assured that the interest will be properly and efficiently resolved.
Thanks again and please let us know if you have any additional or follow up questions. Take care.
Michael D. Russell, Esq.
I was wondering where Florida attorneys stand as to their liability for the payment/non-payment of clients ERISA liens? If a settlement is reached must we pay the lien? Are we required to hold it in trust? If we disburse to the client will we be liable to the plan? I am well aware of the Longaberger case in the 6th Circuit but was unable to find any controlling precedent in Florida. I am also aware of Florida's rule 5-1.1 regulating trust accounts (basically a copy of ABA MRPC 1.15) requiring disputed funds to be held in trust.
Also, if the plan language is well crafted what tools may I use to attempt to negotiate the lien down?
Answer
Thank you for the inquiry. Your questions hits upon several good points. First and foremost, if an ERISA plan is asserting a valid and legitimate reimbursement interest ("lien") in your client's settlement proceeds then arguably that interest should be satisfied. To have a valid and legitimate interest, the ERISA plan must have plan language which seeks an equitable right to reimbursement. ERISA plans are limited to seeking appropriate equitable relief. 29 U.S.C. § 1132(a)(3)(B). An ERISA plan has a right of reimbursement which sounds in equity if the plan language imposes a constructive trust or equitable lien upon a third party recovery. To qualify as equitable the plan language MUST 1) specify that recovery will be made from an identifiable fund and 2) specify that recovery must be limited to a specific portion of said fund. If either of these requirements are not met in the plan language, the plan does not have an equitable right to recovery and thus they do not have a reimbursement interest under ERISA. See Sereboff, 126 S.Ct. 1869 (2006). Thus it is important to make sure the plan is seeking an equitable remedy.
Some of the considerations for resolving this interest.
- Ethical Obligations. Florida Rule 5-1.1 and holding disputed funds in trust. An ERISA plan is no different than any other claimant.
- Client Contractual Considerations. If the interest is not resolved or the plan participant does not cooperate according to the terms of the plan, the participant may subject themselves to legal action and additionally they may face a future set off or complete loss of future benefits.
- Constructive Trust Consideration. The Longaberger case was not about imposing liability on the attorney as much as it was about the plan's equitable right. The Longaberger plan had a first priority right to the settlement proceeds. Because the attorney received a third of those proceeds the attorney was responsible for reimbursing the plan one third of its lien. The plan did not seek damages or a cause of action against the attorney but rather it sought the recovery of funds. While Longaberger is a sixth circuit case with very specific facts it certainly should serve as a cautionary tale to attorneys in every circuit.
In negotiating the reimbursement interest I would recommend a careful evaluation of the plan language. As mentioned above, the plan must have specific language to establish its right. Furthermore, equitable doctrines such as made whole and common fund may apply depending on the plan language and whether you are applying state or federal law (applicable law is based upon the funding of the plan; self-funded plans enjoy federal preemption while insured plans can be limited by state insurance law). Additionally, there can be other weaknesses in the plan language such as requiring third party liability or limiting the reimbursement to medicals recovered.
As a general matter I would encourage you to take a proactive approach and deal with the ERISA plan on the front end. It is important to remember that the plan's right of reimbursement does not come into existence until the settlement or verdict is reached. Prior to this time they only have a right to subrogate and this is the last thing that many of these plans and their agents want to get involved with. Because the interest is not "perfected" until settlement we take the approach that a case should not be settled unless the interest is resolved. If you were dealing with a self-funded ERISA plan with draconian language the only leverage you may have is the threat of walking away and thus the plan would receive nothing. If the case settles this opportunity is lost and the plan has an enforceable right.
As you can see this is a complex area of the law which is constantly changing. Because of this you may encounter a lien or a government benefits issue that demands experience and expertise not commonly available inside of a personal injury firm (such as healthcare billing and coding expertise). To ensure the proper evaluation and favorable resolution of such a matter, your client may require the consultation or retention of outside assistance to advise and address the issue. Your fee agreement should provide for this at your discretion, and stipulate that any reasonable costs may be passed along to the client. In this manner the cost can be placed on the client and both you and the client can be assured that the interest will be properly and efficiently resolved.
Thanks again and please let us know if you have any additional or follow up questions. Take care.
Michael D. Russell, Esq.
Tuesday, June 8, 2010
Medicare Reimbursement Settlements
When dealing with Medicare reimbursement in a liability claim, can the argument be made and does Medicare factor in disputed liability on the underlying case and also causation issues on damages as a means to reduce the amount which must be reimbursed? Also, if the client is doing poorly economically, will Medicare factor that in its final reimbursement amount? Georgia Attorney
Medicare Reimbursement Settlements
Question
When dealing with Medicare reimbursement in a liability claim, can the argument be made and does Medicare factor in disputed liability on the underlying case and also causation issues on damages as a means to reduce the amount which must be reimbursed? Also, if the client is doing poorly economically, will Medicare factor that in its final reimbursement amount?
Georgia Attorney
Answer
There are administrative remedies within the MSP Provisions that allow for either the compromise or waiver of Medicare's interest; however certain criteria must be met.
Compromises
CMS is given authority to consider the compromise of Medicare's claim under the Federal Claims Collection Act (FCCA) at 31 USC, 3711 et seq. and 42 CFR 401.613. The Medicare Secondary Payer Recovery Contractor (MSPRC) is not permitted to compromise a claim. Compromise requests must be submitted in writing to the MSPRC, who will forward the request to the appropriate CMS Regional Office for requests of (<$100,000) or Central Office for requests of (> $100,000) for consideration.
A compromise decision made by CMS is final and is not subject to appeal. That being said, if you are not in agreement with the CMS compromised amount, you do not have to accept it and can pursue other options. One option would be to reach out to the person at the Regional Office who made the decision and discuss the case with them; many times this is beneficial in getting them to see things your way. Another option is to decline the offer and pursue a waiver thru the MSPRC.
A compromise can be requested before or after settlement. If the request is post-settlement, settlement information must be submitted in writing before your request will be processed.
CMS uses the following factors to determine if a compromise or suspension of a claim is warranted. Whether or not a compromise will be granted depends on a number of factors and each matter is considered on a case-by-case basis.
1.Inability to pay - the cost of collection does not justify the enforced collection of the full amount of the claim;
2.If there is an inability to pay within a reasonable time on the part of the individual against whom the claim is made; or
3.Chances of successful litigation are questionable, making it advisable to seek a compromised settlement.
To request a compromise, you must specify the amount you want Medicare to accept. Submit in writing the reason for the compromise and how you determined the amount to be repaid. A full reduction cannot be requested. All compromise requests must be in writing and submitted to the MSPRC who will then forward it on to the appropriate CMS Regional Office.
Waivers.
The authority to consider a Medicare beneficiary's request for waiver on behalf of CMS, under 1870(c) of the Social Security Act and guidelines can be found in 20 CFR 404.506-509. It can only be requested after settlement and final determination has been issued by Medicare.
The MSPRC has the authority to consider a waiver requests under 1870 © of the Social Security Act. Waivers can only be requested after settlement and final determination has been issued by the MSPRC. All waiver requests must be in submitted in writing along with a completed questionnaire SSA-632K form. This questionnaire requests information regarding the beneficiary's monthly income, expenses and assets as well as the reasons for requesting a full or partial waiver. It is recommended that along with the completed questionnaire that you provide the MSPRC with a compelling story of the facts of the case.
CMS may waive all or part of its recovery in any case where an overpayment under Title XVIII has been made with respect to a Medicare beneficiary who is: without fault AND when adjustment or recovery would either defeat the purpose of Title II or Title XVIII of the Act (repaying Medicare would create a financial hardship), OR be against equity and good conscience for the beneficiary to repay Medicare.
"Without Fault" Standard. To determine if a beneficiary is "without fault," the lead contractor will consider four factors. These are:
1.The amount of out-of-pocket medical expenses incurred by the beneficiary;
2.Whether the beneficiary's assets are insufficient to pay Medicare;
3.The beneficiary's assets, monthly income, and expenses; and
4.The age of the beneficiary and whether he or she has any physical or mental impairments.
If you are pursuing a waiver based on the fact that your client incurred accident related out-of-pocket medical expenses include as much documentation as possible to support your argument Proper documentation of out-of-pocket medical expenses must be submitted before they can be considered in the waiver request.
"Defeat the Purpose" Standard. To "defeat the purpose of the Social Security or Medicare programs" means that a recovery against a beneficiary will cause financial hardship by depriving the beneficiary of income required for ordinary and necessary living expenses. An example of financial hardship includes a case where the beneficiary has spent the settlement or insurance proceeds and the only remaining income from which the beneficiary could attempt to satisfy the Medicare claim is from money needed to pay for his or her basic monthly living expenses.
"Against Equity and Good Conscience" Standard. The "against equity and good conscience" test considers, but is not limited to, the following factors:
1.The degree to which the beneficiary did not contribute to causing the overpayment;
2.The degree to which Medicare contributed to causing the overpayment;
3.The degree to which repayment would cause undue hardship to the beneficiary; and
4.Whether the beneficiary would be unjustly enriched by granting a waiver or was harmed by relying on erroneous Medicare information
If you or your client does not agree with the waiver determination you can request a re-determination of the decision. The re-determination request must be made in writing within 120 days of the date of the waiver determination.
If you have any questions please don't hesitate to contact me.
My Best,
Mary Skinner
When dealing with Medicare reimbursement in a liability claim, can the argument be made and does Medicare factor in disputed liability on the underlying case and also causation issues on damages as a means to reduce the amount which must be reimbursed? Also, if the client is doing poorly economically, will Medicare factor that in its final reimbursement amount?
Georgia Attorney
Answer
There are administrative remedies within the MSP Provisions that allow for either the compromise or waiver of Medicare's interest; however certain criteria must be met.
Compromises
CMS is given authority to consider the compromise of Medicare's claim under the Federal Claims Collection Act (FCCA) at 31 USC, 3711 et seq. and 42 CFR 401.613. The Medicare Secondary Payer Recovery Contractor (MSPRC) is not permitted to compromise a claim. Compromise requests must be submitted in writing to the MSPRC, who will forward the request to the appropriate CMS Regional Office for requests of (<$100,000) or Central Office for requests of (> $100,000) for consideration.
A compromise decision made by CMS is final and is not subject to appeal. That being said, if you are not in agreement with the CMS compromised amount, you do not have to accept it and can pursue other options. One option would be to reach out to the person at the Regional Office who made the decision and discuss the case with them; many times this is beneficial in getting them to see things your way. Another option is to decline the offer and pursue a waiver thru the MSPRC.
A compromise can be requested before or after settlement. If the request is post-settlement, settlement information must be submitted in writing before your request will be processed.
CMS uses the following factors to determine if a compromise or suspension of a claim is warranted. Whether or not a compromise will be granted depends on a number of factors and each matter is considered on a case-by-case basis.
1.Inability to pay - the cost of collection does not justify the enforced collection of the full amount of the claim;
2.If there is an inability to pay within a reasonable time on the part of the individual against whom the claim is made; or
3.Chances of successful litigation are questionable, making it advisable to seek a compromised settlement.
To request a compromise, you must specify the amount you want Medicare to accept. Submit in writing the reason for the compromise and how you determined the amount to be repaid. A full reduction cannot be requested. All compromise requests must be in writing and submitted to the MSPRC who will then forward it on to the appropriate CMS Regional Office.
Waivers.
The authority to consider a Medicare beneficiary's request for waiver on behalf of CMS, under 1870(c) of the Social Security Act and guidelines can be found in 20 CFR 404.506-509. It can only be requested after settlement and final determination has been issued by Medicare.
The MSPRC has the authority to consider a waiver requests under 1870 © of the Social Security Act. Waivers can only be requested after settlement and final determination has been issued by the MSPRC. All waiver requests must be in submitted in writing along with a completed questionnaire SSA-632K form. This questionnaire requests information regarding the beneficiary's monthly income, expenses and assets as well as the reasons for requesting a full or partial waiver. It is recommended that along with the completed questionnaire that you provide the MSPRC with a compelling story of the facts of the case.
CMS may waive all or part of its recovery in any case where an overpayment under Title XVIII has been made with respect to a Medicare beneficiary who is: without fault AND when adjustment or recovery would either defeat the purpose of Title II or Title XVIII of the Act (repaying Medicare would create a financial hardship), OR be against equity and good conscience for the beneficiary to repay Medicare.
"Without Fault" Standard. To determine if a beneficiary is "without fault," the lead contractor will consider four factors. These are:
1.The amount of out-of-pocket medical expenses incurred by the beneficiary;
2.Whether the beneficiary's assets are insufficient to pay Medicare;
3.The beneficiary's assets, monthly income, and expenses; and
4.The age of the beneficiary and whether he or she has any physical or mental impairments.
If you are pursuing a waiver based on the fact that your client incurred accident related out-of-pocket medical expenses include as much documentation as possible to support your argument Proper documentation of out-of-pocket medical expenses must be submitted before they can be considered in the waiver request.
"Defeat the Purpose" Standard. To "defeat the purpose of the Social Security or Medicare programs" means that a recovery against a beneficiary will cause financial hardship by depriving the beneficiary of income required for ordinary and necessary living expenses. An example of financial hardship includes a case where the beneficiary has spent the settlement or insurance proceeds and the only remaining income from which the beneficiary could attempt to satisfy the Medicare claim is from money needed to pay for his or her basic monthly living expenses.
"Against Equity and Good Conscience" Standard. The "against equity and good conscience" test considers, but is not limited to, the following factors:
1.The degree to which the beneficiary did not contribute to causing the overpayment;
2.The degree to which Medicare contributed to causing the overpayment;
3.The degree to which repayment would cause undue hardship to the beneficiary; and
4.Whether the beneficiary would be unjustly enriched by granting a waiver or was harmed by relying on erroneous Medicare information
If you or your client does not agree with the waiver determination you can request a re-determination of the decision. The re-determination request must be made in writing within 120 days of the date of the waiver determination.
If you have any questions please don't hesitate to contact me.
My Best,
Mary Skinner
Monday, June 7, 2010
Are Medicare Set-Asides Required?
Question
Mother, father and two children were in a serious accident. Mother has catastrophic injuries. Her bills exceed $175,000. The auto insurance policy limits are $25,000 per person and $50,000 per accident. Medicare has not paid any money for the mother's treatment at this point, but she has applied and will be on Medicare in August of this year at which time it is expected that Medicare will pay future costs relating to the accident.
I have two questions. First, am I correct that we are not required to report the settlement to Medicare, if we settle before October 1, 2010 according to your February 25, 2010 advisory?
Second, from your August 18, 2009 article on Medicare Set-Asides in liability settlements, my sense is that a $25,000 settlement in which future medicals are not specified, where the plaintiff has $175,000 in past medical, substantial pain and suffering, substantial past and future lost wages and other damages would not require a Medicare Set-Aside. Is this correct? My plan is to use the practice tips outlined in your August 18, 2009 article to convince defense counsel that a set aside is not required unless things have changed since August of 2009.
The mother also has an auto products defect case on file, but this is a long way off from settlement or trial.
Thanks for your assistance.
Texas Attorney
Answer
To answer your first question, the reporting to which you refer deals with defense reporting of the settlement to Medicare for MMSEA Section 111 purposes. This is different than the plaintiff reporting the settlement to Medicare as a part of verifying/resolving any conditional payments made by Medicare from date of injury to date of settlement. Let's assume your client becomes entitled to Medicare as of August 1, 2010. For MMSEA Section 111 purposes, if the case settles prior to October 1, 2010 and is to be paid in a lump sum (i.e., TPOC) as opposed to containing an ongoing responsibility to pay future meds (i.e., ORM), then defense does not have to report. However, if the settlement contains ORM, then the trigger date for those settlements is January 1, 2010 and defense would have to report for MMSEA Section 111 purposes. If the case settles on or after October 1, 2010, defense has to report, no matter whether the settlement is for TPOO or has ORM.
If the case settles on or after August 1, 2010, you would also have the obligation to verify and resolve any conditional payments made by Medicare from date of injury to date of settlement. Therefore, there are two aspects to Medicare reporting, one from the defense and one from the plaintiff and depending on when the case settles and the terms of the settlement determines who has to report.
With regards to your second question, the obligation to consider and protect Medicare's interests includes protecting its future interests. That means, you should ask and answer the question "Is a MSA appropriate under these case specific facts?" You are correct in your deduction that, based on your case specific facts, a MSA would not be appropriate and the guidance in the August 2009 MSA White Paper is as good today as the day it was published. Please let me know if you have additional questions.
My best,
John Cattie
Mother, father and two children were in a serious accident. Mother has catastrophic injuries. Her bills exceed $175,000. The auto insurance policy limits are $25,000 per person and $50,000 per accident. Medicare has not paid any money for the mother's treatment at this point, but she has applied and will be on Medicare in August of this year at which time it is expected that Medicare will pay future costs relating to the accident.
I have two questions. First, am I correct that we are not required to report the settlement to Medicare, if we settle before October 1, 2010 according to your February 25, 2010 advisory?
Second, from your August 18, 2009 article on Medicare Set-Asides in liability settlements, my sense is that a $25,000 settlement in which future medicals are not specified, where the plaintiff has $175,000 in past medical, substantial pain and suffering, substantial past and future lost wages and other damages would not require a Medicare Set-Aside. Is this correct? My plan is to use the practice tips outlined in your August 18, 2009 article to convince defense counsel that a set aside is not required unless things have changed since August of 2009.
The mother also has an auto products defect case on file, but this is a long way off from settlement or trial.
Thanks for your assistance.
Texas Attorney
Answer
To answer your first question, the reporting to which you refer deals with defense reporting of the settlement to Medicare for MMSEA Section 111 purposes. This is different than the plaintiff reporting the settlement to Medicare as a part of verifying/resolving any conditional payments made by Medicare from date of injury to date of settlement. Let's assume your client becomes entitled to Medicare as of August 1, 2010. For MMSEA Section 111 purposes, if the case settles prior to October 1, 2010 and is to be paid in a lump sum (i.e., TPOC) as opposed to containing an ongoing responsibility to pay future meds (i.e., ORM), then defense does not have to report. However, if the settlement contains ORM, then the trigger date for those settlements is January 1, 2010 and defense would have to report for MMSEA Section 111 purposes. If the case settles on or after October 1, 2010, defense has to report, no matter whether the settlement is for TPOO or has ORM.
If the case settles on or after August 1, 2010, you would also have the obligation to verify and resolve any conditional payments made by Medicare from date of injury to date of settlement. Therefore, there are two aspects to Medicare reporting, one from the defense and one from the plaintiff and depending on when the case settles and the terms of the settlement determines who has to report.
With regards to your second question, the obligation to consider and protect Medicare's interests includes protecting its future interests. That means, you should ask and answer the question "Is a MSA appropriate under these case specific facts?" You are correct in your deduction that, based on your case specific facts, a MSA would not be appropriate and the guidance in the August 2009 MSA White Paper is as good today as the day it was published. Please let me know if you have additional questions.
My best,
John Cattie
Friday, June 4, 2010
MSAs
Question
I have an 82 year old client who has a Medicare replacement policy with Healthnet of the Northeast. The client suffered a full rotator cuff tear in a MVA but it is very unlikely that surgery is needed. Causation is an issue. Insurance carrier wants language in the release that the client agrees to pay any future medical expenses from the settlement and that the client agrees not to submit any bills to Medicare for payment. The carrier claims that this is required under the Social Security Act. I have never encountered this before and am unsure as to how I should advise my client regarding signing this. Any guidance is appreciated.
Connecticut Attorney
Answer
Certainly, your fact pattern is one commonly encountered these days due to the vast amount of misinformation promulgated towards the insurance community regarding Medicare compliance under the Medicare Secondary Payer ("MSP") Act. Because of their new reporting obligations under Section 111 of the MMSEA (Medicare, Medicaid and SCHIP Extension Act of 2007, found at 42 USC Sec. 1395y(b)(8)), insurance companies want to ensure that Medicare will not chase them for reimbursement of any interest, either past (represented by conditional payments made by Medicare from date of injury to date of settlement) or future (represented by payments made by Medicare for injury-related care post settlement). In their zeal for satisfying Medicare's interests, they often miss the forest for the trees.
Essentially, the carrier is insisting that, instead of billing Medicare for future injury-related care, a Medicare Set-Aside ("MSA") be established to pay for future injury-related care. Nowhere in currently enacted law or guidance from CMS are we told that a MSA must be established as a part of our third party liability settlements. The obligation under the MSP Act is to "consider and protect" Medicare's interests, both past and future. Many insurance companies fail to understand that considering and protecting Medicare's interests does not always mean that you pay Medicare money. In fact, in the third party liability context for MSAs, it rarely means that. What it does mean is that the settling parties should be documenting their files to show what steps have been taken to consider and protect Medicare's future interests, including MSA evaluations, letters from treating physicians indicating exactly what care the injured individual will require, and other items.
Another concept most insurance companies do not realize yet is that the obligation to consider and protect Medicare's future interests falls on the claimant as opposed to the defense. In short, the obligation to satisfy Medicare’s future interests via a MSA or any other vehicle is the responsibility of the claimant and claimant’s attorney, not the defendant. As support for that position, we can look to the federal regs at 42 CFR 411.46, which contains no language placing liability on the defense (unlike 42 CFR 411.24). Furthermore, evidence exists on the CMS website under the Intro to WC tab of the WCMSA site. See: this CMS page. If we look at the Future Medical Services portion in the final paragraph, we see that Medicare asserts that the liability to consider and protect Medicare’s future interests extends to those entities that RECEIVE a primary payment (as opposed to liability for conditional payments made date of injury to date of settlement as promulgated under 42 CFR 411.24 whereby Medicare may recover its conditional payment interest from any entity that MAKES/RECEIVES a primary payment).
To sum up, the insurance community appears to be receiving misinformation about Medicare compliance, and requires a re-education as to the appropriate scope of their obligations. For starters, I would forward to them our MSA White Paper supporting the proposition that MSAs are rarely appropriate in the liability context, and when they are appropriate, they are plaintiff oriented obligations to handle. Further, share with them the language of the CMS website about Future Medical Services. These tools should make the insurer more comfortable with the notion that it does not face exposure to Medicare on these future interest issues. Finally, I make myself available to you for a conference call to discuss these issues.
Sylvius von Saucken, Esq.
I have an 82 year old client who has a Medicare replacement policy with Healthnet of the Northeast. The client suffered a full rotator cuff tear in a MVA but it is very unlikely that surgery is needed. Causation is an issue. Insurance carrier wants language in the release that the client agrees to pay any future medical expenses from the settlement and that the client agrees not to submit any bills to Medicare for payment. The carrier claims that this is required under the Social Security Act. I have never encountered this before and am unsure as to how I should advise my client regarding signing this. Any guidance is appreciated.
Connecticut Attorney
Answer
Certainly, your fact pattern is one commonly encountered these days due to the vast amount of misinformation promulgated towards the insurance community regarding Medicare compliance under the Medicare Secondary Payer ("MSP") Act. Because of their new reporting obligations under Section 111 of the MMSEA (Medicare, Medicaid and SCHIP Extension Act of 2007, found at 42 USC Sec. 1395y(b)(8)), insurance companies want to ensure that Medicare will not chase them for reimbursement of any interest, either past (represented by conditional payments made by Medicare from date of injury to date of settlement) or future (represented by payments made by Medicare for injury-related care post settlement). In their zeal for satisfying Medicare's interests, they often miss the forest for the trees.
Essentially, the carrier is insisting that, instead of billing Medicare for future injury-related care, a Medicare Set-Aside ("MSA") be established to pay for future injury-related care. Nowhere in currently enacted law or guidance from CMS are we told that a MSA must be established as a part of our third party liability settlements. The obligation under the MSP Act is to "consider and protect" Medicare's interests, both past and future. Many insurance companies fail to understand that considering and protecting Medicare's interests does not always mean that you pay Medicare money. In fact, in the third party liability context for MSAs, it rarely means that. What it does mean is that the settling parties should be documenting their files to show what steps have been taken to consider and protect Medicare's future interests, including MSA evaluations, letters from treating physicians indicating exactly what care the injured individual will require, and other items.
Another concept most insurance companies do not realize yet is that the obligation to consider and protect Medicare's future interests falls on the claimant as opposed to the defense. In short, the obligation to satisfy Medicare’s future interests via a MSA or any other vehicle is the responsibility of the claimant and claimant’s attorney, not the defendant. As support for that position, we can look to the federal regs at 42 CFR 411.46, which contains no language placing liability on the defense (unlike 42 CFR 411.24). Furthermore, evidence exists on the CMS website under the Intro to WC tab of the WCMSA site. See: this CMS page. If we look at the Future Medical Services portion in the final paragraph, we see that Medicare asserts that the liability to consider and protect Medicare’s future interests extends to those entities that RECEIVE a primary payment (as opposed to liability for conditional payments made date of injury to date of settlement as promulgated under 42 CFR 411.24 whereby Medicare may recover its conditional payment interest from any entity that MAKES/RECEIVES a primary payment).
To sum up, the insurance community appears to be receiving misinformation about Medicare compliance, and requires a re-education as to the appropriate scope of their obligations. For starters, I would forward to them our MSA White Paper supporting the proposition that MSAs are rarely appropriate in the liability context, and when they are appropriate, they are plaintiff oriented obligations to handle. Further, share with them the language of the CMS website about Future Medical Services. These tools should make the insurer more comfortable with the notion that it does not face exposure to Medicare on these future interest issues. Finally, I make myself available to you for a conference call to discuss these issues.
Sylvius von Saucken, Esq.
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