In recent health care reform negotiations, some senators suggested providing Medicare benefits to people ages 55 and over. An expansion of the group of people eligible for Medicare benefits (people ages 55-65), would have a serious impact on the application of the Medicare Secondary Payer Act. Although defeated this time, it is possible that the proposed reform will be revisited in the future. Clearly any expansion of the eligibility for Medicare will be financed, in part, by the Medicare Secondary Payer Act. This potential reform and others that might be proposed emphasize the importance of monitoring health care reform legislation to determine its impact upon the Medicare Secondary Payer Act.
Mandatory Reporting Requirements Begin January 1, 2010
Beginning on January 1, 2010, responsible reporting entities (RREs) (any entity that pays or funds any settlement, judgment, or award to a Medicare beneficiary) must report detailed information regarding payments to Medicare beneficiaries for claims involving past or future medical expenses. Medicare will use the information to recover benefits it previously paid on behalf of the plaintiff. Within 60 days after any payment to a Medicare beneficiary, parties to the claim are required to reimburse the federal government for any claims it paid. A failure to comply with the mandatory reporting requirements could result in fines up to $1,000 per day and “double damages” if the Centers for Medicare & Medicaid Services (CMS) initiates a legal action to recover its benefits.
Proposed Reporting Rules
The Centers for Medicare & Medicaid Services (CMS) recently issued proposed rules that put the burden of the mandatory reporting requirements on the insurer, not the insured, in most situations. Under these rules, the insurer would be responsible for reporting any settlement that exceeds the insured’s deductible. The insured would be responsible for reporting: (1) any settlement it pays directly and is reimbursed by the insurer, and (2) any settlement that is equal to or less than its deductible.
Mandatory Reporting and Potential Qui Tam Actions
A recent amendment to the False Claims Act makes it a violation to avoid an obligation to pay money to the federal government. This means that a failure to reimburse Medicare is a violation of the False Claims Act. The penalty for violating the False Claims Act include civil penalties ranging from $5,000 to $10,000 per violation, plus treble damages and attorney fees. The False Claims Act contains a qui tam provision that allows private citizens to file a lawsuit in the name of the U.S. Government. There is serious possibility that qui tam actions will be brought against attorneys, defendants, and insurers who fail to reimburse Medicare.
In Haro v. Seblius, the United States District Court for the District of Arizona denied the federal government’s motion to dismiss a class action filed against the Department of Health and Human Resources challenging its administration of the Medicare Secondary Payer (MSP) program. Plaintiffs, a nationwide class of Medicare recipients, specifically challenge the collection practices used to recover Medicare reimbursement claims when a beneficiary receives liability insurance proceeds related to health care services paid for “conditionally” by defendant. Plaintiffs assert that defendant violates a Medicare beneficiary’s due process rights by demanding immediate reimbursement, within 60 days, in advance of resolution of any appeal or request for waiver of the reimbursement claim sought by Medicare. Plaintiffs also assert that defendant’s collection procedures exceed the Secretary’s authority under the Medicare statute.
Defendant moved to dismiss the class action on several grounds, including failing to state a valid Due Process claim and failing to exhaust administrative remedies under the Medicare Act. The court found that plaintiffs had standing to bring an action against defendant under both the Medicare Act and the Due Process Clause. The court stated that plaintiffs’ allegation that defendant is demanding payment of a disputed MSP reimbursement claim without an opportunity to be heard at a meaningful time and in an meaningful manner is a “classic due process claim.”
Date of Decision: November 30, 2009
Haro v. Sebelius, 2009 U.S. Dist. LEXIS 111053, CV 09-134-TUC-DCB (D. Ariz. November 30, 2009) (Bury, J.)