CMS Lobs Hand Grenade into the Insurance Community

Medicare Set-Aside Blog on January 7, 2009
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A case is pending in a US District Court in West Virginia that
should make all insurance professionals, attorneys, carriers, TPAs, employers,
and anyone else associated with MSP compliance issues sit up and take
notice.  The suit was filed by Medicare
against an attorney in a liability case in which he secured a settlement for
the claimant that included future medical services and, of course, his attorney
fees.  Of note is that the claimant
submitted bills for the liability accident to Medicare, which Medicare
paid,  prior to claimant’s retention of
the attorney for representation.


Subsequent to the settlement, the attorney sent notice to
Medicare of the settlement specifics. 
Medicare then recalculated their outstanding conditional payments,
reduced the total outstanding by about half of the originally reported amount
and advised that they expected to be paid from the proceeds of the
settlement.   No payment was made to
Medicare within the statutorily allowed 60 days, so Medicare then filed suit
regarding its intent to collect outstanding payments plus interest directly
from the attorney.  The attorney filed a
motion to dismiss the suit claiming he could not individually be held liable
for these payments.


The US District Court disagreed and denied his motion. They
cited the MSP statute as well as other applicable law which supports Medicare’s
claim.  The law clearly states that once
payment has been received for medical services from an insurer or other primary
payer,  Medicare becomes a secondary
payer and, as such, has the right to collect it’s conditional payments from ANY
entity that received money from the “primary plan or proceeds of the primary
plan”  (42 U.S.C. 1395y(b)(2)(B)(ii)).    In this case, they
found that the retailer involved demonstrated responsibility by making payment
(regardless of liability concerns) and, as such, became the “primary plan”
making anyone receiving proceeds from their “plan”  an “entity” from which Medicare can pursue


Bottom Line:  This
case provides not only clarification on the issue of who can become an “entity”
which Medicare can pursue in its effort to obtain reimbursement of its
conditional payments, but also highlights some of the vital
issues that must be addressed by the
parties responsible for every property
and casualty claim resulting in any type of medical settlement:  

early identification of Medicare’s interests
in a caseopen and ongoing dialogue with Medicare in
negotiation of any outstanding conditional payments they may allegestrict
adherence to their statutory timelines for response and payment

SCHIP is on the horizon and will certainly
fire up this issue.   Is this just the
tip of the iceberg?  


Case cite:  (United States of America vs Paul J. Harris,
US District Court for the Northern District of 
West Virginia, Civil Action No. 5 :08CV102).




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