Medicare is a Defense to Bad Faith
At least one out of every 10 MSP cases seems to turn into a comedy of errors. Proper releases aren’t obtained, things are sent to the wrong place, if at all, and the resolution you are seeking seems to take forever. Then to add insult to injury, the plaintiff blames the insurer for not being able to get timely straight answers out of the federal government and sues it for bad faith. Well take solace in the fact that the courts have pretty consistently held that given the harsh nature of the laws and regulations governing reimbursement of Medicare that the delays caused by an insurer trying to avoid paying the claim more than once are generally reasonable, at least to the extent that sanctions have not been granted.
Porter v. Farmers Insurance is just such an example of everything that could go wrong going wrong. There was some question about whether a claim was ever made by the incoherent plaintiff, UM coverage was extended only because Farmers couldn’t really prove it wouldn’t be imputed by statute, and the interactions with CMS took forever and responses so unclear that it was difficult to discern that it did not have a recovery claim. Even once it got a statement that Medicare would not be asserting any recovery, the parties were not satisfied because the date of accident listed on the letter did not match that of the claim. Had these parties had any real experience with CMS, they would have known that when a Medicare beneficiary becomes entitled after an accident, the date in that letter reflects the date of entitlement to Medicare. Had the parties known, they would not have continued to question the letter and completed the transaction rather than wait for reconfirmation from CMS. There also seemed to be other opportunities to concede that Medicare did not have a claim yet Farmers refused to move forward without written assurances of the same.
Point is that some Medicare delays are avoidable and many carriers continue to make overzealous demands in the interest of protecting themselves from Medicare when they really don’t understand the rules of CMS’ game well enough to do so. This is not the first case that has required a “lien release” by Medicare before a settlement check will be written, yet CMS cannot make a demand in a liability settlement until the insurance payment has been made. My other favorite is settlement agreements that require CMS approval of LMSAs which there is no way to guarantee CMS will provide. The only way to make this process less painful is to learn the rules and abide by them. Know what to ask from whom and when and how to do it, otherwise your requests may not even warrant a response that tells you that you did it wrong. But until the courts realize that there is a way to navigate this process more efficiently than what was demonstrated in this case, at least we don’t have to worry about bad faith penalties – just yet….
MICHAEL PORTER, Plaintiff, v. FARMERS INSURANCE COMPANY, INC., Defendant.
Case No. 10-CV-116-GKF-PJC
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA
2012 U.S. Dist. LEXIS 9862
January 27, 2012