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Law Firm to Pay $250,000 to U.S. For MSP Non-Compliance (Failing to Reimburse/Resolve Medicare Lien from Personal Injury Settlement Proceeds)
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Law Firm to Pay $250,000 to U.S. For MSP Non-Compliance (Failing to Reimburse/Resolve Medicare Lien from Personal Injury Settlement Proceeds)

The following is a press release from the U.S. Attorney’s Office for the District of Maryland on behalf of the U.S. Department of Justice (DOJ) announcing a Medicare Secondary Payer Act (MSP)[1] MSP non-compliance settlement with the U.S. by a plaintiff law firm from Maryland that failed to properly address or make Medicare conditional payment reimbursement (i.e. pay a Medicare lien) from the proceeds of a medical malpractice settlement secured for a firm client in 2015.  This MSP non-compliance settlement is similar to the one we wrote about from June of 2018 regarding a plaintiff law firm in Pennsylvania.

“Department of Justice
U.S. Attorney’s Office
District of Maryland
FOR IMMEDIATE RELEASE
Monday, March 18, 2019

Maryland Law Firm Meyers, Rodbell & Rosenbaum, P.A., Agrees to Pay the United States $250,000 to Settle Claims that it Did Not Reimburse Medicare for Payments Made on Behalf of a Firm Client

Baltimore, Maryland – United States Attorney for the District of Maryland Robert K. Hur announced that Meyers, Rodbell & Rosenbaum, P.A., a law firm with offices in Riverdale Park and Gaithersburg, has entered into a settlement agreement with the United States to resolve allegations that it failed to reimburse the United States for certain Medicare payments made to medical providers on behalf of a firm client.

“Attorneys typically receive settlement proceeds for and disburse settlement proceeds to their clients, so they are often in the best position to ensure that Medicare’s conditional payments are repaid,” said U.S. Attorney Robert K. Hur. “We intend to hold attorneys accountable for failing to make good on their obligations to repay Medicare for its conditional payments.”

According to the settlement agreement, in and prior to 2012, Medicare made conditional payments to healthcare providers to satisfy medical bills for a client of the firm. Under the Medicare statute and regulations, Medicare is authorized to make conditional payments for medical items or services under certain circumstances, with the requirement that when an injured person receives a tort settlement or judgment, those receiving the proceeds of the settlement or judgment, including the injured person’s attorney, are required to repay Medicare for the conditional payments.

In December 2015, with the firm’s assistance and representation, the client received a $1,150,000 settlement in a medical malpractice action stemming from the client’s injuries. After Medicare was notified of the settlement, Medicare demanded repayment of the Medicare debts incurred from those conditional payments, but the firm refused to pay the debt in full, even when the debt became administratively final.

Under the terms of the settlement agreement, the firm agreed to pay the United States $250,000 to resolve the Government’s claims. The firm also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.

This settlement reminds attorneys of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients. This settlement should also remind attorneys not to disburse settlement proceeds until receipt of a final demand from Medicare to pay the outstanding debt.

U.S. Attorney Robert K. Hur commended Eric Wolfish, Assistant Regional Counsel, United States Department of Health and Human Services, Office of the General Counsel, Region III, for his work in the investigation. Mr. Hur thanked Assistant United States Attorney Alan C. Lazerow, who handled the case.

# # #”

Take Aways:

  • Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate, confirm, and address all injury related Medicare expenditures for past medicals prior to, or at a minimum, at the time of settlement.
  • Because the MSP grants a private cause of action (MSP PCOA)[2] and Medicare Advantage Plans that privately administer traditional Medicare coverage for enrolled Medicare beneficiaries (MAO’s) have successfully availed themselves of this MSP PCOA against primary plans[3], parties should also inquire, evaluate, confirm, and address all injury related MAO payments for past medicals as described above.
  • While the Eleventh Circuit recently ruled that MSP private cause of action double damages could only be brought against primary plans[4], case law is not fully settled throughout the U.S. as to whether those other than primary plans like attorneys for Medicare beneficiaries would be liable for double damages under the MSP PCOA[5].  However, there is no doubt the double damages remedy clearly listed in the MSP’s direct cause of action provision applies in recovery actions by the U.S. Government against those who receive payments from primary plans, including Medicare beneficiaries and their attorneys[6].
  • When representing an injured party, doesn’t it make sense to address the issue at the time of representation instead of waiting to see whether the issue results in legal liability or a legal malpractice claim stemming from MSP non-compliance?
  • Due diligence is required for both the defense and plaintiff side to avoid unnecessary MSP non-compliance settlements/legal exposure.

[1] 42 U.S.C. 1395y(b)(2) et seq.

[2] “There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A).” 42 U.S.C. § 1395y(b)(3)(A).

[3] See e.g. In re Avandia Mktg., Sales Practices & Prods. Liab. Litig.685 F.3d 353 (3d Cir. 2012)Humana Med. Plan, Inc. v. W. Heritage Ins. Co., 832 F.3d 1229 (11th Cir. 2016).

[4] MSPA Claims 1, LLC v. Tenet Florida, Inc. — F.3d —- 2019 WL 1233207 18-11816 (11th Cir. March 18, 2019).

[5]  In Aetna Life Ins. Co., v. Nellina Guerrera et al., No. 3:17-CV-621 (JCH), 2018 WL 1320666, (D. Conn. Mar. 13, 2018), grocery store Big Y’s motion to dismiss was denied after Big Y, the alleged tortfeasor in the liability action and thus, a primary plan, settled and paid a Medicare beneficiary. Aetna, a MAO, was allowed to proceed with a MSP private cause of action for double damages against Big Y. However, the court granted motions to dismiss by the Medicare beneficiary and the Medicare beneficiary’s attorney, because under the MSP PCOA scenario, they were not primary plans.

[6] MSPA Claims 1, LLC v. Tenet Florida, Inc. — F.3d —- 2019 WL 1233207 18-11816 at 6 (11th Cir. March 18, 2019) (“[u]nlike the private cause of action, the government’s cause of action broadly permits lawsuits against ‘any entity that has received a payment from a primary plan’ – a grant that includes medical providers.” citing 42 U.S.C. § 1395y(b)(2)(B)(iii)(the MSP direct cause of action by the U.S.); Haro v. Sebelius, 747 F. 3d 1099, 1116 and U.S. v. Stricker, 524 F. App’x 500, 504 (11th Circ. 2013)(unpublished)).

How to Secure Medicare Lien Resolution (While Protecting Medicare’s Past Interests)
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How to Secure Medicare Lien Resolution (While Protecting Medicare’s Past Interests)

Planning to protect Medicare’s future interests should be part of any diligent Medicare Secondary Payer Act[1] (MSP) compliance analysis.  However, because enforcement actions by the U.S. under the MSP have focused on reimbursement of Medicare for payments occurring prior to settlement, Medicare lien resolution (i.e. investigating and negotiating satisfactory payment of Medicare conditional payment reimbursement demands), should be placed at the top of the MSP compliance list by primary payers and those representing injured parties. We recently wrote about conditional payment correspondence from the Centers for Medicare & Medicaid Services (CMS) through its BCRC and CRC contractors, the updated functionality of the Medicare Secondary Payer Recovery Portal (MSPRP), and the importance of obtaining correct conditional payment amounts so settlements can move forward while protecting Medicare’s past interests. When the U.S. government’s conditional payment reimbursement amount (Medicare lien amount) is larger than a potential settlement amount or the payment of the full lien amount will take up a good portion of a Medicare beneficiary’s net settlement, a beneficiary will be less interested in settling. Enter Medicare lien resolution.

Medicare Lien Resolution Road Map

When we perform Medicare lien resolution, our goal is to get CMS to evaluate the Medicare lien amount compared to the net amount to be received by injured party after fees and costs are deducted. Additionally, we sometimes ask CMS to evaluate the Medicare lien amount compared to the weakened financial position/physical condition of the Medicare beneficiary after an accident. When the net settlement is unfairly low compared to the Medicare lien amount, CMS will often reduce the lien prior to settlement. There are several federal statutes and accompanying regulations that provide authority for CMS to reduce (compromise) or sometimes waive Medicare liens. The statutes and regulations outline standards and factors that may be considered for full or partial reductions of Medicare lien amounts. These factors often focus on the ability of the injured party to pay the lien, costs the government would incur to pursue collecting the lien, as well as the injured party’s financial/physical circumstances.

Medicare Lien Waiver Process

The Medicare lien waiver process is a more involved process than the compromise process. Waiver requests typically focus on the financial position of the injured Medicare beneficiary, who may have higher expenses and/or lower income after sustaining an injury. After settlement occurs and funds are transferred, while the MSP technically still allows the U.S. to pursue the primary payer (entity responsible for payment) when a Medicare beneficiary fails to satisfy a Medicare lien, the Medicare beneficiary is most often considered the debtor and pursued by CMS initially through the Benefits Coordination and Recovery Center (BCRC).  Attorneys for Medicare beneficiaries can also be caught in the MSP cross hairs.  Waiver requests for a Medicare beneficiary are sent to the BCRC. In turn, the BCRC typically asks for a SSA-632 form to be filled out with a variety of financial information about the beneficiary. Waiver determinations may be made by BCRC staff and are usually based on financial hardship.

To speed up the process and increase the likelihood of a positive outcome, it is a best practice when requesting a waiver to provide a full financial picture of the beneficiary, including either a completed SSA-632 form or as much of the information requested by that form as can be obtained, so BCRC staff will have adequate information to reach a fair determination. A waiver may be granted when continuing the collection would be against “equity and good conscience.” The process takes about 120 days from start to finish for a waiver determination to be made. If a conditional payment demand has been paid, a waiver or compromise request may still be made, and a refund will be considered. If the BCRC makes a determination to refund all or part of the prior payment, the refund will typically take an additional 3-4 weeks, depending on whether payment had been made to the BCRC directly or whether it was made to the Department of Treasury after a referral of the debt to Treasury by the BCRC.

Medicare Lien Compromise Process

If there is not a significant financial or physical hardship to the Medicare beneficiary, but the dollar amount of the projected settlement is low compared with the likely settlement value and/or the Medicare lien amount, an alternative to a waiver request is a Medicare lien compromise request. To request a compromise, a third-party representative may offer to pay a specific dollar amount on behalf of the beneficiary to fully compromise the outstanding Medicare debt/lien amount. The requester must include the settlement amount (or settlement offer), the amount they are asking CMS to accept as full payment, and the actual or projected attorney fees and costs associated with procuring the settlement. Attorney fees and costs are omitted when the beneficiary is not represented by counsel. CMS, through the BCRC, either responds by accepting the offer or presenting an alternate proposed amount. At that point, the beneficiary must pay the countered amount or if accepted, pay the accepted amount within 60 days of the BCRC response, or else the offer is no longer valid.

Letting a representative act on your client’s behalf in communicating and negotiating with CMS has helped lawyers save time and put more money in the pockets of their clients, while helping parties to the settlement comply with the MSP with respect to Medicare’s past interests.  Count on Medivest to help you with your Medicare lien resolution needs.


[1] 42 U.S.C. § 1395y(b)(2) et seq.

Medicare Lien Enforcement – Time to Take Notice
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Medicare Lien Enforcement – Time to Take Notice

In addition to Medicare being a secondary payer to workers’ compensation as it has been since Medicare was established in 1965, the Medicare Secondary Payer Act of 1980, found at 42 U.S.C. §1395y(b) et seq. (MSP) made Medicare secondary to auto, liability (including self-insureds), and no-fault insurance. These entities or insurance plans, including workers’ compensation plans, are referred to in the MSP as primary plans (Primary Plans).

The MSP allows the U.S. to pursue a double damages recovery for two times the amount Medicare conditionally paid toward injury-related medicals when a Primary Plan should have made those payments. Medicare lien enforcement lawsuits seeking conditional payment recovery by the U.S. must be brought within three years “. . . after the date of receipt of notice of a settlement, judgment, award, or other payment . . . .” Conditional payment recovery suits have historically been focused on protecting Medicare’s past interests although technically, conditional payments can also occur after a settlement. There have been conflicting results in courts over whether the double damages remedy applies only to a Primary Plan or extends to those receiving money from a Primary Plan, such as Medicare beneficiaries (Beneficiaries) or their attorneys.

Pursuant to 42 C.F.R. § 411.24(h), reimbursement of Medicare must occur within 60 days and if not, interest may accrue at close to ten percent under 45 C.F.R. § 30.13. Due to this high rate of interest and the looming threat of double damages, the standard in the lien resolution industry is to pay the amount demanded and request a partial refund, unless a resolution can be reached before settlement with the Centers for Medicare & Medicaid Services (CMS), the agency that runs Medicare. CMS is allowed to compromise (reduce) and even waive Medicare recoveries based on various factors listed in several federal statutes and regulations. Under 45 C.F.R. § 30.14(a), a debtor may either pay the debt within the 60-day period from the final demand or be liable for interest during a 120-waiver determination period, while on appeal, or while any formal or informal review of the debt is pending.

We have written about conditional payment/Medicare lien recovery actions by the U.S. pursuant to the MSP before. Cases have been brought against Beneficiaries, their attorneys, and/or Primary Plans on behalf of CMS.

Medicare Lien Recovery Cases Against Beneficiaries and/or their Attorneys.

On June 18, 2018, the Department of Justice announced in a press release that an attorney/law firm entered into an agreement to repay the U.S. $28,000 after failing to ensure that the attorney/law firm client reimbursed Medicare for conditional payments made related to the underlying injury. The law firm had already disbursed the net settlement funds to its client. The law firm of Rosenbaum & Associates in Philadelphia entered into a settlement with the DOJ agreeing to pay the government this money after the U.S. alleged attorney Rosenbaum failed to timely repay MSP debt. The firm additionally agreed to designate a person at the firm to be responsible for paying MSP debts, to train the designated employee to ensure that the firm pays these debts on a timely basis; and to review any outstanding debts with the designated employee at least every six months. Attorney Rosenbaum also acknowledged that he may be liable under the False Claims Act (31 U.S.C. § 3729 et seq.) for wrongful retention of government overpayments arising from the failure to timely repay the MSP debt.

Other cases have confirmed the above-referenced recovery rights of the U.S. to timely Medicare lien reimbursement. For example, a U.S. District Court granted summary judgment for $11,367.78 plus interest against an attorney for a Beneficiary, holding the attorney liable when Medicare’s conditional payments were not addressed/timely reimbursed from a third party settlement because the attorney’s contingency fee was paid from the proceeds of Primary Plan’s (liability) payment. See U.S. v. Harris, 2009 WL 891931 (N.D. W.Va. 2009) aff’d 334 Fed. Appx 569 (4th Cir. 2009). See also, U.S. v. Weinberg, 2002 WL 32356399 (E.D. Pa. 2002)(Partial judgment was entered in favor of the U.S. against the Defendant attorney on the issue of liability).

In U.S. v. Sosnowski, 822 F. Supp. 570 (W.D. Wis. 1993), the U.S. was entitled to recover MSP conditional payments from a Beneficiary and his attorney but was denied the award of double damages because the court interpreted the MSP as only allowing double damages to be assessed against Primary Plans and determined that neither the injured Beneficiary nor the Beneficiary’s attorney was a Primary Plan. If CMS gets more efficient at searching for all possible conditional payment reimbursement options, we could begin seeing more recovery actions and lawsuits against plaintiff attorneys and their Beneficiary clients.

Medicare Lien Recovery Cases Against Estates of Beneficiaries.

Cases in which CMS has proceeded against an estate of a Medicare beneficiary have yielded varying results. For example, CMS was successful in Benson v. Sebelius, 771 F. Supp. 2d 68, 75 (D.D.C. 2011) (Because plaintiff claimed his mother’s medical costs in pursuing his wrongful death action, medical expenses of mother were taken into consideration in calculating and negotiating wrongful death settlement award, and release to landlord where slip and fall occurred included any and all claims and rights including associated medical liens, no error was found when Medicare Appeals Board (in a de novo review) allowed CMS to recover its full medical expenses lien minus its procurement costs from the wrongful death settlement) (citing Mathis v. Leavitt, 554 F.3d 731, 733 (8th Cir.2009) (“Because appellants claimed all damages available under the Missouri wrongful death statute, the settlement, which settled all claims brought, necessarily resolved the claim for medical expenses.”); Cox v. Shalala, 112 F.3d 151, 154–55 (4th Cir.1997) (determining that Medicare was entitled to reimbursement for medical expenses from the proceeds of a wrongful death settlement because the settlement included recovery for decedent’s medical expenses); see also Brown v. Thompson, 374 F.3d 253, 262 (4th Cir.2004) (holding that CMS was entitled to reimbursement from the proceeds of a medical malpractice settlement pursuant to the MSP).

However, when the underlying wrongful death claim made no claim for medical expenses, there is a stronger argument that the Medicare lien does not extend to the estate of a deceased Medicare beneficiary. See Bradley v. Sebelius, 621 F.3d 1330 (11th Cir.2010) (The U.S. was denied the ability to recover Medicare’s conditional payments when no medical expenses of decedent Medicare Beneficiary were claimed in wrongful death action by survivors).

Medicare Lien Recovery Cases Against Primary Plans/Insurance Companies.

In a Northern District of Alabama case, the U.S. was not allowed to bring a direct MSP action (that would have allowed double damages) against a liability insurer that already settled its case and paid the Beneficiary, but had to bring a subrogation action pleading and proving that the liability carrier knew or should have known of Medicare’s conditional payments at the time payment was made to the Beneficiary. In re Silicone Gel Breast Implants Products Liability Litigation (MDL 926), 174 F.Supp.2d 1242; (N.D.Ala.2001), affirmed in part, reversed in part and remanded 345 F.3d 866, certiorari denied 124 S.Ct. 2907, 542 U.S. 946, 159 L.Ed.2d 828.

In Aetna Life Ins. Co., v. Nellina Guerrera et al., No. 3:17-CV-621 (JCH), 2018 WL 1320666, (D. Conn. Mar. 13, 2018), still pending in District Court, grocery store Big Y’s motion to dismiss was denied after Big Y, the alleged tortfeasor in the liability action, settled and paid a Medicare beneficiary, making it a Primary Plan. Aetna, a Medicare Advantage Plan, was allowed to proceed with a MSP private cause of action for double damages against Big Y. However, the court granted motions to dismiss by the Beneficiary and the Beneficiary’s attorney, because it held that the MSP’s definition of Primary Plan did not specifically include them.

Take Aways:

• Because the MSP grants both a direct lien right and a subrogation right to the U.S. to collect Medicare’s conditional payments, parties to a settlement should inquire, evaluate and confirm all injury-related Medicare expenditures for past medicals at the time of settlement.
• Due diligence is required for both the defense and plaintiff side to avoid unnecessary legal exposure.
• Additionally, because the intent of the MSP is to prevent premature billing of Medicare for injury-related future Medicare allowable medicals, parties to settlements should always consider Medicare’s future interests and decide on reasonable actions to protect those interests when such future medicals are compensated in any settlement.[4]


[1] 42 U.S.C. § 1395y(b)(2)(B)(iii).

[2] Id.

[3] At a minimum, the MSP imposes legal responsibility for repayment of conditional payment amounts. Under subsection (b)(2)(B)(ii), “a primary plan and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made . . . .” Furthermore, under subsection (b)(2)(B)(iii) after describing the double damages remedy allowed by the U.S., the statute states, “[I]n addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.” The corresponding regulation, Title 42 of the Code of Federal Regulations Section 411.24(g) also explains this right in even more detail, “. . . CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment.” Arguments have been made as to whether the language “under this clause” referenced above relates to the reimbursement right or also extends the double damages right of the U.S. against those receiving payment from a Primary Plan. Some courts have restricted double damages awards only to Primary Plans or commercial entities required to make payment under a Primary Plan.

[4] Sally Stalcup, MSP Regional Coordinator, Region VI (May 25, 2011 Handout) at 3 (“. . . IF there was/is funding for otherwise covered and reimbursable future medical services related to what was claimed/released, the Medicare Trust Funds must be protected”).