Factual Existence of a Primary Plan Required

Medicare Set-Aside Blog on May 24, 2012
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All too often CMS makes a decision that an entity is a primary plan under the MSP and makes demand for full reimbursement without any consideration of the underlying facts of the claim. And too often, courts support that primary right to one hundred percent recover from dollar one because the MSP is ambiguously written the way it is. Therefore it is refreshing to see a court make a thoughtful determination. This week Judge Sarah Vance of the US District Court for the Eastern District of Louisiana denied a motion for partial summary judgment by the United States regarding the amount of money damages it believed it was entitled from a medical malpractice settlement.

In 2000, plaintiff’s mother died of cardiac arrest allegedly due to negligent treatment while a patient at the defendant medical center. Ten years later, the parties enter into a settlement agreement for $15,000. Unfortunately CMS asserted a claim to $10,757.44 of it in addition to claims by BCMC, Hematology and Oncology, LLC, and the Louisiana Patient’s Compensation Fund. Defendant filed a concursus proceeding in state court to adjudicate the competing claims which CMS removed to federal court and then moved for summary judgment.

In support of Medicare’s recovery rights, CMS submitted a declaration by Sally Stalcup of the Dallas regional office asserting that the mother was a Medicare beneficiary at the time in question and that Medicare made $10,757.44 in related conditional payments for Part A medical services which she asserted were “the responsibility of liability insurance, including self-insurance, as a primary plan under the Medicare Secondary Payer provisions.” CMS asserts that the medical center’s settlement payment satisfies the requirement of a self-insured plan but plaintiffs opposed the motion as premature.

The Court found that CMS failed to establish that the $15,000 settlement satisfied the definition of a primary plan. Citing Thompson, the Court recognized that settling does not automatically apply the MSP to alleged tortfeasors and CMS failed to establish the factual existence of a primary plan here. Given that CMS had the burden of proof on the motion, the Court found it must be denied at this time.

Now sadly the MSP does convey a priority right of recovery to CMS and any application of it in its current form, supported by all the similar case law, will likely still get CMS paid first and in full. What made this case refreshing was that Judge Vance is making the federal government work for it. Marching about making absolute demands with no evidence of such a right and having it unquestionably supported by the courts is probably more costly and frustrating than the time it takes them to respond to CPL requests, but again that is not something that is being fixed by any pending MSP legislation.

2012 U.S. Dist. LEXIS 70519
May 21, 2012, Decided