Insurance Carrier Subject to Lawsuit for Failing to Reimburse CMS

Workers' Compensation insurance carriers have a duty to reimburse the Centers of Medicare and Medicaid Services for conditional medical payments. Failure to do so may result in a private cause of action by the injured worker or his representative for double damages. Once the lawsuit is filed the workers' compensation insurance company cannot mitigate the double recovery penalty by making payment.

A private cause of action was permitted to go forward seeking double damages by an estate against a workers' compensation insurance carrier for failing to reimburse CMS for conditional medical payments. The District Court, Charles R. Simpson, III , Senior District Judge, held that an issue of fact as to whether insurer did nothing to reimburse Medicare prior to estate's commencement of private action precluded summary judgment.

The Court held that a genuine issue of material fact existed as to whether workers' compensation insurer did nothing to appropriately reimburse Medicare for medical expenses that Medicare had paid for a work-related injury until estate of deceased employee brought private action under the Medicare Secondary Payer Act (MSPA), precluding summary judgment on whether estate was entitled to double recovery under the MSPA. 42 U.S.C.A. § 1395y(b)(3)(A).

"The private cause of action provision allows for damages “in an amount double the amount otherwise provided” – the purpose being to encourage beneficiaries to bring claims even if Medicare has already paid the beneficiaries' expenses. Once a private cause of action claim has been lodged against a defendant, a defendant cannot escape the double damages provided for in that provision by paying single damages to Medicare."

Estate of McDonald v. Indemnity Insurance Company of..., --- F.Supp.3d ---- (2015), CIVIL ACTION NO. 3:12CV–577–CRS, 2015 WL 6997440, Filed April 14, 2015.