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Pennsylvania Federal District Court Dismisses Nursing Home MSP Private Cause of Action as Plaintiff Failed to Prove Nursing Home’s Responsibility to Pay Medical Bills

By , April 21, 2016 8:19 am

MSP Private Cause of ActionOn March 30, 2016, the United States District Court for the Eastern District of Pennsylvania published its opinion on Hope v. Fair Acres Geriatric Center, concluding that Plaintiff failed to show that Fair Acres’ responsibility to pay had been demonstrated by any of the means recognized in the Medicare Secondary Payer Act. Since there was no determination that Fair Acres was primarily responsible for Plaintiff’s Medicare payments, it cannot be said that Fair Acres failed to provide appropriate reimbursement. Thus, because Plaintiff has failed to establish that Fair Acres is a “primary payer” and Fair Acres’ responsibility to pay has yet to be demonstrated in any fashion, Plaintiff’s Medicare Secondary Payer private cause of action was dismissed.

In January 2014, Plaintiff Georgia A. Hope was admitted to Fair Acres, a county-owned nursing home located in Lima, Pennsylvania. Plaintiff was 90 years old at the time of her admission. During her stay at Fair Acres, Plaintiff experienced infection, gangrene, dehydration, and a lower extremity sacral wound that resulted in a partial leg amputation.

On December 22, 2015, Plaintiff filed her Complaint against Fair Acres, alleging negligence per se; negligence; corporate negligence; violation of civil rights under § 1983 for Fair Acres’ failure to provide the level of care and protection required by the Federal Nursing Home Reform Amendments (“FNHRA”), and Omnibus Budget Reconciliation Act of 1987 (“OBRA”) regulations, violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), and violation of the Medicare Secondary Payer Act (“MSPA”), as to medical expenses incurred and paid for by Medicare.

On January 20, 2016, Fair Acres filed its motion to dismiss. Plaintiff then filed a response in opposition, and Fair Acres filed a reply memorandum. The Court held a hearing and in this decision addresses the motion to dismiss. Although the opinion addresses each of the allegations in the complaint and the motion to dismiss, for our purposes here, we focus only on the Plaintiff’s Medicare Secondary Payer Act claim.

A private cause of action is available under the MPSA when a primary payer fails to make required payments. 42 USC Section 1395y(b)(3)(A). 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” by a primary plan. 42 USC Section 1395y(b)(2)(A). Examples of primary plans include group health plans, worker’s compensation laws or plans, automobile or liability insurance policies (including self-insured plans), or no-fault insurance policies. See 42 USC Section 1395y(b)(2)(A)(ii). Regulations promulgated under the MSPA define “self-insured plan” as an “arrangement, oral or written to provide health benefits or medical care or assume legal liability for injury or illness” under which an entity “carries its own risk instead of taking out insurance with a carrier.” 42 CFR Sections 411.21, 411.50(b).

Here, Plaintiff’s only allegation in the Complaint regarding Fair Acres’ “primary plan” status is “Defendants and/or its insurer are primary plans under the Act.” The Court here finds this is a legal conclusion and is therefore not entitled to the presumption of truth. Therefore, the Court finds Plaintiff failed to state a claim under the MSPA.

The Court also concludes that Plaintiff’s MSPA claim also fails because she has not demonstrated Fair Acres’ responsibility to pay for any services rendered. The MSPA provides, in relevant part, that “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 USC Section 1395y(b)(2)(B)(ii).

Under the statute’s plain language, “responsibility” can be “demonstrated” by “a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.” 42 USC Section 1395y(b)(2)(B)(ii). See also 42 CFR Sections 411.22(b) (interpreting 42 USC Section 1395y(b)(2)(B)(ii) and describing the ways in which “a primary payer’s responsibility for payment may be demonstrated”). The thrust of the “demonstrated responsibility” requirement is that the payer’s responsibility to pay must be demonstrated as a matter of law.

Fair Acres argues that “a claim under the MSPA simply does not lie against a defendant whose liability to pay medical costs has yet to be determined.” Fair Acres contends that an “MSPA claim must be brought after the defendant is declared responsible for payment.” Plaintiff, on the other hand, suggests that “it is this present action that would contemporaneously demonstrate Fair Acres’ payment responsibility.” (stating that “by her complaint, Plaintiff seeks to recover monies paid by Medicare on her behalf from Defendant as a primary payer”).

The Court here indicates that the Third Circuit “has not addressed the interplay between the time when a defendant’s responsibility must be demonstrated and the time when a plaintiff can bring an MSPRA claim.” But the Court notes that the “Eleventh and Sixth Circuits have held that responsibility must be demonstrated as a condition precedent to bringing an MSPRA claim.” Glover v. Liggett Grp., Inc., 459 F.3d 1304, 1309 (11th Cir. 2006) (per curiam); Bio-Med. Applications of Tenn., Inc. v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 656 F.3d 277, 293 (6th Cir. 2011).

In Glover, the Eleventh Circuit held that “an alleged tortfeasor’s responsibility for payment of a Medicare beneficiary’s medical costs must be demonstrated before an MSPA private cause of action for failure to reimburse Medicare can correctly be brought.” 459 F.3d at 1309. The court explained that “until Defendants’ responsibility to pay for a Medicare beneficiary’s expenses has been demonstrated (for example, by a judgment), Defendants’ obligation to reimburse Medicare does not exist under the relevant provisions.” Id. The court reasoned that if the alleged tortfeasor’s responsibility to pay was not demonstrated before a private MSPA action, “it cannot be said that Defendants have ‘failed’ to provide appropriate reimbursement.” Id. Furthermore, if the responsibility to pay were not first and separately demonstrated, “defendants would have no opportunity to reimburse Medicare after responsibility was established but before the double damages penalty attached” under the statute’s private cause of action.” Id.

Here, the Court indicates that “Plaintiff has failed to show that Fair Acres’ responsibility to pay has been demonstrated by any of the means recognized in 42 U.S.C. §1395y(b)(2)(B)(ii). There has been no determination that Fair Acres was primarily responsible for Plaintiff’s Medicare payments, so it cannot be said that Fair Acres has failed to provide appropriate reimbursement.” Therefore, the Court concludes Plaintiff has not satisfied the condition precedent to bringing her MSPA claim.

Thus, because Plaintiff has failed to establish that Fair Acres is a “primary payer” and Fair Acres’ responsibility to pay has yet to be demonstrated in any fashion, Plaintiff’s MSPA claim was dismissed without prejudice. The Court did however grant Plaintiff leave to amend her complaint should she be able to prove responsibility for such medical expenses in the future.

In Medicare Secondary Payer private cause of action for double damage circles, the question that continues to challenge everyone involved in work comp, liability, auto, no-fault, med pay, medical malpractice, products liability, and nursing home cases is whether the plaintiff must demonstrate responsibility for payment of the medical bills which Medicare ultimately makes payment on. There are now multiple cases on both sides of the issue, but of particular interest here is the fact that the Court did not discuss any of them except for Glover and Bio-Med.

The Court here failed to mention and discuss Humana Medical Plan and Humana Insurance Company v. GlaxoSmithKline, LLC, (USCA 3rd Circuit, June 28, 2012), concluding that without showing responsibility first, any private party may bring a private cause of action under §1395y(b)(3)(A). As a result, the court found that private parties like Humana can bring suit for double damages when a primary plan fails to appropriately reimburse any secondary payer. In addition, since 42 C.F.R. §422.108 states that an Medicare Advantage Organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary of HHS exercises under the MSP regulations, the court found that the Medicare Act treats MAOs the same way it treats the Medicare Trust Fund for purposes of recovery from any primary payer.

The Court here also failed to mention and discuss Michigan Spine and Brain Surgeons, LLC v. State Farm Mutual Automobile Insurance Company, (USCA 6th Circuit, July 16, 2014), finding that although the text of the Medicare Secondary Payer Act is unclear as to whether a private cause of action may proceed against a non-group health plan that denies coverage on a basis other than Medicare eligibility, the regulations as well as congressional intent indicate that this requirement applies only to group health plans and not to non-group health plans. Therefore, the court concludes that despite not showing any proof of responsibility, Michigan Spine may pursue its claim under the Medicare Secondary Payer Act against State Farm.

Although it is not known yet whether Ms. Hope will appeal this decision to the US 3rd Circuit Court of Appeals, as always, please count on our Settlement Solutions team to keep you informed on the ongoing evolution of MSP private cause of action. If we can be of any help or assistance with your own MSP compliance program, including private cause of action issues or concerns, please contact us at 888.672.7674, or at contactus@helioscomp.com.

California Federal District Court Rules that Despite State Filing Deadline Law, State Guarantee Association Owes Medicare Conditional Payments

By , April 19, 2016 3:04 pm

073115_1834_FloridaFede1.jpgOn March 16, 2016, the United States District Court for the Central District of California published its opinion on California Insurance Guarantee Association v. Burrell, HHS, and CMS, granting the United States’ Motion to Dismiss. The Court dismissed CIGA’s claims against the United States to the extent that they are based on the United States’ failure to file timely proofs of claim under the Guarantee Act or based on the United States’ alleged position as an assignee or subrogee of either the insured or the insurer. Therefore, despite state law indicating otherwise, CIGA is required to reimburse the United States for any conditional payments made by Medicare in the claims referenced.

The California Insurance Guarantee Association (CIGA) was created by the California Legislature to establish a fund from which insureds could obtain financial and legal assistance in the event their insurers became insolvent. To that end, CIGA is currently paying several claims under various workers’ compensation policies issued by now-insolvent insurers. These same claimants also received payments from Medicare for items and services that were otherwise covered by these policies.

Where Medicare pays benefits for a loss that is also covered by another insurer, the Medicare Secondary Payer statute, 42 U.S.C. § 1395y, designates Medicare as the “secondary payer” and generally requires those other insurance plans (called “primary plans”) to reimburse Medicare for all benefits Medicare paid. Concluding that the workers’ compensation policies were “primary plans” within the meaning of the statute, the United States demanded that CIGA reimburse it for the Medicare benefits paid to these claimants. CIGA refused, prompting the United States to commence collection proceedings.

CIGA filed this action seeking a judicial declaration that it is not required to reimburse the United States for any conditional payments made by Medicare to these claimants. The United States moved to dismiss the Complaint. CIGA timely opposed, and the United States timely replied.

The Court granted the United States’ prior Motion to Dismiss on the grounds that CIGA was a “primary plan” within the meaning of the Medicare Secondary Payer statute, and that the statute’s reimbursement requirements preempted any contrary California statutes. However, CIGA was given leave to amend to assert other grounds on which the United States may be prohibited from seeking reimbursement.

In its Second Amended Complaint, CIGA asserts two such grounds. First, CIGA asserts that the United States did not file timely proofs of claim under the California Guarantee Act. Second, CIGA argues that the Guarantee Act prohibits the United States from asserting claims against CIGA as either an assignee or subrogee of the insured (or insurer). The United States challenges both theories.

The United States contends that claims made by the United States can never be defeated by a state-imposed time limit. CIGA responds that the McCarran-Ferguson Act is an exception to this rule. That Act provides that “no Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, unless such Act specifically relates to the business of insurance.” 15 U.S.C. § 1012(b). CIGA argues that the California Guarantee Act is a state law that “regulates the business of insurance,” and thus supersedes any general federal law allowing claims to be filed outside the Guarantee Act’s filing deadline. In reply, the United States argues that McCarran-Ferguson does not apply because the Guarantee Act’s claims filing statute does not regulate the “business of insurance,” and the Medicare Secondary Payer statute is a federal statute that specifically regulates the business of insurance.

The Court begins with the familiar rule that “when the United States becomes entitled to a claim, acting in its governmental capacity and asserts its claim in that right, it cannot be deemed to have abdicated its governmental authority so as to become subject to a state statute putting a time limit upon enforcement.” United States v. Summerlin, 310 U.S. 414, 417, 60 S. Ct. 1019, 84 L. Ed. 1283, 1940-2 C.B. 435 (1940). This common law rule has its origins in the concept of sovereign immunity—just as the states cannot sue the federal government without its consent, the states cannot enact laws that purport to bind the federal government without its consent. Congress can, of course, waive sovereign immunity. Similarly, the federal government can consent to state regulation. However, there must be “a clear congressional mandate and specific legislation which makes the authorization of state control over the federal government clear.” The Court finds that absent such a waiver, Summerlin clearly controls here.

The California Guarantee Act requires all claims against CIGA to be presented to the liquidator of the defunct insurer “on or before the last date fixed for the filing of claims in the domiciliary liquidating proceedings.” Cal. Ins. Code § 1063.1(c)(1)(C). CIGA alleges that this deadline passed several years ago with respect to the defunct insurers at issue in this lawsuit, and that the United States’ claims for reimbursement are therefore barred. However, the Court concludes that as a state law that “undertakes to invalidate the claim of the United States so that it cannot be enforced at all,” the Guarantee Act’s claims filing deadline “transgresses the limits of state power” and is thus inapplicable to claims by the United States.

Therefore, the Court indicates that the only question is whether Congress waived Summerlin in the insurance context. CIGA argues that the McCarran-Ferguson Act authorizes the states to bind the federal government to a claims filing deadline in the insurance context. As previously noted, the McCarran-Ferguson Act provides that “no Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, unless such Act specifically relates to the business of insurance.” 15 U.S.C. § 1012(b).

The McCarran-Ferguson Act was enacted in response to the Supreme Court’s decision in United States v. South-Eastern Underwriters Assn., 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440 (1944). “Prior to that decision, it had been assumed that issuing a policy of insurance was not a transaction of commerce subject to federal regulation. However, in South-Eastern Underwriters, the Supreme Court held that an insurance company that conducted a substantial part of its business across state lines was engaged in interstate commerce and thereby was subject to the antitrust laws. In response, Congress moved quickly to restore the supremacy of the States in the realm of insurance regulation by enacting McCarran-Ferguson.”

CIGA relies on Ruthardt v. United States, 164 F. Supp. 2d 232 (D. Mass. 2001), aff’d, 303 F.3d 375 (1st Cir. 2002), for the proposition that McCarran-Ferguson was intended as a waiver of Summerlin. The Court however disagrees.

First, the court points out that the Act, by its express terms, does not apply to Summerlin. The Act refers only to “Acts of Congress” as not preempting state statutes that regulate the insurance industry. § 1012(b). The rule laid down in Summerlin is not an “Act of Congress,” nor is it derived from any Act of Congress; it is a common law rule that stems from principles of sovereign immunity that long predate this country’s founding, and that is now enshrined in the Supremacy Clause. Nor does Summerlin bind the states by preempting state law “through” a federal statute; rather, it is a stand-alone principle that delineates the states’ power (or lack thereof) over the federal government.

Second, the purpose of the Act was to ensure that the regulation of the insurance business stayed with the states (unless Congress specifically provided otherwise). The Summerlin principle does not substantially affect the state’s regulation of the insurance industry. It is not a legislative enactment that imposes requirements that all businesses and policyholders in the California insurance market must adhere to; rather, it simply governs one aspect of CIGA’s claims process where the United States acts as a claimant.

Third, and perhaps most importantly, protecting the insurance business from unwitting federal legislative control is a far cry from subjecting the federal government as a sovereign to state control. “That Congress intended the former cannot be reasonably construed as intending the latter.”

For these reasons, the Court grants the United States’ Motion to Dismiss. The Court dismisses CIGA’s claims against the United States to the extent that they are based on the United States’ failure to file timely proofs of claim under the Guarantee Act or based on the United States’ alleged position as an assignee or subrogee of either the insured or the insurer.

This is the latest in a long line of cases that have essentially made it clear that the Medicare Secondary Payer Act preempts state law when it comes to pursuing and collecting Medicare conditional payments. Therefore, whether a public or private entity, whether the original debtor or insurer, or a recently appointed or contracted responsible payer of the claim, you must research and resolve Medicare conditional payments associated with the claim. As Medicare gets more aggressive in its pursuit of conditional payments, and the courts get tougher on debtors, it necessarily means that you, as the primary payer, or your designated representative or agent, must identify whether the claimant is a Medicare beneficiary, learn whether Medicare has made any payments, investigate whether such payments are related to the claim, timely dispute and appeal reimbursement of any amount not due, communicate and negotiate with Medicare contractors, and ultimately reimburse Medicare the amount it is appropriately due on a timely basis.

Whether a workers’ compensation, liability, auto, no-fault, med pay, medical malpractice, nursing home, products liability, or class action, our conditional payments resolution team, made up of attorneys, nurses, pharmacists, and claims specialists with years of experience saving millions of dollars for our customers, can help. Please contact us at 888.672.7674, or at contactus@helioscomp.com.

Thanks for your Readership and Your Workers Compensation.com Best Blog Nominations

By , March 28, 2016 8:37 am

Rafael Gonzalez, Esq.
Vice President, Strategic Solutions

Dear MedicareInsights reader:

Wanted to take this opportunity to express our thanks for your continued readership.

All of us associated with the Settlement Solutions team, and especially those of us who work on MedicareInsights.com, are incredibly thankful for your ongoing support.

Whether it is Medicare Secondary Payer legislation, regulations, case law, administrative policy, congressional studies, CMS statistics, or contractor experience and results, we know you have come to rely on us to keep you updated on all things MSP.

And as MSP compliance has become more and more complicated, more complex, and more difficult, we understand you have entrusted in us to provide you with leadership on mandatory insurer reporting, conditional payment resolution, and set aside allocations, approval, and administration.

I hope that the articles, research, and scholarship we publish on a weekly basis on MedicareInsights.com show how serious we take your trust, how dedicated we are to making sure you remain well versed on all components of MSP compliance, how important each of you and your business are to us.

As you may have recently heard, Bob Wilson recently announced that WorkersCompensation.com is currently accepting nominations for Best Blogs in the workers compensation industry.

We are so very delighted that many of you have reached out to inquire about nominating MedicareInsights.com. We truly appreciate your trust and confidence in us and are so very grateful for your continued support.

As a result, if you are interested in nominating MedicareInsights as one of your favorite workers compensation blogs, you may do so by visiting WorkersCompensation.com and clicking on the Best Blog icon through March 31, 2016.

You will be asked the name of the blog (MedicareInsights), principal blogger (Rafael Gonzalez), area of nomination (MSA/Settlement), and your name, email address, and employer. You will receive a confirmation email acknowledging your nomination. Winners will be announced by WorkersCompensation.com in April 2016.

On behalf of each and every one of the individuals in our Settlement Solutions team, and especially those responsible for bringing you MedicareInsights.com, thanks for allowing us to serve you, keep you informed, and considering us one of your favorite blogs.

Michigan State Court Awards Double Damages on MSP Private Cause of Action Despite Payment

By , March 11, 2016 11:19 am

Rafael Gonzalez, Esq.

Vice President, Strategic Solutions

 

On February 17, 2016, the State of Michigan Circuit Court for the County of Oakland published its opinion on Hull v. Home Depot, finding that although Home Depot had already paid $42,233.16 to Medicare and Blue Cross Blue Shield Medicare Advantage Plan, because Mr. Hull’s filing of the MSP private cause of action prompted Home Depot’s payment of same, Mr. Hull is entitled to double damages and therefore awards another $42,233.60 to reward him for his efforts.

John Hull was employed by Home Depot when he injured his knee while at work in April 2010. In September 2011, he submitted a claim for workers’ compensation benefits, which was denied. Mr. Hull appealed the denial and ultimately a hearing before the Worker’s Compensation Board of Magistrates was held in March 2015. On May 5, 2015, the Magistrate rendered an order finding that Home Depot was responsible for paying medical expenses relating to the knee injury.

On June 26, 2015, Home Depot filed a claim for review appealing the Magistrate’s decision. While that appeal was pending, on August 3, 2015, Mr. Hull filed an action pursuant to the private enforcement provision of the Medicare Secondary Payer Act at 42 USC Section 1395y(b)(3)(A), not in federal court, but in the State of Michigan Circuit Court for the County of Oakland, seeking double damages for the $42,233.60 paid by Medicare and a Medicare Advantage Plan for medical treatment related to his work knee injury.

On August 13, 2015, Home Depot sent a letter to the Michigan Compensation Appellate Commission withdrawing its claim for review. As a result, the Commission entered an order granting the withdrawal on August 28, 2015. Consequently, on September 10, 2015, Home Depot paid $6,813.83 to Medicare and $35,419.33 to Blue Cross Blue Shield, the Medicare Advantage Plan which paid for the knee injury medical costs.

Having paid the outstanding Medicare and MAP conditional payments, Home Depot then filed for summary disposition of Mr. Hull’s MSP Private Cause of Action for double damages. Mr. Hull opposed Home Depot’s motion and filed his own summary disposition. In deciding summary disposition, affidavits, depositions, admissions, or other documentary evidence may be submitted. If pleadings show that a party is entitled to judgment as a matter of law, or if the evidence shows that there is no genuine issue of material fact, the trial court may render judgment.

The state court correctly points out that the Medicare Secondary Payer statute was enacted in the 1980s to reduce Medicare costs by making the government a secondary provider of medical insurance coverage when a Medicare recipient has other sources of primary coverage. The MSP statute permits Medicare to render conditional payments for medical expenses related to a worker’s compensation claim with the expectation that the primary payer will later reimburse Medicare if the primary care has or had the responsibility to make payment.

Although we generally see federal courts deal with these types of Medicare secondary payer issues, in this case, the state court indicates that there are two causes of action contained in the Medicare Secondary Payer statute. First the government itself may sue primary payers and obtain double damages to obtain money belonging to Medicare. 42 USC Section 1395y(b)(2)(B)(iii). Second, private citizens may collect doubled damages by bringing claims against primary payers to recover money owed. 42 USC Section 1395y(b)(3)(A).

Based on federal and state case law from around the country, the state court indicates that Congress has authorized a private cause of action and double damages to encourage private parties who are aware of non-payment by primary plans to bring actions to enforce Medicare’s rights. The court here indicates that without the double damages, the private party may not be motivated to take arms against an insurer because Medicare may have already paid the expenses and the private party would have nothing to gain by pursuing the primary payer. Therefore, with the private right of action and double damages, the private party can pay back the government and still have money left over as a reward for such efforts.

Here, Home Depot argues that because it voluntarily paid the amounts owed to Medicare and Blue Cross Blue Shield without a court ordering it to do so, dismissal is appropriate. They also argue that because Mr. Hull filed the double damages lawsuit while the Magistrate’s opinion was on appeal, his lawsuit is premature and cannot proceed. Home Depot also argues the complaint should be dismissed because it fails to state a valid claim. In other words, Home Depot argues that Mr. Hull must establish that Home Depot’s responsibility to pay such medical bills was demonstrated prior to the filing of the private cause of action.

The state court however dismisses Home Depot’s arguments by finding that the demonstrated responsibility provision limits lawsuits against tortfeasors, not lawsuits against private insurers. Here, because the claim arose out of worker’s compensation law, it is not a tort action against Home Depot, and therefore there is no tortfeasor, but a private insurer. Consequently, Mr. Hull was allowed to proceed without having to demonstrate Home Depot had the responsibility to pay such medical expenses.

Home Depot also argued that it was entitled to summary disposition because Mr. Hull filed this action before a final adjudication of Home Depot’s responsibility by the appeals commission was entered. Since Home depot paid the amount owed within seven days of receiving the appeals order granting withdrawal of its claim for review, Home Depot argued that the case should be dismissed.

The state court finds the fact that Home Depot paid after receipt of the order does not insulate it from liability. The state court points out that the very same issue was already decided by the USDC in Kentucky in Estate of McDonald v. Indemnity Insurance Company of North America, wherein the federal court concluded that once a private cause of action is filed, a defendant cannot escape double damages by paying single damages to Medicare after the law suit is filed.

In Estate of McDonald, the Kentucky Worker’s Compensation Board found that the decedent’s death was caused by the work accident and issued an opinion ordering worker’s compensation benefits to be paid and medical expenses to be reimbursed. Because Medicare was never reimbursed for the conditional payments it made related to the workers compensation claim, the estate brought a private cause of action against the worker’s compensation insurer. After the lawsuit was filed, but before the federal court heard the case, the insurer paid the amount owed and later argued that because it had made payment, it did not owe double damages. The federal court however disagreed, finding that once a private course of action has been launched, a defendant cannot escape double damages by paying single damages to Medicare after the lawsuit was filed.

Here, the state court points out that Home Depot refused to pay for Mr. Hull’s medical expenses for nearly five years. Home Depot paid the medical expenses only after Mr. Hull filed his private cause of action for double damages. The court therefore found that this course of conduct is not permitted in light of the clear intent and purpose of the Medicare Secondary Payer Act. As a result, Home Depot’s motion for summary disposition was denied and Mr. Hull’s counter motion for summary disposition was granted. Although Home Depot had already paid $42,233.16, because Mr. Hull’s filing of the suit prompted Home Depot’s payment of same, the state court found that Mr. Hull was entitled to double damages and therefore awarded another $42,233.60 to reward him for his efforts.

As we have been communicating for several years now, Medicare Secondary Payer compliance is becoming more and more complex. The MSP private cause of action provision has certainly made compliance more complicated, and many would say even more risky for payers. This is the second published case where despite reimbursing the conditional payments made by Medicare or a Medicare Advantage Plan, a payer has been found to owe double damages because reimbursement was made after the lawsuit seeking double damages was filed. The case law from around the country has allowed medical care providers, injured workers, the estate of the deceased injured individual, and Medicare Advantage Plans to file and ultimately collect double damages under the MSP private cause of action provision. And there are new and ongoing efforts by law firms, collection agencies, and new business ventures specifically set up to chase after such double damages. Make no mistake about it, this is not going away. If the last five years are any indication, this is a trending area we expect will continue to grow and become more significant, more active, and more expensive.

Helios Settlement Solutions is the country’s leading Medicare Secondary Payer compliance services provider. We offer comprehensive MSP compliance services, including mandatory insurer reporting of ongoing responsibility for medical, ICD-9 and ICD-10 codes, and total payment obligation to claimant, conditional payment investigation, analysis, and resolution, as well as set aside allocations, approval, and administration. To speak with us about these industry leading risk management, mitigation, and prevention tools, please contact us at 888.672.7674, or at contactus@helioscomp.com.

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