Loss of Consortium is a Reportable Section 111 Claim

Commentary, Medicare Set-Aside Blog, MSP Litigation on June 5, 2013
Posted by Jennifer Jordan, JD, MSCC

In the years since the MMSEA passed in 2007, I’ve witnessed a lot of creative accounting methods used when determining how to allocate for damages from a settlement amount. People will do anything to characterize settlement funds as anything other than past or future medical reimbursement in order to avoid Medicare Secondary Payer obligations. Well here’s news for those who still think they’re too clever for CMS – they’ve been on to you for some time now. The whole reason we have reporting and WCMSA reviews is because for decades we actively encouraged claimants to take their compensation for medicals and spend it freely because they were entitled to Medicare, hence the phrase “intentional shifting of the burden to Medicare”. While most have come to understand that those days are over, many still cling to the good old days and try anything to keep that money hidden from the federal government.

Many people believe that Section 111 reporting only applies if medical claims are in play. In reality, the statute only imposes a duty to determine if an insurance payment recipient is a Medicare beneficiary and if so, report the settlement (or ORM) to CMS – it says nothing with regard to the need to demonstrate medical compensation was made. In fact, in the reporting itself, there’s not even a field that requests the specific amounts of medical compensation be reported, only the total. While intuitively you would think that medical expense compensation would be necessary given that CMS only needs to coordinate benefits if the compensation paid triggers the secondary payer exclusion, but technically the statute does not say that. Furthermore, CMS has specifically addressed the issue in the User Guide, acknowledging that:

“[t]are certain, very limited liability situations where a settlement, judgment, award, or other payment releases or has the effect of releasing medicals, but the type of alleged incident typically has no associated medical care and the Medicare beneficiary/ Injured Party has not alleged a situation involving medical care of a physical or mental injury. This is frequently the situation with a claim for loss of consortium. . . . Current instructions require the RRE to report claim information in these circumstances.

CMS User Guide, Version 3.5, Ch. IV, July 3, 2012, Apr. 22, 2013, pg. 6-15 (emphasis added). So call it what you want, but if your settlement involves a Medicare beneficiary, Medicare wants to know about it.

Now despite all that, it is important to remember that just because it is necessary to report such a claim, that doesn’t mean that plaintiff is required under the MSP to disclose his or her Social Security number if it was not agreed upon to do so during negotiations. In re: Asbestos Products Liability Litigation v. GE, a recent case in the Eastern District of Pennsylvania, the court refused to enforce a settlement agreement at the request of plaintiff who was the widow of the deceased claiming that Connecticut law precluded her from recovering medical damages and her loss of consortium claim was not reportable, therefore she was refusing to disclose her SSN. Through a lengthy analysis of MMSEA Section 111 and the Users’ Guide, the court determined that the SSN was a material term which was not agreed upon by the parties and therefore there was no agreement to enforce. This case now joins the ranks of Hackley v. Garofano and Segar v. Tank Connection to represent that courts recognize the significance of Section 111 to insurers and are not allowing plaintiffs to hold them hostage through refusing to disclose necessary reporting information.

Because the procedures for reporting were not created by CMS until after the statute was passed, the MMSEA is silent to the need for the SSN or HICN. The SMART Act, passed January 10, 2013, requires HHS to investigate alternatives to the use of SSNs within 18 months from enactment, however that deadline my be extended by multiple periods of one year should it prove to threaten privacy or the integrity of the MSP program. So for the time being, SSNs will continue to be a necessary evil in our insurance settlements and it appears we can rely upon support from the federal courts in obtaining them.

Readers are encouraged to read the recent analysis for more insights by the court:

TAYLOR, Administrator c/t/a of the Estate of Ronald Taylor and Marie Taylor,
(Plaintiff) v. GENERAL ELECTRIC COMPANY, et al., (Defendants)
CIVIL ACTION NO.: 12-cv-60048
2013 U.S. Dist. LEXIS 76346
May 8, 2013, Decided
May 9, 2013, Filed