Monthly Archive for June, 2011

E.D. PA HOLDS THAT MAOS HAVE NO PRIVATE RIGHT OF ACTION TO ENFORCE THEIR RIGHTS AS A SECONDARY PAYER

Published on June 23, 2011 in Uncategorized. Closed

In a recent decision, the United States District Court for the Eastern District of Pennsylvania held that Medicare Advantage organizations (MAOs) do not have a private right of action to enforce their rights as a secondary payer.  MAOs provide insurance to Medicare beneficiaries who select to receive their Medicare insurance from private insurers in lieu of direct benefits from the federal government.  An MAO has certain rights under the Medicare Act and its implementing regulations, including the right to assume secondary payer status.  Accordingly, an MAO may bill for reimbursement of any conditional payments it makes for Medicare benefits if another plan is primary.

The court found that while the Medicare Advantage (MA) statute refers to the Medicare Secondary Payer (MSP) Act, it does not fully adopt or incorporate it.  Therefore, the MAOs do not have the authority to bring an action for reimbursement under 42 U.S.C. § 1395y(b)(2)(B)(iii) or a private right of action for damages under 42 U.S.C. § 1395y(b)(3)(A).  The court pointed out that the MA statute contains its own secondary payer provision that does not contain an explicit grant of a private right of action to MAOs.  See 42 U.S.C. § 1395w.  The court also examined the regulations implementing the Medicare Act and determined that there was no express or implied right of action for MAOs.  The court concluded that Congress intentionally did not provide MAOs with any enforcement rights. 

This decision is consistent with a recent ruling by the United States District Court for the Southern District of Florida in Humana Medical Plan, Inc. v. Reale, 2011 U.S. Dist. LEXIS 8909 (S.D. Fla. Jan. 31, 2011).  Click here to see the article discussing this decision.

Date of Decision: June 13, 2011
Humana v. GlaxoSmithKline (In re: Avandia), 2011 U.S. Dist. LEXIS 63544 (E.D. Pa. June 13, 2011).

PLAINTIFFS CANNOT JOIN MEDICARE TO LAWSUIT IN ATTEMPT TO FORCE MEDICARE TO MAKE CLAIM FOR CONDITIONAL PAYMENTS

Published on June 14, 2011 in Uncategorized. Closed

In Black v. John/Jane Doe Employee, et al., No. 11-25-DLB-JGW (E.D. Ky. May 2, 2011), the plaintiff sued the tortfeasors and Medicare for personal injuries she sustained in a slip and fall accident.  The plaintiff alleged that because Medicare may have paid some of Plaintiff’s medical bills from the accident, it “should be required to . . . assert [its] interests or otherwise be forever barred from doing so as to any party hereto.”  The court granted Medicare’s motion to dismiss for lack of subject matter jurisdiction holding that disputes regarding the reimbursement of conditional payments can only be reviewed by a federal court after Medicare’s administrative procedure has been exhausted.  The fact that Medicare may seek reimbursement of conditional payments made on behalf of a plaintiff does not give plaintiffs a right to circumvent the administrative process.

This case further demonstrates that a settlement, judgment or award must exist in order for Medicare to assert a claim for conditional payments.  Attempts by plaintiffs to join Medicare as a party to a lawsuit in order to force Medicare to make a claim for conditional payments will not be successful.

NEW JERSEY SUPERIOR COURT HOLDS THAT SAME STANDARD APPLIES TO MSAS IN BOTH WORKERS’ COMPENSATION AND THIRD-PARTY LIABILITY CASES; ATTORNEYS’ FEES MAY BE DEDUCTED FROM MSA

Published on June 13, 2011 in Uncategorized. Closed

As further support that Medicare Set-Asides (MSAs) are necessary to protect Medicare’s future interest in third-party liability cases, the New Jersey Superior Court recently held that there was no reason to apply a different standard to set asides created with money obtained from third-party liability claims than it applies to set asides created with money obtained from workers’ compensation claims.  See Hinsinger v. Showboat Atlantic City, 2011 N.J. Super. LEXIS 96, at *3 (Jan. 21, 2011).  The court explained that the statutory and policy reasons for creating MSAs in both situations are the same: to protect the government from paying medical bills for which the beneficiary has already received money from another source.  Further, the court held that the same regulations and directives that apply to set asides created in workers’ compensation cases apply to third-party liability cases.

The court also considered whether Medicare regulations allow an attorney to recover fees for a judgment or settlement obtained on behalf of a client in a civil suit from the MSA.  After the plaintiff prevailed at trial, the parties settled the matter for $600,000.  Because the plaintiff only recently became eligible for Medicare, Medicare had not yet made any conditional payments.  Therefore, the only issue was the protection of Medicare’s future interest.  In an effort to comply with the Medicare Secondary Payer Act, the parties agreed to allocate $180,600, the amount the jury had awarded for projected actual medical costs, to an MSA.  Subsequently, the plaintiff’s counsel sought permission to withdraw a portion of his fees from the money allocated to the MSA.

The court found that 42 CFR § 411.37, which provides for a pro-rated reduction of attorneys’ fees from the total amount of conditional payments due to CMS, could also apply to funds obtained for future medical expenses obtained in a civil action.  The court reasoned that its decision to apply 42 CFR § 411.37 was in line with general principles of equity due to the fact that plaintiffs’ attorneys work on behalf of Medicare to secure funds to pay future medical expenses Medicare would otherwise pay.  Accordingly, the court held that attorneys’ fees incurred to procure a settlement or judgment may be deducted from the money allocated to an MSA.

It is unclear whether Medicare will provide coverage after the plaintiff’s reduced MSA is exhausted or whether Medicare will require the plaintiff to spend the amount deducted in attorneys’ fees.

MSPRC TEMPORARILY SUSPENDS THE ISSUANCE OF DEMAND LETTERS

Published on June 10, 2011 in Uncategorized. Closed

In a recent alert, the Medicare Secondary Payer Recovery Contractor (MSPRC) announced that the Demand letter for liability insurance (including self-insurance), no-fault insurance and workers’ compensation has been temporarily suspended while the letter is under review.   After the MSPRC receives notice that a settlement, judgment or other payment was reached, it calculates the final reimbursement amount and issues a “Demand Letter.”

The MSPRC has already reviewed the Rights and Responsibilities letter (“RAR”) and recently announced that its review is complete.   Issuance of the RAR is anticipated to resume on June 10, 2011.   After issuing the RAR, the MSPRC automatically generates a “Conditional Payment Letter” (“CPL”) within 65 days.  Until MSPRC resumes issuing the RAR, expect delays obtaining conditional payment information.

It appears that as a result of the Haro decision, MSPRC is now reviewing its internal policies and procedures before issuing any more conditional payment demand letters.

Click here to see alert and updates posted by MSPRC.

DISTRICT COURT HOLDS THAT CMS CANNOT REQUIRE PREPAYMENT OF DISPUTED REIMBURSEMENT CLAIMS; PLAINTIFFS’ ATTORNEYS NOT RESPONSIBLE FOR DISBURSING SETTLEMENT PROCEEDS TO CLIENTS

Published on June 6, 2011 in Uncategorized. Closed Tags: , , .

In a recent decision, the United States District Court for the District of Arizona held that the Center for Medicare & Medicare Services (CMS) cannot require prepayment of an MSP recovery claim before the correct amount is determined where the beneficiary appeals or seeks a waiver of the MSP reimbursement claim.  The court found that CMS’ application of the 60-day requirement to collect reimbursement claims from beneficiaries that seek a wavier or an appeal is not authorized by the statutory structure created by Congress and is “neither rational nor consistent with the statutory scheme providing for waiver and appeal rights.”  The court explained that the MSP provision that interest will accrue from the notice of the settlement upon the final determination of a disputed claim is a strong incentive for beneficiaries to pay what they owe Medicare prior to the expiration of the 60-day time period, leaving only the disputed portion of the claim unpaid.  See 42 U.S.C. § 1395y(b)(2)(B)(ii). 

Additionally, the court held that plaintiffs’ attorneys could not be held financially responsible for disbursing settlement proceeds to their clients instead of holding the funds or immediately turning them over to CMS.  The court noted that Congress never expressly made attorneys responsible for reimbursement under section 1395y(b)(2)(B)(ii), but only “an entity that receives payment from a primary plan.”  42 U.S.C. § 1395y(b)(2)(B)(ii) (2002).  The court found that there is no statutory authority, express or implied, to support a direct cause of action to recover a reimbursement claim against an attorney that has received payment from a primary plan and passed it along to the beneficiary.  The court notes that CMS may have a direct action against attorneys to the extent they are end-point recipients of settlement proceeds.  Therefore, it appears that CMS could still file a recovery action for double damages against a plaintiff’s attorney for up to the amount of the settlement proceeds the attorney received as a contingency fee.   

The court also certified the case as a class action, broadly defining the class as: “persons who are or will be subject to MSP recovery, and from whom defendant has demanded or will demand payment of MSP claims before there have been determinations of the correct amounts through the waiver or appeal process.”

This decision provides some much needed guidance on CMS’ recovery practices.  While the decision provides authority to allow plaintiffs’ attorneys to disburse settlement proceeds to Medicare beneficiaries, attorneys should retain and pay CMS any undisputed reimbursement claim to avoid accruing interest.  As a result of this decision, insurance carriers may be even more reluctant to disburse settlement proceeds until a final demand is received from CMS because they are responsible for reimbursing Medicare for conditional payments and risk being sued in a recovery action for double damages if the plaintiff does not reimburse Medicare with the settlement proceeds.  See United States Files Suit Against Parties Involved in $300 Million Settlement to Recover Conditional Medicare Payments.

Haro et al. v. Sebelius, U.S. District Court for the District of Arizona, No. CV 09-134 TUC DCB (D. Az. May 9, 2011).