Caldera v. The Insurance Company of PA
There are not many MSP private cause of action cases made under 42 USC 1395y(b)(3)(A) reported, so when I find one I am generally intrigued. After Douglas Stalley was finally sanctioned last summer for his constant attempts to turn the MSP into a qui tam statute, claims by him & Erin Brockovich seem to have disappeared. However a recent decision out of the US District Court for the Southern District of Texas has left me disappointed. While not a fan of that particular part of the MSP because I find it’s potential for abuse frightening, I hate to see the law applied badly and kill a claim that appears to fit the only real application of the statute.
Claimant was injured in 1995 for which the defendant paid some benefits under Texas WC law. Still suffering from his injury, Claimant applied for & received SSDI in 1998, meaning that by 2000 he was automatically entitled to Medicare. In 2002, the insurer filed to terminate his medicare benefits on the basis that the injury had resolved and any new treatment was not related. Claimant didn’t appeal and let Medicare cover his care, inclusive of back surgeries in 2005 and 2006 totaling $42,637.41.
So here is where it gets interesting. On April 12, 2011, the parties entered into an Agreed Judgment in state court holding that the condition requiring back surgery was in fact related to the initial 1995 workers’ compensation injury. The opinion then stated that this established the defendant’s responsibility for medical expenses required to treat the injury, but did not liquidate any damages or require any payment. Defendant denies any liability for the Medicare payments because claimant did not comply with preauthorization requirements and did not file timely claims for those medical bills. Furthermore, Defendant also argues that Medicare did not make conditional payments subject to reimbursement because no payment had been made or could reasonably expect to be made under Texas workers’ compensation law. Defendant finally stated that no payment could be expected until the conclusion of the workers’ compensation administrative remedies, defendant’s objections overruled and it was ordered to pay. The court granted the motion to dismiss and while I understand it found this a case of first impression, I don’t think it got it right.
In Texas, pursuant to §408.005 of the TX WC Act, you cannot limit or terminate an employees right to medical benefits, meaning they have lifetime medicals. In the world of CMS, that means perpetual ORM. Upon notice in 2002 that the insurer determined that continued treatment of his back was not related, claimant understood that WC wasn’t covering it so he turned to Medicare. Medicare made payments for benefits because claimant was told it was not related to the work comp claim, so Medicare was the assumed primary payer. But the minute the judge entered the 2011 agreed judgment establishing relatedness, Medicare became secondary payer for that previously determined not related condition and that should have been enough for Medicare to become entitled to reimbursement for any related treatment paid, and therefore because claimant is statutorily entitled to bring that claim on behalf of Medicare, for him to have prevailed. Without looking extensively into the Texas law, I get that there must be something that precludes an award of money damaged to the claimant under these circumstances, but that should have no bearing on the MSP claim. A state law cannot prevent Medicare from recovering in secondary payer situations.
With regard to the arguments that proper authorization and timely claims were not made, I cannot believe that discussion of 42 CFR 411.24(f)(1) never happened. The regs say specifically that CMS may recover without regard to any claims filing requirements that the insurance program or plan imposes on the beneficiary. While I disagree vehemently that this provision even exists because how can it be right to hold the insurer responsible for the claimant’s disregard of the process and causing Medicare to make a wrongful payment, the fact is that the reg exists and should be properly implemented when the issue arises. As it turns out, the insurer made an error in not paying the claim to begin with because it has subsequently been deemed related, so why should it be entitled to a free pass on those expenses based upon a procedural technicality. Why would you seek preauthorization or timely reimbursement at the time it was relevant from an entity that already told you’re not covered.
I think the proper way to have viewed this case would have been using the CMS explanation of liability settlements. In those cases, there are no Medicare overpayments prior to settlement, judgement or award because up until that point, no responsibility attaches to the defendant. Without the need to accept or establish liability, primary payer responsibility attaches upon an insurance payment exchanged for a release from the liability in question. CMS states that the obligation arises by operation of law and in the case at hand, that is exactly what happened. While the medical benefits had been terminated in 2002 under state law, primary payer status attached the moment that Agreed Judgement was approved by the court.
Well with all that being said, I concede that I am not a federal judge…
GUADALUPE CALDERA, Plaintiff, vs. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Defendant.
CIVIL ACTION NO. C-11-321
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, CORPUS CHRISTI DIVISION
2012 U.S. Dist. LEXIS 12888
February 2, 2012, Decided