U.S. Flexes MSP Recovery Muscles with US v. Stricker

On December 1, 2009, the US Department of Justice, on behalf of the Secretary of Health and Human Services, filed a civil action to recover conditional payments that were made to approximately 907 Medicare beneficiaries involved in a $300,000,000 class action liability lawsuit named the Abernathy Settlement. Defendants include plaintiff attorneys, Travelers Indemnity Company, AIG, Monsanto Company, Pharmacia Corporation, and Solutia, Inc. The suit alleges that the defendants had an obligation under 42 CFR §411.25 to notify Medicare of any settlement, judgment, award or other payment that was made when the case was resolved, and to reimburse Medicare for these conditional payments at the time of settlement, but failed to do so. It also claims that it does not matter that these defendants paid out the settlement proceeds, as 42 CFR §411.24(i) allows Medicare to seek payment from the liability insurance carrier regardless of whether payment has already been made to the Medicare beneficiary. The US is seeking reimbursement of these funds along with double damages plus interest.

On January 28, 2010, the United States filed a motion for partial summary judgment on liability against a portion of the defendants named above. Within this most recent motion, the U.S. attempts to show the following:

  1. The underlying plaintiffs in the Abernathy case asserted and released medical claims in that action.
  2. Medicare made conditional payments on behalf of Medicare beneficiaries who were among the plaintiffs.
  3. The corporate defendants (Monsanto, Solutia and Pharmacia) are responsible primary plans under the MSP statute and required to reimburse Medicare for its conditional payments.
  4. Several firms and attorneys representing Abernathy plaintiffs received funds as part of the Abernathy settlement and are therefore liable as entities that received payment from a primary plan, and are therefore also required to reimburse Medicare for its conditional payments.

The United States performed a search of its official records for all conditional payments made on behalf of 907 Medicare beneficiaries involved in the Abernathy case from 1991 to 2009, and discovered that these payments totaled $67,156,770.01. The U.S. is arguing that the Medicare Secondary Payer (MSP) Statute requires that primary plans (Monsanto, Solutia, and Pharmacia) and entities that receive payment from those plans (James J. Stricker, Daniel R. Benson, the law form of Kasowitz, Benson Torres & Friedman, and Donald W. Stewart) shall reimburse the Medicare Trust Funds for Medicare’s conditional payments made on behalf of its beneficiaries.

While U.S. v. Stricker is most certainly a noteworthy case, it is just one of several recent developments in the MSP arena that indicate a new trend is on the horizon. Most would agree that with the implementation of Mandatory Insurer Reporting (MIR), the United States government will have unprecedented access to settlement information. However, when MIR is coupled with U.S. v. Harris and U.S. v. Stricker, it is evident that from this point forward extreme caution must be exercised when settling claims involving Medicare beneficiaries, particularly those claims where Medicare has made conditional payments. These actions should be viewed as a “shot over the bow” from the U.S. government warning those involved in any type of injury settlement that their interests should not be ignored as they have been for the past 30 years.

To view U.S. v. Stricker in its entirety, please click here
To view U.S. v. Harris in its entirety, please click here
To view U.S. v. Stricker Motion for Summary Judgment, please click here

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