Tag Archive for 'medicare secondary payer'

SIXTH CIRCUIT HOLDS THAT CMS IS ENTITLED TO COMPLETE REIMBURSEMENT OF CONDITIONAL PAYMENT WHERE PLAINTIFF SETTLES FOR AMOUNT BASED ON DEFENDANT’S ALLOCATED LIABILITY

Published on December 13, 2011 in Uncategorized. Closed Tags: , , , , .

In a recent decision by the United States Court of Appeals for the Sixth Circuit, the court ruled that CMS is entitled to the complete reimbursement of the conditional payment regardless of the negligence attributed to the tortfeasor.  Hadden v. U.S., No. 09-6072, 2011 U.S. App. LEXIS 23289 (6th Cir. Nov. 21, 2011). In Hadden, the plaintiff was injured when he was struck by a utility truck. The driver of the utility truck lost control when it was run off the road by the driver of another car that ran a stop sign. The driver responsible for the accident was never identified. Medicare paid for plaintiff’s medical expenses related to the accident. Plaintiff settled his claims against the owner of the utility truck and signed a release in which he agreed to pay and satisfy all medical expenses, liens, and claims related to the incident.  The settlement reflected the fault that could be attributed to the settling defendant. Plaintiff was ordered to pay Medicare its full reimbursement even though the primarily liable tortfeasor was never found, and no payments were made on the tortfeasor’s behalf.

The MSP Act provides:

A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. . . .

42 U.S.C. § 1395y(b)(2)(B)(ii). According to the Hadden court, the use of the term “responsibility” clearly and unambiguously dictates that a Medicare beneficiary’s tort recovery from a tortfeasor/primary plan is subject to Medicare’s claim for reimbursement for the entire amount of Medicare’s conditional payments without regard to whether the tort recovery included full payment for the items and services paid for by Medicare. The court found that the amount the beneficiary is obligated to reimburse Medicare remains unchanged even if the claimant’s settlement reflects a reduced amount because of the alleged tortfeasor’s share of liability.

The practical import for those claims involving Medicare in the Sixth Circuit will be that CMS will be much less willing to negotiate its interest, taking the position that it is entitled to its full share regardless of equitable arguments. As a result, settlement will be less likely in cases involving a Medicare beneficiary. Beneficiaries will fear that Medicare will claim the entire settlement award.  Insurance carriers will be unwilling to pay any more than what they value the settlement regardless of Medicare’s present and future interest. As a result, the parties will be more likely to try those cases, which will adversely impact the court system.

The Hadden decision is at odds with the decision by the United States Court of Appeals for the Eleventh Circuit decision in Bradley v. Sebelius et al., No. 09-13765,  2010 U.S. App. LEXIS 20091 (11th Cir. Sept. 29, 2010), which held that Medicare was not entitled to a full recovery of the conditional payment amount in a wrongful death action.  Please click here for a discussion of the Bradley decision. As a result of the decisions in Hadden and Bradley, an obvious conflict exists among the United States Courts of Appeals with respect to whether Medicare must be willing to adjust the amount it seeks to recover in cases where the parties reach settlement, which may only be resolved by the Supreme Court of the United States. 

Date of Decision: November 21, 2011
Hadden v. U.S., No. 09-6072, 2011 U.S. App. LEXIS 23289 (6th Cir. Nov. 21, 2011).

THE SMART ACT IS INTRODUCED IN THE SENATE

Published on November 7, 2011 in Uncategorized. Closed Tags: , , , .

On October 17, 2011, U.S. Senators Ron Wyden (D-OR), Rob Portman (R-OH), Ben Nelson (D-NE), and Richard Burr (R-NC), introduced S. 1718, The Strengthening Medicare and Repaying Taxpayers Act (SMART Act), in the Senate.  The goal of the proposed legislation is to make the Medicare Secondary Payer (MSP) system more efficient and effective. The SMART Act was also introduced in the House of Representatives last March.  Click here to see discussion of the SMART Act. 

CMS TO IMPLEMENT NEW FIXED PERCENTAGE PAYMENT OPTION TO RESOLVE MEDICARE LIENS IN CERTAIN LIABILITY SETTLEMENTS

Published on October 31, 2011 in Uncategorized. Closed Tags: , , .

The MSPRC recently announced that CMS will implement a new payment option for beneficiaries who receive certain types of liability insurance settlements of $5,000 or less to resolve Medicare’s recovery claim.  A beneficiary who elects this option will be able to resolve Medicare’s lien by paying Medicare 25% of his/her total liability insurance settlement instead of using the traditional recovery process.  In order to quality for this option, the following criteria must be met:
1. The liability insurance (including self-insurance) settlement is for a physical trauma based injury. (This means that it does not relate to ingestion, exposure, or medical implant); and
2. The total liability settlement, judgment, award, or other payment is $5000 or less; and
3. The beneficiary elects the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident, and
4. The beneficiary has not received and does not expect to receive any other settlements, judgments, awards, or other payments related to the incident.
The new option will be available on November 7, 2011.  A full explanation, including instructions on how and when to elect the option, will be available on MSPRC’s website on November 7, 2011.

Beneficiaries may not be willing to pay a quarter of a small settlement to Medicare, especially where the beneficiary is represented by an attorney and will have to pay attorney’s fees from those settlement proceeds.  It does not appear that this option provides a reduction for procurement costs.

Click here to see the MSPRC announcement.

DISTRICT COURT REVIEWS AND APPROVES PARTIES' LMSA

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

In a recent order by the United States District Court for the Eastern District of Arkansas, the court approved the parties’ Liability Medicare Set Aside (“LMSA”) amount to cover the plaintiff’s future medical treatment for accident-related injuries that would otherwise be covered by Medicare.  The plaintiff had sued seeking damages associated with a permanent and disabling injury to his right hand while working as a truck driver aboard a floating barge.  The parties reached a settlement agreement where plaintiff agreed to compromise and discharge all claims against defendant in the liability suit and all claims under the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq., against the employer and workers’ compensation carrier in exchange for a total payment of $1,000,000.00. 

The plaintiff was a current recipient of Social Security Disability benefits, and therefore, he was Medicare eligible.  To protect Medicare’s interest in the settlement, the parties agreed to establish an LMSA and retained the Garretson Resolution Group to determine an LMSA amount to cover the future cost of plaintiff’s accident-related medical treatment.  The proposed LMSA was submitted to CMS for approval, but CMS refused to review it due to “workload issues.”  Instead, the parties filed a motion with the court to review and approve the proposed LMSA.  The court approved the proposed LMSA finding that the parties had reasonably considered and protected Medicare’s interest in the settlement and that the LMSA amount fairly and reasonably took Medicare’s interest into account. 

It seems likely that CMS will refuse to review the majority of LMSA’s submitted for third-party liability settlements.  By having a court review and approve a proposed LMSA, parties can obtain some assurance that the amount set aside is sufficient and meet their good faith obligations.

Date of Decision: August 9, 2011
Smith v. Marine Terminals of Arkansas et al., No. 3:09-CV-00027 (E.D. Ark. Aug. 9, 2011).

MEDICARE CONSIDERS ITS FUTURE INTEREST SATISFIED WHERE TREATING PHYSICIAN CERTIFIES TREATMENT IS COMPLETED AND FUTURE MEDICAL SERVICES WILL NOT BE REQUIRED

Published on October 4, 2011 in Uncategorized. Closed Tags: , , , , , .

In a recent memorandum, CMS issued its first guidance with respect to the use of Liability Medicare Set-Aside Arrangements (LMSA) amounts related to liability insurance settlements, judgments, awards, or other payments (“settlements”).  CMS advises that where the beneficiary’s treating physician certifies in writing that treatment for the alleged injury related to the liability insurance settlement has been completed as of the date of the settlement and that future medical items and/or services for that injury will not be required, Medicare considers its interest, with respect to future medicals for that particular settlement, satisfied.  Further, CMS provides that when the treating physician makes such a certification, there is no need for the parties to submit the certification for review and approval.  Therefore, the parties can rely on such certifications to demonstrate that Medicare’s future interest has been considered and satisfied. 

While the scope of the memorandum is limited to cases where a treating physician is able to opine that no future injury-related care is needed, the memorandum serves as the first official notice regarding CMS’s position on the use of LMSAs.

Click here to view the memorandum.