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By Settlement Solutions, March 26, 2013 10:27 am

Case law as it pertains to MSPMedicare Secondary Payer Act compliance in liability settlements continues to reach different conclusions in different courts. In fact, the only aspect that appears to be consistent in these opinions is a lack of any significant trend or majority position concerning exactly how to apply the MSPMedicare Secondary Payer Act Act in liability cases. More specifically, due to the ambiguous/confusing nature of the MSPMedicare Secondary Payer Act in liability settlements, there has been a vast difference of opinion as to how to protect Medicare’s interest through the use of MSAsMedicare Set-Asides under the MSPMedicare Secondary Payer Act.

We have seen several cases find that a LMSALiability Medicare Set-Aside is required/appropriate for compliance with the MSPMedicare Secondary Payer Act in Louisiana and Mississippi (see Frank v. Gateway Insurance Co., 2012 U.S. District LEXIS 33581 and Welch v. American Home Insurance Company, 2013 U.S. District LEXIS 25948). Additionally, in a recent Florida case, Early v. Carnival Corp., 2013 U.S. District LEXIS 16711, the court refused to provide an advisory opinion on whether an LMSALiability Medicare Set-Aside was required under the MSPMedicare Secondary Payer Act because to do so would have required the court to draft (rather than interpret) a key part of the settlement. However, in Sterrett v. Klebart, 2013 Conn. Super. LEXIS 245 (February 5, 2013), the court found that the settlement parties were not required to set-aside any settlement proceeds for future medical benefits, despite the fact that the injured party became a paraplegic as a result of the alleged injury in this liability lawsuit.

The facts of the Sterrett case involve the Plaintiff, Clifford Sterrett (Sterrett), who was a social invitee at the home of the defendants. Sterrett was walking down the stairs at the home when he fell backwards and was injured. Sterrett suffered a spinal cord injury that resulted in paraplegia and alleged that the defendants were negligent because the stairway did not have a handrail. The defendants countered that Sterrett was contributorily negligent because he was under the influence of alcohol at the time that he fell. The defendants also asserted a series of other special defenses.

The parties mediated and reached a settlement in the amount of $550,000. The court recognized that considering all of the facts and circumstances of the case, particularly the nature of Sterrett’s injuries and all of the special defenses raised by the defendants, the defendants’ agreement to settle the case for $550,000 represented a substantial compromise over the potential verdict range in a jury trial. Due to the fact that the settlement was “compromised” and settlement funds paid to Sterrett were not intended to include funds representing compensation for future medical benefits, the court found that the settlement parties were not required to set-aside any of the settlement proceeds for future medical benefits which may be paid by Medicare.

There was an acknowledgement that there was an obligation to reimburse Medicare for conditional payments and that Medicare was owed $14,448.30. The court further found that the parties “reasonably and adequately considered the interest of Medicare in the settlement, and the plaintiffs and defendants should not be subject to any claim, demand, or penalty from Medicare as a result of the settlement payment that has been agreed upon in this manner.”

What is interesting about this case is that the court acknowledged that Sterrett would incur medical bills payable by Medicare in the foreseeable future. However, because the settlement funds contemplated by this particular settlement agreement did not include any significant amount that would be used to cover the costs of future medical expenses, there was absolutely nothing to set-aside. It appears that by “creative lawyering” of the settlement allocation, the parties were able to convince the court that nothing in this settlement involved future medical costs. In this particular case, the court was more than willing to go along with this way of thinking.

The court seemed to side step the issue of the burden shift of future costs to Medicare. Obviously, in this case the plaintiff is a paraplegic and someone is going to have to pay for his medical coverage. The parties and the court appear to be simply pointing fingers to the government and saying, “Let Medicare pay.” However, in the end, the burden may end up being shifted to Sterrett, the Medicare beneficiary in this case. As this case is reportable under MMSEAMedicare Medicaid and SCHIP Extension Act Section 111Section 111 of the Medicare Medicaid and SCHIP Extension Act stating requirements for mandatory insurer reporting , the Centers for Medicare and Medicaid Services (CMSCenters for Medicare and Medicaid Services) will flag the ICD-9International Classification of Diseases, 9th Revision codes reported and associated with the settlement and could potentially deny Sterrett coverage for items related to the injury until the entire settlement is exhausted. The court stated that the plaintiffs in this case should not be subject to any future claim, demand, or penalty from Medicare in the future. Yet, CMSCenters for Medicare and Medicaid Services is arguably not bound by this statement or this decision and further, it appears that no determination as to Sterrett’s contributory negligence was made by the court; therefore, Sterrett may be without recourse if he appeals loss of Medicare coverage through Medicare’s administrative appeals process.

Even if Medicare does not deny Sterrett coverage in the end, the burden is arguably being shifted to Medicare in some form or fashion. The future medical cost has to go somewhere- and it is going to be either the Medicare beneficiary or the Medicare Trust Fund. Although CMSCenters for Medicare and Medicaid Services has not finalized “formal guidance” on how to comply with the MSPMedicare Secondary Payer Act with regard to future medical treatment in liability cases, it seems that the intent behind the MSPMedicare Secondary Payer Act and the protection of Medicare’s interests was not accurately applied to this case and seems to have lost its way.

Hopefully in the future, courts will have a better understanding of the potential burden shift to Medicare and will find a resolution that not only protects the settlement parties, but also protects the Medicare Trust Fund and the Medicare beneficiary.

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By Settlement Solutions, March 13, 2013 1:55 pm

2013 has been extremely busy with regard to MSPMedicare Secondary Payer Act compliance activity and updates.  We started out the New Year with the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 being signed by President Obama on January 10, 2013 which will set into motion a series of changes relating to MSPMedicare Secondary Payer Act compliance. Want to make sure you are completely up to date on the changes that the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 will bring this year?

PMSI’s 2013 legal update webinar will ensure you are not only up to date on the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 but will also clarify and fully explain other MSPMedicare Secondary Payer Act compliance topics, such as Medicare Advantage Plans, new conditional payment options, recent MSPMedicare Secondary Payer Act case law, as well as an overview of other legislative activity with regard to MSPMedicare Secondary Payer Act reform. After attending our webinar, you can be sure you are fully up to date on 2013 MSPMedicare Secondary Payer Act trends! To view our recent ExpertInsights video on the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011, please click here.

Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP will offer her expertise in reference to the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 and other MSPMedicare Secondary Payer Act legal updates on Tuesday, April 16, 2013 from 1 PM -2 PM EDT.

This webinar is complimentary and 1 hour of CEU and CLEContinuing Legal Education credit has been applied for in multiple states; all attendees who successfully complete the Webinar will be provided with a Certificate of Attendance. For more information on obtaining CEU or CLEContinuing Legal Education credit for this webinar and to Register, please click here.

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By Settlement Solutions, January 16, 2013 10:43 am

With the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 signed by President Obama and becoming law on January 10, 2013, numerous changes are on the horizon with regard to conditional payment reimbursement and Mandatory Insurer Reporting (MIRMandatory Insurer Reporting). Please join us for a complimentary webinar which will address the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 and the impact it will have on workers’ compensation and liability claims.  

Highlights from the webinar will include the details and application of the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 in reference to:  

• Being able to obtain a Final Conditional Payment Demand Prior to Settlement
• Not having to report or reimburse Medicare for settlements under a certain monetary threshold
• Changes in the application of fines for noncompliance with MIRMandatory Insurer Reporting and the reporting of SSNsSocial Security Numbers/HICNs
• A new statute of limitations/time limit wherein CMSCenters for Medicare and Medicaid Services cannot recover conditional payments

Heather Schwartz, Esq., MSCC, CHPE, CLMP, CMSP will offer her expertise in reference to the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 on Thursday, January 24, 2013 from 2 PM -3 PM EDT.  Click here to register now!

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By Settlement Solutions, January 10, 2013 4:36 pm

The SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 was signed by President Obama today, on January 10, 2013 after having passed in both branches of Congress. The SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 was passed as part of H.R. 1845 and attached onto a Medicare IVIG Access Bill; it reforms several aspects of the conditional payment and MMSEAMedicare Medicaid and SCHIP Extension Act Section 111Section 111 of the Medicare Medicaid and SCHIP Extension Act stating requirements for mandatory insurer reporting processes. The items within H.R. 1845 which relate to MSPMedicare Secondary Payer Act reform are discussed below; items relating to the Medicare IVIG Access Bill have been omitted.

Below is a breakdown of the MSPMedicare Secondary Payer Act reforms within H.R. 1845 by section. As noted within each section, certain reforms have timelines as to when they will take place.

For a full copy of H.R. 1845, please click here.

Section 201 (Conditional Payment Final Demand and use of Website):

This section seeks to improve efficiency in the conditional payment system.

1. A claimant or “applicable plan” may at any time 120 days prior to the settlement, judgment or award notify the Secretary of the expected date and amount.
2. The Secretary must provide conditional payment information through a website and update the information no later than 15 days after a payment is made.
3. If certain conditions are met, the last statement downloaded from the website can be considered the final demand (see information on protected period in section V within HR 1845; essentially it is 65 days from the time CMSCenters for Medicare and Medicaid Services receives notice although the Secretary may extend for an additional 30 days).
4. If there is a dispute over the conditional payment amount, the Secretary must respond/resolve the dispute within 11 days or the proposed resolution by the claimant/applicable plan will be deemed accepted.
5. This process will go into effect 9 months after H.R. 1845 goes into effect (effective date of H.R. 1845 is January 10, 2013). This section also provides that the Secretary create an appeals process for conditional payments.

Section 202 (Thresholds for Reporting and Conditional Payment Reimbursement):

By November 15^th each year, the Secretary will have to publish a threshold wherein reporting and conditional payment reimbursement will not apply. This will begin in the year 2014.

Section 203 (Discretionary Fines for noncompliance with Mandatory Insurer Reporting (MIRMandatory Insurer Reporting)):

Fines for noncompliance with MIRMandatory Insurer Reporting will now be discretionary rather than mandatory; however, the guidelines surrounding discretion are not yet created.  Within 60 days of the passage of H.R. 1845(effective date of H.R. 1845 is January 10, 2013), CMSCenters for Medicare and Medicaid Services will seek proposed comments on which actions/practices should be sanctionable and which should be non-sanctionable in the Federal Register.

Section 204 (SSNsSocial Security Numbers/HICNs in MIRMandatory Insurer Reporting):

An RREResponsible Reporting Entity - payer subject to Mandatory Insurer Reporting Requirements mandated by Section 111 of the MMSEA will no longer be required to report SSNsSocial Security Numbers and/or health identification claim numbers going forward. However, the timelines for implementing this are very loose. CMSCenters for Medicare and Medicaid Services has 18 months after the date of the enactment of 1845 to publish rules surrounding this, and CMSCenters for Medicare and Medicaid Services may seek one or more periods of up to 1 year in extensions if certain criteria are met (see section 204 for more information).

Section 205 (Statute of Limitations for conditional payment recovery):

The statute of limitations for conditional payment recovery is 3 years after the receipt of notice of a settlement, judgment, award or other payment made.

The passage of the SMARTStrengthening Medicare and Repaying Taxpayers Act of 2011 ActStrengthening Medicare and Repaying Taxpayers Act of 2011 is great news. PMSI will continue to follow and keep our clients apprised of any updates surrounding H.R. 1845.