MSP Litigation and Other Natural Disasters

Medicare Set-Aside Blog on April 11, 2012 | Posted by


As a general proposition, MSP cases have resulted in some of the worst case law I have ever seen. But some cases should not even be allowed to be filed. If you can’t name the right party when you are trying to demand that it do something that it is statutorily prohibited from doing, then you should not be allowed to waste judicial resources and should probably be sanctioned. Yet another MSP gem was recently brought to my attention.

In a case dismissed on September 7, 2011, plaintiff had filed suit against the MSPRC and a Nebraska hospital demanding that Medicare pay the hospital’s bill stemming his 2008 auto accident with an underinsured motorist. The accident resulted in over $200,000 in medial bills and the underinsured motorist’s policy limit was $100,000, which was offered in settlement. The hospital filed a $50,000 lien, meaning that it opted to waive Medicare payment and roll the dice on plaintiff’s tort recovery. By doing this, the hospital waives any ability to obtain payment from Medicare, so should the case not settle or reach judgment, it might not get paid but is also not limited to Medicare fee schedule. MSPRC reported that Medicare had also made $36,779.38 in other related conditional payments. And I’m guessing that the plaintiff’s attorney wants his third, so while quite a dilemma, what is it doing in federal court? I believe the phase failure to state a claim upon which relief can be granted would be appropriate here.

Plaintiff sued the hospital where he received treatment? Not for any wrong doing and not for holding a legitimate lien permissible by Medicare policies. In fact he requested no relief against the hospital so it was dismissed immediately. Plaintiff sued MSPRC? No, not the Secretary of Health and Human Services who is the real party in interest in any litigation involving the administration of the Medicare program pursuant to 42 CFR 421.5(b). And he sued MSPRC to force it to pay his hospital bill that Medicare is statutorily prohibited from making payment for pursuant to 42 USC 1395(y)(b)(2) so long as his claim against the underinsured driver exists. But why would the “recovery contractor” ever be the proper entity to pursue to make a benefit payment? And after we get over all of the silliness, let us never forget sovereign immunity and the administrative exhaustion requirement of 42 USC 405(g).

Needless to say, the case was dismissed for subject-matter jurisdiction, but the take away here is to stop taking these case to federal court to begin with. There are 76 million baby-boomers reaching Medicare entitlement age and with that, the likelihood of more and more tort and comp cases having MSP issues. You cannot avoid learning about Medicare and its processes and policies any longer. The only issue here was equitable apportionment of the policy limits settlement offer and unfortunately for plaintiff, he has more guests at his party which demonstrates another issue that doesn’t get much consideration. Because the hospital is permitted to opt out of accepting Medicare in this situation, the Medicare beneficiary is penalized by the lien being more than the Medicare rate, particularly from a limited recovery source. This is a different inequity than we are used to complaining about, just penalizes Medicare beneficiaries for enrolling in the program they worked their entire lives to become entitled to. Compounded by Medicare’s belief that it is entitled to be made whole, there will be very little left for plaintiff should he elect to settle this claim. Yet what is the alternative? Going to trial will not produce more funds from an underinsured motorist. Policy limits dictate here and if we don’t get some resolution on the equitable apportionment issue from the Supreme Court, we will continue to be faced with impossible settlement situations just like this for years to come.

 
DONALD E. WRIGHT, Plaintiff, v. KATHLEEN SEBELIUS, SECRETARY OF
THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES,
and SAINT ELIZABETH REGIONAL MEDICAL CENTER, INC., Defendants.
4:11CV3055
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA
818 F. Supp. 2d 1153; 2011 U.S. Dist. LEXIS 100987
September 7, 2011, Decided