Tag Archive for 'MSP Act'

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).

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.

CMS DELAYS IMPLEMENTATION DATE FOR REPORTING BASED ON TPOC AMOUNT

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

In a recent alert, CMS announced that it has delayed Section 111 reporting dates for certain liability insurance settlements, judgments, awards, or other payments. The implementation date for reporting will be based on the Total Payment Obligation to Claimant (TPOC) amount. The schedule of the new dates is as follows:

For TPOCs over $100,000, where the TPOC date* remains on or after October 1, 2011, mandatory reporting begins the first quarter of 2012;

For TPOCs between $50,001 and $100,000, where the TPOC date is on or after April 1, 2012, mandatory reporting begins the third quarter of 2012;

For TPOCs between $25,001 and $50,000, where the TPOC date is on or after July 1, 2012, mandatory reporting begins the fourth quarter of 2012; and

For TPOCs between $5,000 and $25,000, where the TPOC date is on or after October 2012, mandatory reporting begins the first quarter of 2013.

Click here to view the alert.

*The TPOC Date is the date the payment obligation was established. This is the date the obligation is signed if there is a written agreement unless court approval is required.

SIXTH CIRCUIT HOLDS THAT PRIVATE CAUSES OF ACTION UNDER THE MEDICARE SECONDARY PAYER ACT MAY PROCEED WITHOUT “DEMONSTRATED RESPONSIBILITY”

Published on September 23, 2011 in Uncategorized. Closed Tags: , , .

In a recent decision by the Court of Appeals for the Sixth Circuit, the court determined that the “demonstrated responsibility” provision in the MSP Act does not apply to lawsuits brought by private parties against insurers, and that the provision is only a precondition to lawsuits brought by Medicare for reimbursement.  See 42 U.S.C. § 1395y(b)(2)(B)(ii) (“A primary plan . . . shall reimburse [Medicare] for any payment made by [Medicare] . . . with respect to an item or service if it is demonstrated that such primary pan has or had a responsibility to make payment with respect to such item or service.”  In support of its determination, the court relied on the following five reasons: (1) the provision’s text places a condition only when primary plans must reimburse Medicare; (2) the structure of the MSP Act and placement of the provision; (3) relevant legislative history; (4) the backdrop of the MSP Act was Medicare’s failed attempts to bring lawsuits against tortfeasors; and (5) applying the “demonstrated responsibility” provision would limit lawsuits brought by private parties contrary to Congress’s intent.  The impact of this decision is that it will be easier for private parties to bring actions seeking reimbursement of Medicare’s conditional payments along with double recovery from the tortfeasor’s insurance carrier.

Date of Decision: September 2, 2011
Bio-Medical Applications of Tennessee v. Central States, Nos. 09-6121/6169 (6th Cir. Sept. 2, 2011).

COURT REJECTS GOVERNMENT’S MOTION FOR RECONSIDERATION BASED ON THEORY ON CONTINUING ACCRUAL ARGUMENT

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

In a recent ruling, the U.S. District Court for the Northern District of Alabama denied the Government’s motion to reconsider the court’s dismissal of United States v. Stricker in September of 2010.  By way of background, the court dismissed the action based on its finding that the applicable statutes of limitations barred the Government’s complaint. 

In its motion to reconsider, the Government argued that the court erred in granting the motions to dismiss without considering its theory of continuing accrual argument.  Based on the theory of continuing accrual, the Government argued that because the administration of the settlement fund required disbursements on an annual basis, a new Medicare recovery cause of action accrued every year when the annual payments were made.  The court rejected the theory, finding it “lacking in law and logic.”  The court explained that the Government could have filed suit before the expiration of the statute of limitations seeking a total reimbursement for everything that was to be paid pursuant to the settlement agreement, including the continuing payments.  The court also noted that the regulations implementing the MSP Act define the Government’s right to initiate recovery as beginning “as soon as it learns that payment has been made or could be made under workers’ compensation, any liability or no-fault insurance, or an employer group health plan.” 42 C.F.R. § 411.24(b) (emphasis added). 

It is unknown how other courts will handle the theory of continuing accrual in the context of Medicare recovery actions.  However, there is currently no legislative, regulatory or case law to support it.

Date of Decision: August 12, 2011
United States v. Stricker, No. CV-09-2423 (N.D. Ala. Aug.12, 2011).