How to Avoid Medicare Conditional Payment Mistakes That Delay Settlement

Medicare conditional payments are one of the most common sources of settlement delays, mistakes, and malpractice risk in personal injury litigation. They aren’t optional. They aren’t minor. And the Department of Justice has made it clear: if your firm fails to properly reimburse Medicare, they will pursue repayment  from your client or directly from you.

The mistake is rarely in intent. It’s in process.

Here’s how to avoid the most common pitfalls that can derail your settlement, expose you to liability, or worse, turn into a federal enforcement action.

1. Never Rely on a Conditional Payment Letter

A Conditional Payment Letter (CPL) is not binding. Only the Final Demand Letter is.

One Maryland firm learned this the hard way. They settled a malpractice case for $1.15 million. Before finalizing the settlement, they checked the Medicare portal, confirmed the amount by mail and phone, and received a CPL stating that $14,990 was owed. They relied on that figure in closing the case.

Sixty days later, Medicare issued a Final Demand for $330,000. The government enforced it. The firm tried to appeal but failed. The U.S. Attorney’s office pursued repayment, and the matter ultimately settled for $250,000 covered by the firm’s malpractice carrier.

Takeaway: You don’t have a number until you have the Final Demand. Don’t disburse settlement funds until that demand is in hand.

2. Use the Right Resolution Path for Disputes

If you want to challenge the Final Demand amount, follow the administrative process, don’t file a motion in state court.

In another case, a Texas firm settled a personal injury case and disagreed with Medicare’s Final Demand. Instead of requesting a waiver or compromise, they tried to reduce the lien through a Texas state court order. They sent Medicare a check for the reduced amount and a copy of the court’s order.

Medicare rejected the check. The DOJ filed suit, arguing that only a federal court has jurisdiction to resolve Medicare recovery disputes. The state court’s order had no legal effect. The firm and its managing partner were sued and exposed to liability for the full lien amount, interest, and costs.

Bottom line: Sovereign immunity and preemption mean you can’t sidestep the Medicare Secondary Payer Act. Use the appeal, waiver, or compromise options that Medicare provides. Pay first to stop the interest clock, then seek relief.

3. Don’t Treat Conditional Payment Resolution as Routine

The MSP statute gives Medicare a direct right of recovery. That right extends to the law firm and even individual attorneys. In some cases, DOJ has pursued attorneys directly, even when a case was referred out to co-counsel.

A few key enforcement examples:

• A firm paid $91,000 after its co-counsel failed to reimburse Medicare.
• A Philadelphia firm implemented a formal compliance program after a settlement over unpaid conditional payments.

The pattern is clear: Medicare expects full compliance, and the DOJ is enforcing that expectation.

4. Build Internal Processes That Prevent Mistakes

Compliance starts with identifying Medicare beneficiaries early and tracking them throughout the case. Create a repeatable system:

• Confirm Medicare status at intake.
• Report the claim properly to the BCRC.
• Obtain the CPL, but don’t rely on it.
• Submit final settlement details to get the Final Demand.
• Audit the charges for unrelated items.
• Consider compromise or waiver after paying the Final Demand.

At a minimum, designate a staff member to manage Medicare repayment, train them on compliance, and review outstanding debts every six months. Document your file and keep a paper trail.

5. Partner with Experts for Complex Cases

The Medicare Secondary Payer Act is notoriously complex. Personal injury teams are good at many things, but navigating the CMS portal, decoding conditional payment data, and negotiating waivers isn’t typically one of them.

Bringing in a lien resolution partner like Synergy can reduce delays, prevent errors, and protect both your client’s recovery and your firm’s liability exposure.

Final Thought

Settling a case for a Medicare beneficiary without finalizing conditional payment resolution is a risk. Waiting for a Final Demand and using the right process to address disputes is not optional, it’s compliance.

Personal injury firms should view Medicare compliance as a core part of settlement, not a post-closing task. Every delay or mistake in this area costs time, money, and reputation.

And as DOJ actions show, the cost of getting it wrong could be yours.