Feds pursuing Medicare conditional payment reimbursement from beneficiaries’ attorneys, as well as primary payers

brown wooden gavel close up photography
Photo by rawpixel.com on Pexels.com

Although we hear a great deal about Medicare becoming increasingly more aggressive with primary payers (responsible employers, corporations, insurers, self insured entities, and third party administrators), the federal government is also becoming just as unforgiving with beneficiaries’ attorneys. Pursuant to the Medicare Secondary Payer provisions of the Social Security Act, 42 U.S.C. § 1395y(b)(2), when Medicare has made a payment on an auto, liability, no-fault, or work comp claim, it is entitled to reimbursement from the primary payer, including the beneficiary’s attorney.

Two recent cases remind us that attorneys representing Medicare beneficiaries in auto, liability, no-fault, and work comp claims have responsibility to make sure Medicare is reimbursed, if Medicare has made payments related to such claims.

Maryland attorney and law firm agree to pay $250,000 in settlement

In March 2019, the US Attorney for the District of Maryland Robert K. Hur announced that Maryland law firm Meyers, Rodbell & Rosenbaum, P.A., entered into a settlement agreement with the United States to resolve allegations that it failed to reimburse Medicare for certain payments made to medical providers on behalf of a firm client.

According to the settlement agreement, in and prior to 2012, Medicare made conditional payments to healthcare providers to satisfy medical bills for a client of the firm. In December 2015, with the firm’s assistance and representation, the client received a $1,150,000 settlement in a medical malpractice action stemming from the client’s injuries. After Medicare was notified of the settlement, Medicare demanded repayment of the Medicare debts incurred from those conditional payments. The firm refused to pay the debt in full, even when the debt became administratively final.

Terms of the settlement

Under the terms of the settlement agreement, the firm agreed to pay the United States $250,000 to resolve the government’s claims.  The firm also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.

US Attorney goes after Pennsylvania attorney and law firm

This is not the first time a US Attorney has gone after an attorney or personal injury law firm for not reimbursing Medicare conditional payments. In June 2018, U.S. Attorney William M. McSwain announced that Philadelphia personal injury attorney Jeffrey Rosenbaum and his law firm, Rosenbaum & Associates, entered into a settlement agreement with the United States to resolve allegations that they failed to reimburse Medicare for certain payments the government had previously made to medical providers on behalf of firm clients who sought medical care.

At various points before March 2017, Medicare made conditional payments to healthcare providers to satisfy medical bills on nine of the firm’s clients. Between May 2011 and March 2017, Medicare demanded repayment of the Medicare debts incurred from those conditional payments.

Terms of the settlement

Under the terms of the settlement agreement, Rosenbaum agreed to pay a lump sum of $28,000. Rosenbaum also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance. In addition, Rosenbaum acknowledged that any failure to submit timely repayment of Medicare secondary payer debt may result in liability for the wrongful retention of a government overpayment under the False Claims Act.

Warning to lawyers                                       

These settlement agreements should remind personal injury lawyers and other primary payers of their obligation to reimburse Medicare for conditional payments before and after a settlement, judgment, award, or payment. As the MSP law makes clear, when any primary payer, including an attorney, fails to reimburse Medicare, the United States can recover from the primary payer, including the attorney—even if the primary payer already provided payment and even if the attorney already transmitted settlement proceeds to the client. And if the federal government cannot collect from the Medicare beneficiary or his/her attorney, the U.S. has variable options including seeking reimbursement from the original primary payer, even if the settlement agreement indicates otherwise.

Federal safeguards

Congress enacted these rules to ensure repayment from responsible parties. As we have seen over the last several years, the federal government intends to hold all primary payers, including attorneys, accountable for failing to make good on their obligation to reimburse Medicare when it has made payments related to an underlying auto, liability, no-fault, or work comp claim.

As always, Optum Workers Compensation and Auto No-fault Settlement Solutions will continue to keep you updated on all aspects of Medicare Secondary Payer compliance including issues pertaining to reimbursement of conditional payments on auto, liability, no-fault, and workers compensation claims.