Oregon Plaintiff Liability Fund Not an RRE

Medicare Set-Aside Blog on April 2, 2012 | Posted by


The last five years have been full of debates over who qualifies as an RRE, often with the most ridiculous results. A theme park giving out gift certificates as a “sorry you fell on our property” consolation prize constitutes an RRE making a reportable insurance payment pursuant to the policy created by CMS on behalf of Secretary Sibelius as sanctioned by Congress. By no means do I believe there is any Congressional intent behind the monster that CMS created. However, all these years later we have just come to expect that pretty much any form of compensation tied to a personal injury will need to be reported. Well, no more.

On March 29, 2012, the US District Court for the District of Oregon ruled in favor of the state bar association, stating that it is not required to report payments made from its Plaintiff Liability Fund (PLF). The PLF is a non-profit corporation that provides legal malpractice insurance for all active members of the Oregon State Bar, covering an attorney’s errors and omissions that occur while providing legal services. Arguing that although a liability insurance without a doubt, the PLF states it pays claims against lawyers who cause economic damages related to the provision of legal services and does not cover claims of tortious conduct that result in bodily injury. DHHS argued that a malpractice claim involving a personal injury cause should involve medical expenses paid conditionally by Medicare. While the court accepted that as true, it could not get over the fact that the PLF does not have “primary” responsibility no matter what label you attached to it; therefore, determined that there was no way that Congress contemplated it having a reimbursement responsibility to Medicare, thus could not be an applicable plan for purposes of the MMSEA.

While it is great that someone finally got excluded from the reporting requirement, sadly I believe this ruling to be in error. But for the legal malpractice, the Medicare beneficiaries would have recovered from whatever other form of insurance was available. Due to the malpractice, the PLF serves as a replacement source of compensation so theoretically does contemplate medical damages when the malpractice occurred in cases involving personal injury. Because the “primary” plan was lost due to the malpractice, the PLF does in fact end up being the primary plan as there is no one standing in line in front of it. Remember that the primary plan label attaches upon settlement, judgment, award or other insurance payment; therefore, the court’s analysis of Congress needing to contemplate its existence is completely off the mark. The whole point of MMSEA reporting is for the government to capture data about sources of reimbursement, so if the PLF pays to compensate for lost medical damages, that is a source of reimbursement for which Congress intended Medicare to know about.



OREGON STATE BAR PROFESSIONAL LIABILITY FUND, Plaintiff, v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES and
KATHLEEN SEBELIUS, in her official capacity as Secretary of the Department of
Health and Human Services, Defendant.
No. 03:10-CV-1392-HZ
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON,
PORTLAND DIVISION
2012 U.S. Dist. LEXIS 43790
March 29, 2012, Decided