Monthly Archive for October, 2010

IN MEDICARE RECOVERY ACTION, ALABAMA FEDERAL COURT RULES 3-YEAR STATUTE OF LIMITATIONS FOR CORPORATE DEFENDANTS AND 6-YEAR STATUTE OF LIMITATIONS AGAINST PLAINTIFF ATTORNEYS

Published on October 12, 2010 in Uncategorized. Closed Tags: , .

In the United States v. Stricker et al., the U.S. District Court for the Northern District of Alabama ruled on the applicable statute of limitations in a Medicare recovery action.  By way of background, on December 1, 2009, the Government instituted the action against the tortfeasors, plaintiff attorneys, and insurers that were involved in a $300 million toxic tort settlement reached in 2003. The Medicare Secondary Payer Act does not indicate a deadline for filing a claim for recovery. Therefore, the relevant statute of limitations for the Government’s claims is governed by the Federal Claims Collection Act (FCCA).  See 28 U.S.C. § 2415. The parties disputed whether the FCCA’s six-year or three-year statue of limitations applied. The court held that the claim against the corporate defendants was based in tort, and therefore, a three-year statute of limitations applied, which resulted in the dismissal of these claims.  The court noted that the Government could have intervened earlier in the underlying action and preserved its rights, but chose not to. The court held that the Government’s claim against the attorney defendants was based on contract law, and therefore, the six-year statute of limitations applied. The court reasoned that the defendant attorneys acted as agents pursuant to the contractual relationship between the Government the Medicare beneficiaries, and the attorneys’ obligation to pay their clients monies allegedly owed to the Government for Medicare reimbursement arose from an express contractual relationship with the Medicare beneficiaries.

 Additionally, the court held that the start of the statutes of limitations periods was different for the two groups of defendants.  As to the corporate defendants, the cause of action arose at the execution and court approval of the settlement while the cause of action as to the attorney defendants arose when payment of the settlement was made.

SIXTH CIRCUIT COURT OF APPEALS TO HEAR ORAL ARGUMENT IN HADDEN v. U.S.

Published on October 12, 2010 in Uncategorized. Closed Tags: , .

In Hadden v. U.S., after settling with a joint tortfeasor for an amount based on what Vernon Hadden perceived to be the tortfeasor’s fault allocation, the U.S. District Court for the Western District of Kentucky ordered him to reimburse Medicare for his entire Medicare lien.  See No. 1:08-CV-102009, U.S. Dist. LEXIS 69383 (W.D. Ky., Aug. 6, 2009).  Mr. Hadden appealed, and on October 13, 2010, the matter will be argued before the Sixth Circuit Court of Appeals. 

The issue the Sixth Circuit must decide on appeal is whether the Centers for Medicare and Medicaid Services (CMS) must consider comparative fault principles in their Medicare recovery process.  Mr. Hadden should prevail on his appeal because Medicare should be required to adjust its recovery amount based on an allocation of fault.  The U.S. Supreme Court has already demonstrated that federal law requires the allocation of recoveries.  See Arkansas Dep’t of Health and Human Servs. v. Ahlborn, 547 U.S. 268 (2006); see also Can Judges Be Persuaded To Reduce Medicares Interest in a Settlement?.  In order for settlements with a Medicare beneficiary to occur, Medicare must be willing to adjust the amount it seeks to recover in cases where the parties reach settlement.  If the Sixth Circuit affirms the district court’s decision, it will discourage settlements in cases where the plaintiff is a Medicare beneficiary.  Medicare beneficiaries will fear that Medicare will claim the entire settlement award, and insurance carriers will be unwilling to pay any more than what they value settlement to be in order to cover the entire Medicare lien and potential future Medicare liens.  As a result, the parties will be more likely to try those cases, which will adversely impact the court system.

DOUBLE DAMAGES AVAILABLE IN SUITS AGAINST PIP CARRIERS FOR NON-PAYMENT OF FIRST-PARTY BENEFITS

Published on October 12, 2010 in Uncategorized. Closed Tags: , , .

Under the Medicare Secondary Payer Act, Medicare is the secondary provider of medical insurance coverage when a Medicare recipient has other sources of primary insurance coverage. The Medicare Secondary Payer Act provides that a Medicare payment “may not be made . . . with respect to any item or service to the extent that payment has been made or can reasonably be expected to be made under” a primary plan. 42 U.S.C. § 1395y(b)(2)(A). A “primary plan” includes no fault insurance.  Medicare may make “conditional payments” for services where the primary plan “has not made or cannot reasonably be expected to make payment with respect to such item or service promptly.” 42 U.S.C. § 1395y(b)(2)(B)(i). Medicare is entitled to reimbursement from the primary plan or any entity receiving payment from a primary plan if the primary plan had a responsibility to make the payment. 42 U.S.C. § 1395y(b)(2)(B)(ii).  

Enforcement of a primary plan’s payment of reimbursement obligation may be made by a direct cause of action by the government, 42 U.S.C. § 1395y(b)(2)(B)(iii); a subrogation claim brought by the government, 42 U.S.C. § 1395y(b)(2)(B)(iv); and by a private cause of action, 42 U.S.C. § 1395y(b)(3)(A). The provision regarding private causes of actions sets forth as follows:

There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A). 42 U.S.C. § 1395y(b)(3)(A).

When a Medicare beneficiary files a tort claim, that party may file a private cause of action seeking reimbursement of Medicare’s conditional payments along with double recovery from the tortfeasor’s insurance carrier, but only after, and to the extent that, such carrier’s liability under the tortfeasor’s private policy has been determined. A primary responsibility for conditional payments made on behalf of the Medicare beneficiary may be demonstrated by a judgment against the primary payer, a settlement by a primary payer (even where liability is denied) or “by other means,” which includes contractual obligations.  See 42 U.S.C. 1395(y)(2)(ii); 42 C.F.R. § 411.22.

Under liability and no-fault insurance policies, insurance carriers have contractual obligations to pay medical expenses. For example, under Pennsylvania law, an insurer that issues liability insurance policies covering any motor vehicle, must include coverage providing a medical benefit in the amount of $5,000, known as first-party benefits. (75 Pa.C.S.A. § 1711 (2010).   Therefore, in states with no-fault automobile laws (e.g., Pennsylvania and New Jersey), it may be increasingly common for Medicare beneficiaries to add a count for double damages, pursuant to the MSP Act, in lawsuits against their insurance carrier for non-payment of first-party benefits (also known as “PIP”).

MEDICARE NOT ENTITLED TO RECOVER FULL AMOUNT OF ITS LIEN FROM TORT RECOVERY IN FLORIDA WRONGFUL DEATH ACTION

Published on October 12, 2010 in Uncategorized. 0 Comments Tags: , , .

In Bradley v. Sebelius, the Eleventh Circuit Court of Appeals determined the interplay between the Florida Wrongful Death Act (FWDA) and the federal Medicare Secondary Payer Act. Under Florida law, in a recovery for wrongful death action, children may recover for lost parental companionship, instruction, and guidance and for mental pain and suffering from the date of injury.  Fla. Sta. § 768.21(3). It is a well-settled principle under Florida law that proceeds from a wrongful death action are not for the benefit of the estate, rather, they are the property of the survivors and compensation for their loss. 

In Bradley, the decedent was hospitalized for three months for injuries resulting from the negligence of the nursing home of which he was a resident. Medicare paid $38,875.08 for the decedent’s medical care during his hospital stay. Without filing suit, Carvondella Bradley, the personal representative of decedent’s estate, settled a wrongful death claim for $52,000, the full amount of the nursing home’s liability insurance policy limits. Bradley notified the Centers for Medicare and Medicaid Services (CMS) of the settlement proceeds and associated legal fees and costs.  CMS refused to recognize that the medical expense claim had been settled for less than 100%, claiming that Medicare had the authority to claim the total amount of medical expenses, $38,875.00, less procurement costs, or a net amount of $22,480.89.

Bradley filed an application with the probate court to adjudicate the rights of the estate and the rights of the children with respect to the settlement. Bradley notified Medicare of the probate court proceedings, but Medicare refused to appear or participate. The state probate court ordered that Medicare could recover $787.50, after determining the total value of the claims of the decedent’s surviving children.

 Medicare refused to accept the probate court’s determination, contending that the court’s decision was advisory in nature and/or superseded by federal law. Relying on language contained in its field manual, Medicare refused to recognize the probate court’s allocation of liability payments to non-medical losses unless and until payment was based on a court order issued on the merits of the controversy. The surviving children appealed Medicare’s final decision to district court.  The district court, also relying heavily on the language contained in the Medicare field manual, determined that Medicare was entitled to the reimbursement of $22,480.89, not $787.50, for conditional medical expense payments made on behalf of the decedent. 

The Court of Appeals reversed the district court, holding that Medicare was only entitled to the sum of $787.50, as determined by the allocation of the probate court. The Court recognized that the $52,000 settlement consisted of medical expenses and costs recovered by the estate (subject to the Medicare Secondary Payer Act) and non-medical, tort property claims of the surviving children (not subject to the Medicare Secondary Payer Act) and concluded that Medicare was not entitled to any share of the surviving children’s claim.  The Court held that the district court’s reliance on the Medicare field manual was misplaced. Further, the Court noted that Medicare’s position would have a “chilling effect on settlement” by “compelling plaintiffs to force their tort claims to trial, burdening the court system.”  

In a dissenting opinion, Judge Martin stated that she would have affirmed the district court’s decision because the district court’s reliance on the Medicare field manual was not arbitrary, capricious, or an abuse of discretion. 

 Date of Decision: September 29, 2010

Bradley v. Sebelius et al., United States Court of Appeals for the Eleventh Circuit, No. 09-13765 (Sept. 29, 2010).

INSURER NOT LIABLE UNDER THE FALSE CLAIMS ACT FOR REFUSING TO PAY PLAINTIFF’S MEDICAL BILL WHERE LIABILITY WAS CONTESTED

Published on October 12, 2010 in Uncategorized. 0 Comments Tags: , , .

In United States ex. rel. Mason v. State Farm Mutual Automobile Insurance Company, the Ninth Circuit Court of Appeals held that the insurance carrier was not liable under the False Claims Act, 31 U.S.C. § 3719(a)(7), for making a “false statement” where the primary insurer initially contested its liability for plaintiff’s surgery on the basis that the plaintiff’s injury was a pre-existing condition and not the result of a car accident. At the time the hospital provided the bill to Medicare, the primary insurer was not likely to pay within 120 days, making Medicare liable to the hospital under the Medicare Secondary Payer Act.  See 42 U.S.C. § 1395y(b)(2)(B)(i).  Further, the Court held that even if the invoice were false, the insurance carrier would not be liable under the False Claims Act because it had no obligation to reimburse Medicare at the time the hospital submitted its bill to Medicare.

Date of Decision: October 1, 2010

United States ex rel. Mason v. State Farm Mutual Auto Ins. Co., United States Court of Appeals for the Ninth Circuit, No. 09-35819 (Oct. 1, 2010).