Federal Appeals Court Rules State Apportionment Order Not A Bar to Medicare Recovery

A Medicare recipient brought an action against Medicare challenging a determination that she was required to reimburse The Centers for Medicare and Medicaid Services $10,121.51 for conditional medical payments alleging that such recovery was barred by a state court's apportionment order. \

The Court of Appeals, Hardiman, Circuit Judge, held that:

(1) recipient's liability settlement from third-party tortfeasor qualified as a “primary plan” within the meaning of the Medicare as a Secondary Payer Act;

(2) recipient's $90,000 settlement with tortfeasor included her medical expenses, and thus recipient had obligation to reimburse Medicare for $10,121.15 in medical

(3) the New Jersey Collateral Source Statute (NJCSS) did not prevent Medicare from recovering medical expenses as part of her damages in tort suit;

(4) state court's order apportioning settlement proceeds did not bar government from seeking reimbursement for medical expenses;

(5) District Court lacked jurisdiction to adjudicate recipient's unexhausted claim pursuant to “equity and good conscience” exception under Act; and

(6) District Court lacked federal question jurisdiction over due process claim.

"As the ALJ correctly found, the Superior Court's apportionment order was not “on the merits,” and need not be recognized by the agency. A court order is “on the merits” when it is “delivered after the court has heard and evaluated the evidence and the parties' substantive arguments.” Black's Law Dictionary 1199 (9th ed.2009); cf. Greene v. Palakovich, 606 F.3d 85, 98 (3d Cir.2010) (finding, in a criminal case, that “on the merits” means the state court “acted on the substance of [the] claim”), aff'd sub nom. Greene v. Fisher, ––– U.S. ––––, 132 S.Ct. 38, 181 L.Ed.2d 336 (2011); Thomas v. Horn, 570 F.3d 105, 115 (3d Cir.2009) (holding that state proceedings occur “on the merits” “when a state court has made a decision that 1) finally resolves the claim, and 2) resolves the claim on the basis of its substance”). Here, the state court did not adjudicate any substantive issue in the primary negligence suit. Indeed, in her motion for the order, Taransky clarified that she sought an apportionment not to resolve any outstanding issue in her suit, but “only to the extent necessary to obtain specified documentation relevant to anticipated administrative proceedings with the federal Centers for Medicare and Medicaid Services.” JA at 267. The state court, in effect, rubber stamped her request. Taransky's motion was uncontested, issued pursuant to a stipulation between Taransky and Larchmont, and prepared and submitted by Taransky's counsel for the judge's signature. This order is the antithesis of one made on the merits."

Taransky v Sec of US Dept of HHA, 760 F.3d 307 (3rd Cirt 2014)

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CMS 2016 Recovery Thresholds for Workers’ Compensation Settlements, Judgments, Awards or Other Payments

2016 Recovery Thresholds for Certain Liability Insurance, No-Fault Insurance, and Workers’ Compensation Settlements, Judgments, Awards or Other Payments 

As required by section 1862(b) of the Social Security Act, the Centers for Medicare and Medicaid Services (CMS) has reviewed the costs related to collecting Medicare’s conditional payments and compared this to recovery amounts.

CMS Sues Lawyers Over MSP Reimbursement

The Secretary of Health and Human Services (HHS) [The Centers for Medicare and Medicaid Services (CMS)] has filed a recovery action in the US District Court in Alabama for recovery of Medicare Secondary Payments (MSP). 

The recovery action is based upon an alleged failure of the attorneys to honor a claim that CMS had filed in an underlying bankruptcy claim filed in 2003. The settlement provided for distributions to be paid from 2004 through 2013 by the defendants.

The complaint alleges that the US may initiate a claim for recovery of Medicare conditional payments when it "learns that payment 'has been or could have be made' under a liability insurance policy of plan. 42 C.F.R. Sec 411,24(b)."

Complaint: The United States of America v James J. Sticker, et al. Docket 1:09-cv-02423, filed 12.02.2009

Click here to read more about Medicare Secondary Payer Act and workers' compensation.

And they didn't see it coming........

Rafael Gonzalez authored a very helpful, and spot on, post today that summarizes the new approach of The Centers for Medicare and Medicaid Services (CMS) to recoup benefits under Medicare Secondary Payer law (42 U.S.C. § 1395y(b)) (MSP) before a final determination is made in the underlying workers' compensation claim.

Rafael Gonzalez

With multiple reporting trigger points CMS is new able to capture data quickly and with the implementation of the expedited US Treasury debt collection procedures, the Digital Accountability and Transparency Act (DATA Act). the process will now  ignore the sluggish/delayed workers' compensation program/adjudication.

CMS has now operationalized a new procedure, "As part of the continuing efforts to improve the Coordination of Benefits & Recovery (COB&R) program and claims payment accuracy in Medicare Secondary Payer (MSP) situations, the Centers for Medicare & Medicaid Services (CMS) will be transitioning a portion of the Non-Group Health Plan (NGHP) recovery workload from the Benefits Coordination & Recovery Center (BCRC) to its CommercialRepayment Center (CRC)."

Ironically, this process cuts through the red tape and cottage industry's interests of the State programs and moves the claims to the goal of Federalization of the entire system based also on a uniformity of processing, coding and determinations at the Federal administrative level. See also, D. Torrey, The Federalization Standards Issue, A Short History Before and After NFIB v. Sebelius (2012), ABA, 2013. "These views speak loudly to the expectation of educated observers that state-based workers’ compensation will endure and that federalization is unlikely."

Additionally, the cottage industries (lawyers, insurance carriers & employers, ie. MARC) who lobbied for The Strengthening Medicare and Repaying Taxpayers (SMART) Act of 2011, never saw the forest from the trees as they tried to stake out their territory.

Perhaps, the very next step may be an effort to follow the liability program models, wherein pre-disposition, alternate resolution, is possible early in the process, ie. the mass tort specialized programs for resolution. 

Of course, workers' compensation (WC) insurers and employers would then need to really expedite WC claims. But then, wasn't that the intent of the now antiquated 1911 system anyway?

Click below to read the post on LinkedIn:
New Process for Primary Payers Resolving Medicare Conditional Payments Begins Today

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Medicare Finalizes New Rules To Collect Conditional Payments

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule to tighten its procedure in collecting conditional payments made in workers' compensation actions.. On February 22, 2008 the Department of Health and Human Services published a final rule (PDF) in its program to strengthen CMS's ability to collect payments under the Medicare Secondary Payer (MSP) Amendments.


CMS has designated third party administrators (TPAs) and self-insured plans as "primary payers."

The rule continues to provide that, "...As is the case with group health plan and large group health plan insurance, Medicare may not make payment if payment with respect to the same item or service has been made or can reasonably be expected to be made under workers' compensation..."

The final rule removes the requirement that the reimbursement will be made "promptly" and now substitutes that the primary payer is "...obligated to reimburse CMS if and when it is demonstrated that the primary payer has or had primary payment responsibility. This responsibility may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items and services included in a claim against the primary payer, or by other means, including but not limited to a settlement, award, or contractual obligation. This means that a primary payer may not extinguish its obligations under the MSP provisions by paying the wrong party--for example, by paying the Medicare beneficiary or the provider when it should have reimbursed the Medicare program. Primary payers are expected to reimburse CMS when it is demonstrated that they have or had payment responsibility."

This rule supplements the recent legislation requiring the timely disclosure of information which was contained in the Medicare Medicaid and SCHIP Extension Act of 2007 and again reflects the Administration concern that cost shifting should not be transferred from workers' compensation onto CMS. The insurance industry continues to press for legislation that will would shift the burden from workers' compensation onto Medicare and require the US taxpayers to continue to supplement contested workers' compensation claims. CMS recently announced improper payments in 3 states amounted to $371.5 Million dollars alone. Previously this legislation was introduced and efforts to enact it failed.

CMS Recovery Contractor Publishes New Rights and Responsibilities Letter

The Centers for Medicare and Medicaid Services (CMS) has now posted its newly revised Rights and Responsibilities letter. The letter complies with the Court's Order in Haro v. Sebelius which restrict the application of interest while an appeal is pending. The letter no longer demands that an attorney withhold settlement proceeds from a case.

CMS employs outside contractors to collect conditional payments that Medicare has paid and for which it is only secondarily responsible

"The Medicare Secondary Payer Recovery Contractor (MSPRC) protects the Medicare trust fund by recovering payments Medicare made when another entity had primary payment responsibility. The MSPRC accomplishes these goals under the authority of the Medicare Secondary Payer (MSP) Act. The MSPRC identifies and recovers Medicare payments that should have been paid by another entity as the primary payer either under a Group Health Plan (GHP) or as part of a Non-Group Health Plan (NGHP) claim which includes, but is not limited to Liability Insurance (including Self-Insurance), No-Fault Insurance, and Workers' Compensation. The MSPRC does not pursue supplier, physician, or other provider recovery'." 

For over 3 decades the Law Offices of Jon L. Gelman  1.973.696.7900  jon@gelmans.com have been representing injured workers and their families who have suffered occupational accidents and illnesses.


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CMS Takes a New Direction in the Proposed MSP Appeal Process

The Centers for Medicare and Medicaid services (CMS) has proposed rules for the Medicare Secondary Payer (MSP) appeals process that will target the “applicable plan” as the primary responsible party for recovery. 

Medicare, in pursuing recovery directly from the applicable plan, removes the beneficiary, as well as the provider or supplier, as the responsible party to initial a re-determination and all subsequent levels of the administrative process that could culminate in judicial review.

Docket ID:CMS-2013-0270

Topic(s):Administrative Practices and Procedures, Health Facilities, Health Professions, Kidney Diseases, Medical Devices, Medicare, Reporting and Recordkeeping Requirements, Rural Areas, X-Rays

Document Type:Proposed Rule

Received Date:Dec 27, 2013

Start-End Page:78802 - 78807

Comment Start Date:Dec 27, 2013

Comment Due Date:Feb 25, 2014

Click here to review the proposed rules.

Found on

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CMS and Future Medicals: New Rules Proposed

The Centers for Medicare and Medicaid Services (CMS) is proposing several options to efficiently and effectively handle issues concerning the payment of future medicals.


"This advance notice of proposed rulemaking solicits comment on standardized options that we are considering making available to beneficiaries and their representatives to clarify how they can meet their obligations to protect Medicare's interest with respect to Medicare Secondary Payer (MSP) claims involving automobile and liability insurance (including self-insurance), no-fault insurance, and workers' compensation when future medical care is claimed or the settlement, judgment, award, or other payment releases (or has the effect of releasing) claims for future medical care."
***
"We are issuing this advance notice of proposed rulemaking (ANPRM) to solicit public comments on standardized options that beneficiaries and their attorneys or other representatives will be able to use to resolve MSP obligations related to settlements, judgments, awards, or other payments (hereinafter, for ease of reference in this document and unless otherwise indicated, “settlement(s)”) involving future medical care while protecting Medicare's interest."


Click here to read the Federal Register Notice.

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NGHP Alert Clarifying MSP Criteria for Exposure, Ingestion, and Implantation Cases

CMS on 8/19/14 issues a new Alert "NGHP Alert Clarifying MSP Criteria for Exposure, Ingestion, and Implantation Cases."

For incidents after December 5, 1980 this Alert should be reviewed to determine CMS obligations.

Click here to review the Alert.

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CMS Publishes a User Manual for MSP Reporting

The Centers for Medicare and Medicaid Services (CMS) has now published a User Manual. The manual details the federal procedures that will be utilized to implement Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA Section 111).

July 1, 2009 is the implementation date for mandatory reporting in workers' compensation claims. Section 111 adds reporting requirements and does not eliminate any existing statutory provisions or regulations. CMS' existing processes, including for example, CMS’ process for self-identifying pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation claims to CMS’ Coordination of Benefits Contractor (the COBC) or the processes followed by CMS’ Medicare Secondary Payer Recovery Contractor (the MSPRC) for MSP recoveries, remain undisturbed. The Act does impose penalties for noncompliance.

CMS has announced that it will offer a "query function" to required reporting entities to ascertain whether or not the claimant is a Medicare beneficiary. The query will be based upon identifying data including: HICN or SSN; first initial of the last name; first 6 characters of the last name; date of birth and gender.

Yet to be determined are a host of reporting issues including:

• Interim dollar reporting threshold for "Total Payment Obligation to the Claimant" (TPOC) amounts -- CMS’s decision on this issue will be released separately in the near future.
  
• Interim dollar reporting threshold for "Ongoing Responsibility for Medicals" (ORM) -- CMS has this issue under consideration.
  
• Further information regarding reporting for mass torts – This issue is still under discussion.
  
• ICD9 Codes – CMS is reviewing the codes to determine if there are certain codes which Responsible Reporting Entities (RREs) will be prohibited from submitting.
  
• Examples regarding "Who is the RRE" -- CMS is reviewing additional examples submitted by the industry for possible inclusion in the User Guide.

Federal court denies motion to add Medicare secondary reimbursement claims to a pending class action

A United States District Court handling Vioxx litigation has denied as application to add Medicare reimbursement claims to the pending application. 

"The Court has reviewed the briefs and finds that denying leave to amend is appropriate because the proposed joinder of these new Defendant Law Firms is not the most expeditious way to dispose of the merits of these matters. First, the Court finds that the proposed amendment violates Federal Rule of Civil Procedure 20. The Court previously granted a motion to sever the Plan Plaintiffs' claims pursuant to Rule 21(a). See AvMed II, 2008 WL 4681368, at *5–8. As the Court held in AvMed II, the Plan Plaintiffs' bring different claims pursuant to different health benefit plan language to pursue liens over funds owed to different claimants in different factual circumstances. See id. This diversity between the claims of the individual Plan Plaintiffs meant that the rights to relief asserted did not arise out of the same transactions or occurrences and did not present common questions of law or fact. See id. (citing Fed.R.Civ.P. 20(a)). Therefore, the Court recognized the risk of “transform[ing] this litigation into an action against approximately 15,000 defendants, each of whom has entered into a separately negotiated health plan contract and each of whom has received medical benefits under highly individualized factual circumstances.” See id. at *8. Accordingly, the Court exercised its discretion to sever the improperly-joined claims of the individual Plan Plaintiffs."

....

Jon L.Gelman of Wayne NJ, helping injured workers and their families for over 4 decades, is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson).  

In re Vioxx Products Liab. Litig., MDL 1657, 2012 WL 6045910 (E.D. La. Dec. 4, 2012)

Read more about Medicare Reimbursement Claims

Private Claim for Medicare Reimbursement Dismissed

Mar 17, 2009

A private suit, brought by a consortium of plaintiff entities and individuals seeking reimbursement of Medicare for the failure of the tobacco companies' to repay The Centers for Medicare and Medicaid [CMS] for benefits, was ...

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Medicare Denied Reimbursement From Claim Of Survivor: Held

Oct 01, 2010

The 11th Circuit Court of Appeals has held that Medicare is not entitled to reimbursement under the Medicare Secondary Payer Act (MSP) when the the surviving children's allocated share of proceed is the result of a wrongful ...

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Workers' Compensation: Hospital Controlled Physician Access and ...

Dec 01, 2012

By one estimate, under its current reimbursement system, Medicare is paying in excess of a billion dollars a year more for the same services because hospitals, citing higher overall costs, can charge more when the doctors ...

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The Doctrine of Equitable Allocation Not Applicable in a Medicare ...

Nov 22, 2011

The 6th Circuit Court of Appeals has ruled that The Center for Medicare and Medicaid Services (CMS) is entitle to complete reimbursement of Medicare payments under the Medicare Secondary Payer Act (MSP) from a liability ...

http://workers-compensation.blogspot.com/

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CMS/MSP and the Increase in Drug Costs

Hold onto your seats because the cost of drugs are soaring and so will be the requests from CMS for MSP reimbursements and future allocations for set-aside agreements. CMS just announced that to merely make ends meet next year that it is increasing the drug premium cost 12% for 2009. While CMS announced that this is lower than anticipated it still will be a major increase to workers’ compensation programs through reimbursement procedures.

With 17.4 million beneficiaries enrolled in the program and the average person living longer due to enhanced medical care the issue reimbursement will continue to have a greater impact on State workers’ compensation programs.

GAO Releases Report on Medicare Secondary Recovery Procedures

The US Government Accounting Office has released a report concerning the efficiency of the Medicare Secondary Recovery process.


Identified Issues:

• Contractor performance. Challenges related to the timeliness of the MSPRC and WCRC were identified, including significant increases in the time required to complete important tasks. CMS reported taking steps to address the challenges with each of these contractors’ performance.

• Demand and recovery issues. Challenges were identified related to the timing of demand amounts, the cost-effectiveness of recovery efforts, and the amounts of Medicare demands from liability settlements. CMS reported taking steps to address some, but not all, of these challenges.

• Mandatory reporting. Key challenges were identified with certain aspects of mandatory reporting: determining whether individuals are Medicare beneficiaries, supplying diagnostic codes related to individuals’ injuries, and reporting all liability settlement amounts. CMS reported taking steps to address some, but not all, of these challenges.

• CMS guidance and communication. Key challenges were identified related to CMS guidance and communication about the MSP process, guidance on Medicare set-aside arrangements, and beneficiary rights and responsibilities. CMS has taken few steps to address these challenges.

Click here to read the complete report: 

"To improve the MSP program, GAO is making recommendations to improve the cost-effectiveness of recovery, decrease the reporting burden for NGHPs, and improve communications with NGHP stakeholders. CMS agreed with these recommendations."

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Third Circuit Court of Appeals Enforces Medicare Conditional Payment Collection

The Third Circuit Court of Appeals ruled that a Medicare recipient could not prevent CMS from recovering conditional payments from a liability settlement by holding that the NJ Collateral Source Statute (NJCSS) did not prevent Medicare from recovering medical expenses as part of her damages in a tort suit and that the state court's oder apportioning settlement proceeds did not bar the Federal government from seeking reimbursement for medical expenses.

Taransky v Sec of US HHS No. 13-3483, 214 WL 3719158 (Decided July 29, 2014)

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The Eleventh Circuit Holds 4 Year Statute of Limitations Applies in MSP Private Actions

The 11th Circuit Court of Appeals decided that a four-year statute of limitation applies to private actions pursued under the Medicare Secondary Payer Act [MSPA]. 

MD Fed Court Holds a Fighfighter HAS STANDING to bring a private action under the MSP Act

Firefighter brought action against mayor and city council pursuant to private enforcement provision of Medicare Secondary Payer (MSP) statute, alleging that his exposure to asbestos while working caused his pleural malignant mesothelioma. City moved to dismiss.

"...private citizens may collect double damages by bringing claims against primary payers to recover money owed. Id. § 1395y(b)(3)(A). It is under this latter provision that O'Connor asserts the instant suit."

Motion to Dismiss DeniedO'Connor v. Mayor and City Council of Baltimore494 F.Supp.2d 372 D.Md.,2007.July 19, 2007

Jon Gelman
Wayne NJ
http://www.gelmans.com/

Judge Accepts Medicare’s Plan To Remedy Misunderstanding On Therapy Coverage

Today's post is shared from Kaiser Health News khn.org

"A federal judge has accepted Medicare’s plans to try once more to correct a commonly held misconception that beneficiaries’ are eligible for coverage for physical and occupational therapy and other skilled care only if their health is improving.

"'Confusion over the Improvement Standard persists,' wrote U.S. District Court Chief Judge Christina Reiss in Vermont in a decision released by the court Thursday. Advocates for seniors say coverage is often mistakenly denied simply because the beneficiary reaches “a plateau” and is no longer making progress.

The Doctrine of Equitable Allocation Not Applicable in a Medicare Secondary Payment Reimbursement Claim

The 6th Circuit Court of Appeals has ruled that The Center for Medicare and Medicaid Services (CMS) is entitle to complete reimbursement of Medicare payments under the Medicare Secondary Payer Act (MSP) from a liability claim even though the beneficiary claimed that the settlement required allocation due to the law allocating liability.

"We address only one of them here: specifically, under § 1395y(b)(2)(B)(ii) as amended, if a beneficiary makes a “claim against [a] primary plan[,]” and later receives a “payment” from the plan in return for a “release” as to that claim, then the plan is deemed “responsib [le]” for payment of the “items or services included in” the claim. Id. Consequently, the scope of the plan's “responsibility” for the beneficiary's medical expenses—and thus of his own obligation to reimburse Medicare-is ultimately defined by the scope of his own claim against the third party. That is true even if the beneficiary later “compromise[s]” as to the amount owed on the claim, and even if the third party never admits liability. And thus a beneficiary cannot tell a third party that it is responsible for all of his medical expenses, on the one hand, and later tell Medicare that the same party was responsible for only 10% of them, on the other."

Hadden v. U.S., --- F.3d ----, 2011 WL 5828931, C.A.6 (Ky.), 2011. Decided November 21, 2011.

For over 3 decades the Law Offices of Jon L. Gelman  1.973.696.7900  jon@gelmans.com have been representing injured workers and their families who have suffered occupational accidents and illnesses.

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CMS Hammers Work Comp Carriers with Major MSP Reporting Requirements

A new law on the books introduced in the Senate on Dec. 18, 2007 and signed by the President on December 29, 2007 is going to have significant impact on how the workers' compensation system operates in the future concerning Medicare Secondary Payer (MSP) issues. Robert E. Taren, Esq. of California, a national expert on the subject, has alert me to the new legislation.

For years it has been a dirty little secret in the Workers' Compensation Industry that the insurance carriers were shifting the medical liability from themselves to Medicare. Enacted in 1980 the Medicare Secondary Payment Act has had major enforcement problems and Medicare has continued to bleed dollars. Struggling with the issue and after major reports of a failing system, Medicare in 2001 issued the famous Patel Memorandum establishing a system where the workers' compensation industry would be required to obtain Medicare consent before future medical benefits could be compromised. Medicare also established a recovery program from benefits that were paid in the past and actually the responsibility of the workers' compensation system.

Plagued by the multiple network of workers' compensation programs and reluctant players in the system to provide data, Medicare has struggled to establish a efficient program. Attorneys, claimants, insurance carriers and the agencies themselves have been reluctant to provide information to Medicare and in turn Medicare has had to seek information through convoluted reporting procedures.

A stagnating system has caused those in the workers' compensation industry to complaint that that the process is too slow and that the workers' compensation has been placed on life support systems. Additionally the major stakeholders in the system, the insurance carriers and the employers have made failed attempts to cut Medicare off at the knees by eliminating and reducing the past due recoveries and the potential future medical payments.

The Medicare, Medicaid, and SCHIP Extension Act of 2007 requires workers' compensation carriers to submit information to Medicare on a schedule prescribed by the Federal government or be subject to a $1,000 a day fine for each violation.

Should CMS be A Joint Payee in a Workers Comp Settlement?

How to reimburse The Centers for Medicare and Medicaid Services (CMS) is becoming a serious issue under the Medicare Recovery Act (MSP). Commonly know as Allocation Orders, these cases are emerging across the country and the Courts are denying attempts to merge the payments of the plaintiff's with that due to CMS.

In Zaleppa v Seiwell, 2010 PA Super 208, No. 2019 MDA 2009, Decided November 17, 2010, an appellate panel tossed out a request to have CMS named as a co-payee of the proceeds. Likewise, a Federal Court ruled that CMS's name should not appear on the same check as the one going to the plaintiffs ruling that the interests of the two parties were not similar. Bradley v Sebelius, 621 F.3d 1330 (11 Cir Ct Ap 2010) decided September 29, 2010.

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