Public Benefits Preservation: What Your Client Doesn’t Know will Hurt Them, and You!

April 9, 2020

By: Evelynn Passino

One of the many practice points rarely taught in law school: your client may lose public benefits as a result of a recovery, and you have a duty, as their attorney, to discuss benefit preservation with them. That does not mean you have a duty to actually preserve their eligibility–a competent adult can very well choose to not keep their benefits—but you must make sure they understand their options. Failing to discuss with your client how he or she can maintain their benefits may be grounds for malpractice. This article will provide relevant case law, an overview of the major government benefit programs, protection mechanisms, and best practices for ensuring that the attorney’s duty is met while protecting the client.

Case Law: Grillo & Glorioso

There are now many legal malpractice cases in which attorneys failed to properly advise their clients, but two cases which clearly illustrate this duty are Grillo v. Petiete et al., 96-145090-92 (96th Dist. Ct., Tarrant Cty., Texas) and French v. Glorioso, 94 S.W.3d 739 (Tex. App. 2002). Grillo involved a birth injury resulting in severe brain damage. The attorneys refused a structured settlement in favor of a lump sum of $2.5 million, which was then placed into a court registry. Because there was no structure, she was taxed on the interest earned. Not only did this result in substantially less money for Christina Grillo’s care, she lost Medicare and Medicaid eligibility because a special needs trust was not utilized, leaving her family with the burden of paying for care. Due to her serious medical needs, the funds were exhausted within a few years. The attorneys and guardian ad litem were ultimately liable in the malpractice cases for over $4 million in damages.

In Glorioso, the personal injury victim’s recovery was placed in her attorney’s trust account, where it remained for over a year. While she was not Medicaid-eligible at the time of her injury, she became eligible prior to the case being settled. The personal injury victim eventually lost Medicaid and subsequently filed suit against her attorney for failing to advise her that the funds needed to be in a special needs trust to protect her eligibility. The attorney was able to prove that he had advised her that she would need to establish an SNT to protect her benefits both at mediation and before, and that she had declined. Ultimately, he was not liable for malpractice.

Public Benefit Programs

Government benefits are often compared to a tangled web or alphabet soup, and for good reason. There are a number of programs available, many interact or intersect, and most of them are known by similar acronyms. The first thing to understand is that government benefits generally fall into two types: means-tested (or needs-based) and entitlement. Means-tested benefits require the client to qualify financially, while entitlement benefits are not in any way related to income or assets.

Supplemental Security Income (SSI)

SSI is a means-tested benefit administered by the Social Security Administration, although some states add a supplement. In 2020, SSI is a monthly cash payment of up to $783 for an individual or $1,175 for a married couple. SSI is intended to provide basic support (food and shelter) for people with both financial and medical needs. In many states, receiving SSI automatically qualifies someone for Medicaid coverage in their state.

To qualify for SSI, the person must be a US citizen or non-citizen who meets certain requirements, have limited countable income and resources (less than $2,000 for an individual or $3,000 for a couple), and be one of the following: 65 or older, blind, or disabled. Assume any income or assets are countable unless the program provides an exemption. A person’s primary home and one vehicle are both considered exempt resources. The items in a person’s home are, generally, exempt resources, although there are exceptions for items held solely for their value. For example, a diamond ring that is worn from time to time is exempt, while a diamond or gold that is held as an investment is not.

The recovery from a lawsuit, unfortunately, is not an exempt resource. Any funds given to your client are going to count as income in the first month and as a resource in subsequent months. As illustrated in Glorioso, funds held in an attorney’s trust account can become a countable resource which underscores the necessity to plan early. SSI recipients are sometimes tempted to forego SSI; however, if they also have Medicaid, they must understand both can be lost as most states provide Medicaid coverage automatically with SSI. Preserving SSI eligibility may be important for this reason alone.

Social Security Disability Insurance (SSDI)

SSDI is also administered by the Social Security Administration but is an entitlement benefit. SSDI is a monthly payment that on average provides $1,258 per month. To qualify for SSDI, an individual must be disabled and have enough recent work credits (varies based on the age of the person). After 24 months of SSDI, an individual automatically qualifies for Medicare benefits. There are no financial qualifications for SSDI, so a settlement would have no impact on this benefit.

How to Tell the Difference between SSI & SSDI

The safest option is to request the award letter, but there are a few ways in which SSI and SSDI vary. First, SSI is means-tested while SSDI is not. Second, SSI is always going to be below $783 (unless your state supplements SSI) while SSDI is usually (but not always) over $1,000. Third, qualifying for SSI requires no recent work history while SSDI does. While this is not true 100% of the time, usually SSI is paired with Medicaid and SSDI is paired with Medicare.

Medicaid

Medicaid is health insurance funded by state and federal governments and administered by state agencies. For that reason, Medicaid programs vary across the board, both in terms of offerings and qualifications. Generally, Medicaid is means-tested, although there are some programs which are not. The qualifications are similar to SSI in that there are both financial and medical criteria, such as being pregnant, disabled, or 65 or older. Medicaid provides many benefits, but the one not covered by other government benefit programs is nursing home care. A client receiving this type of care through Medicaid typically cannot afford to lose it.

Like SSI, not all income and assets are countable but the rules are similar. Lawsuit recoveries are countable, meaning they will usually disqualify a person from Medicaid. As stated above, in many states qualifying for SSI will result in qualification for Medicaid, but the reverse is also true: losing SSI will cause an interruption in Medicaid coverage. If Medicaid coverage is important to the client, then finding out if they have SSI and if their Medicaid is “tied to” their SSI is critical before distributing any part of their recovery to them.

Medicare

Medicare is a federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS) and is an entitlement benefit. To qualify for Medicare, an individual must be age 65 or older, have End Stage Renal Disease, or be disabled. There are no financial qualifications for Medicare, so it will not be impacted by funds received from a settlement.

There are 4 “parts” to Medicare. Part A covers inpatient care, such as hospital stays and limited skilled nursing care. Part B covers outpatient care, such as doctor’s visits, preventive care, home health care, and durable medical equipment. Parts A and B are what is known as “traditional Medicare.” Part D covers prescriptions. Part C combines parts A and B, and sometimes part D, and is administered by private companies called Medicare Advantage plans or Medicare HMOs. These companies receive funding from the federal government and operate like traditional insurance companies with networks, co-pays, and other out-of-pocket expenses. Most also offer additional coverage, such as dental coverage and gym memberships. Medicare supplements, also known as “Medigap” policies, are policies offered by private companies to fill in the gaps of what traditional Medicare does not pay for.

Medicare Set-Asides

If your client has Medicare or will have Medicare in the next few years, it may be prudent to consider establishing a Medicare Set-Aside (MSA) account. MSAs are not currently required by law but failing to properly advise your client may be grounds for a malpractice claim.

In a nutshell, CMS interprets the Medicare Secondary Payer Act to require that Medicare’s future interests be taken into account when a plaintiff receives compensation from a personal injury settlement. CMS’ preferred method to address this issue is the establishment of an MSA. The MSA is an account set up to pay for injury-related future medicals that are Medicare-covered. Once the MSA is funded, Medicare will continue to pay for non-injury related services, and when the funds in the MSA are exhausted, Medicare resumes coverage for injury related care.

How to Tell the Difference between Medicaid & Medicare

Medicare is a federal program while Medicaid is administered by states and varies from state to state. Medicare is an entitlement benefit; Medicaid is needs-based. While Medicare offers very limited coverage for nursing home stays, Medicaid often covers 100% of the cost. A person can qualify for Medicare after being on SSDI for 2 years. Medicaid qualification in many states is tied to SSI. Finally, set-asides only apply to Medicare. There is no such thing as a Medicaid set-aside.

Section 8 / The U.S. Department of Housing & Urban Development (HUD)

HUD provides several housing programs to assist low income families, the elderly, and people with disabilities. These programs are federally funded but administered at the state level through local housing authorities. The best-known of these programs is the Section 8 voucher program.

The local housing authority determines the amount of the voucher based on the above factors and the cost of rent in the local housing market. The voucher recipient then finds a suitable dwelling for that price (if the rent is higher than the voucher, the recipient pays the excess). The recipient will likely also pay 30-40% of monthly adjusted income.

Section 8 benefits are means-tested but not in the same way as programs like SSI and Medicaid. Those programs consider all income and assets while HUD only looks at the family’s income. This includes income produced by assets, or a percentage of assets deemed as income, but not the assets themselves.

Income generally includes what one would expect it to include: wages, income from a business, interest earned on investments, periodic annuities, etc. Of note are exclusions for lump sums (inheritances, insurance payments, and settlements for personal or property losses) and reimbursement of medical expenses. The lump sum category has an exception to the exclusion, however, for payments in lieu of earnings which includes workers’ compensation (meaning these payments are income).

Just because personal injury settlements are excluded income does not mean no planning or counseling is needed. Individuals who qualify for HUD benefits almost always have other needs-based benefits, so it is important to understand the whole package.

The Supplemental Nutrition Assistance Program (SNAP)

SNAP is a means-tested benefit funded by the federal government and administered by state agencies. Qualifications for SNAP vary by state but are generally based on the family’s income and resources. Non-citizens can qualify for SNAP if they have lived in the United States for 5 years, are receiving disability-related benefits, or are under 18. Like SSI and Medicaid, there are some resources that do not count towards the family’s asset limit, such as a home and vehicle (although there are restrictions on the value of vehicle and the purpose it is used for). Recipients access this benefit through an Electronic Benefit Transfer (EBT) card which functions like a debit card for use at grocery stores. Because this benefit is means-tested, it is impacted by personal injury settlements.

Veterans’ Benefits

Benefits provided by the Veterans Administration (VA) are funded by the federal government. Some are not means-tested, such as disability-connected VA compensation (disability connected), but VA pensions, which include Aid & Attendance and Housebound benefits, are means-tested. VA healthcare benefits can also be needs-based insofar as determining whether the veteran will pay a co-pay. Like other means-tested benefits, VA pensions are impacted by lawsuit recoveries. VA pensions apply an income test and a net worth test.

For the income test, they look at annual income, so they will take the award from the settlement and divide it by 12 to calculate the reduction in monthly benefits. The reduced rate will apply for 12 months. After 12 months, the veteran’s benefits will go back to normal, assuming no other changes.

For the asset test, there is a limit of $127,061 for both the veteran and spouse. Like other benefits, the money cannot be given away to reduce assets, but there are methods of reducing net worth to qualifying levels, such as spending money on medical services or home repairs (so long as it’s for fair market value).

Clients with No Benefits

Even if a client has no benefits presently, you may still need to discuss public benefit preservation strategies with them if there is a likelihood they will be on such benefits in the future. For example, if the client is going to have Medicare, they may want to establish a Medicare Set-Aside. If the client will need to qualify for Medicaid, they may want to consider placing funds in a settlement trust that can transfer assets to a Special Needs Trust.

Public Benefit Preservation Strategies

Once you have identified the client’s benefits, the next step is helping them decide which course of action to take to preserve them. There is one option available to nearly any kind of client: spend the money down to a level where they will qualify for the desired benefits. There are certain rules and timelines that must be followed to do this effectively, so it is critical to speak with an elder law or special needs law attorney who can properly advise you. One thing they cannot do is give the money away as that is considered a transfer for less than fair market value. A few other options are listed below that apply to more narrow circumstances.

Special Needs Trust (SNT)

If the client is disabled and wants to use their money in the future, they can establish an SNT. SNTs are authorized by federal law to shelter funds in the trust from being counted by most government benefit programs. The notable exception is VA benefits. There are two kinds of SNTs: standalone and pooled.

Standalone SNT

A standalone SNT (also known as a (d)(4)(a) trust) can be created and customized for an individual. Standalone SNTs can be expensive to draft, take weeks or months to set up, and a trustee must be appointed. Private banks or trust companies often fill the role of trustee and can be very costly.

Pooled SNT

A pooled trust (also known as a (d)(4)(c) trust) is an existing trust that a person can join. It gets its name because the funds contributed by the beneficiaries are pooled for investment purposes to obtain better returns; however, each sub-account is kept separate, so no beneficiary has access to another beneficiary’s money. By contrast with standalone trusts, pooled trusts are fast to join because the bulk of the drafting is already done. Fees also tend to be lower for two reasons: 1) according to federal law, the trustee must be a non-profit organization; 2) since the trustee is administering the same trust for many people (as opposed to the same number of people who all have different trusts), the trustee can work efficiently.

There are three things to keep in mind about these types of trusts. First, any SNT must include a provision to repay the state for Medicaid services provided since the inception of the trust when the beneficiary passes away. If there are funds remaining after payback, they may go to the designated death beneficiary; however, pooled trusts have the right to retain some or all the funds. These policies vary from trust to trust. Some pooled trusts retain nothing or a small percentage, so it makes sense to shop around. Second, SNTs are “sole benefit” trusts, meaning all funds expended must be for the benefit of the beneficiary only. A beneficiary would not be able to use funds in an SNT to buy gifts for a friend or loved one. Third, there are a number of rules to follow regarding distributions. For example, if someone has SSI, the trust cannot provide funds for food or shelter without causing a reduction the person’s SSI benefit. It is important to work with a trustee who is knowledgeable about the rules in your state and one well versed in working with personal injury settlements.

More generally, the client needs to understand that while the money is still theirs, they will have no control over it. They can make requests of the trustee, but ultimately every disbursement is the trustee’s decision. SNTs are always irrevocable, so they can’t be easily undone once they are created.

ABLE Accounts

If the client has less than $15,000 and they were disabled prior to age 26, they might consider placing the funds in an ABLE account as an alternative to establishing an SNT. These accounts, created by the Achieving a Better Life Experience Act, are available nationwide. Like an SNT, funds in an ABLE account are not “countable,” but unlike an SNT, the client has full control over the account. There is a bonus for those with SSI—they can use the funds for food and shelter purposes, which they cannot do with the funds in an SNT.

ABLE accounts and SNTs are increasingly used together, especially for those with SSI. The SNT can be funded with the full recovery, and the trustee can deposit up to $15,000 per year in the ABLE account, which the client can then use to pay their rent and buy groceries.

Do Nothing

Any competent adult can choose to take their recovery and lose their means-tested benefits. They need to be properly counseled before doing so, however. They might not be thinking about what their benefits really pay for or how much it would cost to buy private health insurance. Many benefit programs have waiting lists, so once a client is disqualified, it may be for good. Clients must understand all the ramifications and all of their options available under the law to make a truly informed decision.

Best Practices

While the world of government benefits is complicated, there is some good news. You can keep yourself safe from a malpractice lawsuit and ensure your clients are protected if you remember to READ:

Review your client’s benefits at intake and throughout the case.
Enlist experts early-on to educate you and your client. Whether it’s a local attorney who practices in this area or a company like Synergy, work with people who know these programs inside and out.
Award letters—get them! Every government program sends the client a letter explaining what benefit they qualified for. This is the only way to know for sure what benefits your client does or does not have.
Document your file regarding your client’s decision and action steps taken to educate them. This is especially important if the client is choosing to forego any of their benefit programs. It is never a bad idea to have them sign something acknowledging that you counseled them on this matter and that they declined to take an action that would preserve their benefits. One last tip, you might want to add a sentence to your closing statement informing clients that the receipt of a settlement could jeopardize eligibility for government assistance programs.

Medicare Advantage Plans and Workers Compensation Medicare Set-Asides

March 25, 2020

B. Josh Pettingill

We are oftentimes asked about injured workers who have a Medicare Advantage Plan (MAP) and if they still need to use their Workers’ Compensation Medicare Set-Aside (WCMSA) funds if the MAP will cover all their medical care. This brief post will explain Medicare’s position on this issue and then provide real-world analysis. There has been a surge of case law over the last several years regarding MAPs and their ability to assert the same rights as Medicare under the MSP statute. However, there is no case law in existence regarding MSAs or where a MAP has denied paying for accident-related care. Over the years, whenever the injured worker has an MAP, the plan covers everything the MSA normally would (and then some).

Medicare Advantage Plan – Part C

Medicare Advantage Plans also referred to as “Part C” Plans, were established under the Social Security Act as an alternative to traditional Medicare. Medicare Advantage Plans are a type of Medicare health plan offered by a private company that contracts with Medicare to provide all Part A and Part B benefits.

Part C Coverage

Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans and Medicare Medical Savings Account Plans. If your client is enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and are not paid for under original Medicare. Most Medicare Advantage Plans include prescription drug coverage (Part D) as well. In order to be eligible for an MAP, you must be eligible for Medicare Part A and Part B.[1] Part C plans can also cover things that traditional Medicare does not pay for such as gym memberships or dental benefits.

Part C Statistics

As of 2018, more than one-third of all Medicare beneficiaries were enrolled in some type of Medicare Advantage Plan. One in every five (20%) of these enrollees were in group plans offered by employers and unions.[2] What this means for Workers’ Compensation cases is that we are seeing a lot of injured workers who have these types of plans.

Medicare’s Position

From Medicare’s standpoint and per the WCMSA reference guide, section 4.1.3:

“A WCMSA is still recommended when you have coverage through other private health insurance, the Veterans Administration, or Medicare Advantage (Part C). Other coverage could be canceled, or you could elect not to use such a plan. A WCMSA is primary to Medicare Advantage and must be exhausted before using Part C benefits to cover your WC claim-related expenses.”[3]

In other words, they don’t care if there are other forms of private health insurance because the claimant’s circumstances may change and there could be a shift in burden for Medicare to pay. However, by including MAPs in the category of “other coverage”, one could interpret that CMS is also admitting that these plans will likely pay if presented with a bill. That is exactly what we have been seeing.

Real-World Implications

As it stands today, these plans are not rejecting claims on the basis they should be paid for out of a Medicare Set-Aside. There have been rumblings from Medicare that they are sharing Section 111 reporting data with the MAPs which could give them the ammunition to reject claims if they were related to the work-related injury. [4] However, they simply do not have the resources or the wherewithal to do this. It is not to say that it won’t happen in the future. That day is not yet upon us.

Conclusion

You cannot proactively advise your clients to go out and purchase a Medicare Advantage Plan in an effort to circumvent the MSA obligation. Medicare’s position is that the WCMSA exists to protect the Medicare Trust Fund which would mean the injured worker proactively spends money from the MSA account as they treat. Along with that, you cannot control how the providers bill and who they bill.

The practical takeaway is that if your client has a Medicare Advantage Plan, there is a very high likelihood they may never spend a dime of their WCMSA funds. That is the way it stands today. Is it possible that CMS could start to share pertinent data with their MAP partners which would give them the chance to potentially deny paying for accident-related care on the basis they have the same rights under the MSP statute? Yes, but not highly likely.

WCMSAs come from Medicare’s interpretation of the MSP and not from any regulation or case law. Accordingly, it would be a significant stretch to say that a Part C plan could insist upon a set-aside when Medicare itself does not even have a specific regulation or statute requiring them. But, do not be surprised if you see Humana, Cigna or any other MAP provider, at least try to do it someday.

[1] Source: www.Medicare.gov

[2] Source: Kaiser Family Foundation analysis of CMS’s Landscape Files and March Enrollment files for 2010-2018

[3] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-3_0.pdf

[4] Unsubstantiated rumors. The passage of the PAID Act would validate this happening.

Today Planning is More Critical than Ever

March 24, 2020

Now, more than ever, proper settlement planning is critical for disabled clients. Protecting their recovery should be top of mind and a high priority given the turbulence in our global markets. There are always going to be ups and downs in the financial markets. The real estate market has crashed. The tech market has crashed. The oil markets have crashed. There will be ups and downs in everyone’s personal financial situation. You need a new car, roof or the AC goes out. Now we have a virus that is creating an economic and social shutdown of our way of life for the foreseeable future.

Our current financial crisis illustrates how critical it is for you to bring in a settlement planner to speak with your clients. Your clients do not have to plan for their settlement, but they do deserve to speak with someone that has the education, experience, and knowledge to show them the options. Education about ways to protect the recovery from rapid dissipation and insulation from the market are exceedingly important.

If you have a client that settles their case, they need to know the ramifications of their financial decisions. The two questions that always need to be addressed immediately before accepting any settlement are:

Can I take any portion of my settlement in cash or will that impact my public benefits?
Can I utilize a structured settlement for a portion of my settlement?

Those two questions have to be asked and answered on every case before anything is finalized. The answers to those questions will dictate the form of the settlement and set the stage for proper planning. Not asking those questions, could cause irreparable harm to the client.

As part of the planning process, it is important to meet with a qualified settlement planner to help your client create a visual picture of their future. They need to do some basic budgeting. Questions need to be asked like: How much do I NEED now and ongoing? What do I WANT now and ongoing? What public benefits are necessary for my future?

If a settlement planner can get a picture of the client’s needs and wants, solutions can be created to provide for as much of those as possible. By making sure critical questions get asked and simple budgeting is done, creating a rock-solid settlement plan becomes much easier. There are many benefits to crating a settlement plan which includes a structured settlement and public benefit preservation vehicles.

Structured Settlement Benefits

Peace of mind (Guarantee and Fixed): The periodic payment schedule is outlined in the settlement documents and does not change with the market fluctuations.
Creditor Protection: Future periodic payments are not subject to creditors.
Lifetime Income: Annuities are one of the only financial services products that will pay you for the rest of your life (regardless of how long you live).
Tax-Free Payments: All payments received from a traditional structured settlement are tax-free.
Dollar-Cost Averaging Tool: A structure can create monthly, quarterly or annual income payable to you over a period certain. These funds can be used to invest in other asset classes over time to lower the risk of a single investment date.

Public Benefit Preservation Benefits

Income: Public Benefit programs from Social Security can continue to provide income for your lifetime.

Medical Coverage: Programs through Medicaid and Medicare can provide health insurance benefits at no or a lower cost vs private coverage.

Years upon years of settlement planning experience teaches us inevitably there are clients who need and would benefit from a structured settlement and/or trust to preserve benefits. All too frequently clients decide to take a cash settlement only to regret their decisions and want to go back on their public benefits they lost. At the same time, clients can structure too much of their settlement and need cash. It is critical to make sure that clients have the right allocation of their settlement to upfront cash, structured settlement, and trust. This blend, crafted at the time of settlement, is a critical foundation for their future. Proper settlement planning will impact how easily a disabled client transitions from litigation to life.

No Time Limits on Medicare Advantage Plans Private Cause of Action for Double Damages

March 2, 2020

The 11^th Circuit Court of Appeals weighed in on the question of whether the Medicare statute, which provides a three-year timeline to the government to request repayment, applies to a private entity providing Medicare benefits (Medicare Advantage plans). The Court’s answer is that the claims filing provision does not bar a claim and that the timeline is not a precondition to filing suit.

Basic primer on Medicare. When Medicare pays for accident-related treatment, it is entitled to be paid by the primary payor. Its payment is made as a conditional payment, conditioned on repayment when other funds become available. In the case of an accident, that could be medical payments coverage, bodily injury coverage or an uninsured/underinsured coverage. If Medicare seeks reimbursement and is denied, the United States can sue the primary plan to recover its payment. If the cause of action is successful, Medicare can be awarded double damages.

Section 1395y(b)(2)(B)(iii) contains a three-year statute of limitations that requires the government to sue within three years of the date that Medicare receives notice of a primary payer’s responsibility to pay.

(iii) Action by United States

… An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to paragraph (8) relating to such payment owed.

(vi) Claims-filing period

Notwithstanding any other time limits that may exist for filing a claim under an employer group health plan, the United States may seek to recover conditional payments in accordance with this subparagraph where the request for payment is submitted to the entity required or responsible under this subsection to pay with respect to the item or service (or any portion thereof) under a primary plan within the 3-year period beginning on the date on which the item or service was furnished.

A few sections down lies § 1395y(b)(3)(A), which provides a private cause of action available to Medicare beneficiaries and other private entities if a primary plan fails to provide primary payment or reimbursement. This section does not contain a statute of limitations.

(A) Private cause of action

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).

This is where the Medicare Advantage plan enters. In 1997, Congress enacted Medicare Part C or “Medicare Advantage” program (also known as MAP, Med A, MA, MAO). These plans are administered by private insurance companies that provide Medicare benefits for fixed fees from the Center for Medicare and Medicaid Services. 42 U.S.C. § 1395w-22(a)(4) states that a Medicare Advantage plan may charge a primary plan when a payment “is made secondary pursuant to section 1395y(b)(2).” This established that Medicare Advantage plans can sue under the MSPA to recover from primary plans if they do not pay. These plans must use the MSPA’s private cause of action versus the government cause of action.

In the MSPA Claims v. Kingsway Amigo, 2020 U.S. App. LEXIS 4554 (February 13, 2020), the Court found that there is nothing within the statutory language or structure to suggest the Medicare Advantage plan must comply with the claims filing provision as a prerequisite to seeking reimbursement. The decision starts with a warning as the second sentence of the opinion acknowledges that the case “turns on a careful examination of the often-convoluted rules governing the federal Medicare program.” The court painstakingly reviews the statutory structure of the Medicare statute even with a little levity; the opinion states “Okay, time for a deep breath and a summary.”

The Court found that the dependent “notwithstanding” clause and the permissive term “may” in the actual text of the MSP claims filing provision means that Medicare Advantage plans are not required to bring suit as a prerequisite in the 3-year period. Specifically stating, “[w]ords in a statute must be interpreted according to their ordinary meaning and “may” cannot, by any rendering, mean “must.” The Court finds that when a statute uses the word “may,” it “implies that what follows is a permissive rule and that it does not create a separate bar that private Medicare Advantage plans must overcome in order to sue.

The importance of this decision can’t be overstated. With no statute of limitations, the private cause of action provisions that MAO’s have been using so aggressively to recover are even more powerful. Insurers are becoming increasingly more fearful of failure to repay MAOs and this can lead to delays in resolution of a settlement when there are potential Medicare conditional payment or advantage plan liens. In addition, personal injury lawyers can be the targets of these types of private causes of action as well which in turn gives trial lawyers another thing to worry about when it comes to lien resolution. Because of these sorts of issues, now more than ever, insurers may want to directly pay MAO liens back directly and demand indemnification.

To avoid these types of scenarios and alleviate concerns, work with Synergy as your partner in bringing to resolution all liens asserted by Medicare Advantage plans, Medicare supplement plans and traditional Medicare outside of litigation. We also offer lien reduction services for many other lien types including ERISA, FEHBA, Military, Disability and Medicaid.

Workers’ Compensation Case: What about the Medicare Set-Aside?

February 13, 2020

An inquiry that Synergy receives on a regular basis involves a Medicare-eligible claimant who has both a workers’ compensation and a third-party liability companion case. The third-party liability claim has resolved and now the workers’ comp carrier has a lien against the liability claim for the amount that has been paid out for past medical/indemnity benefits. The question becomes: Is an MSA necessary and does that get handled through workers’ comp, liability or both?

The short answer is it depends. It depends on how the cases are settled. In some states, the workers’ comp carrier may be granted what is known as a “holiday” from paying any future medical expenses.[1] Specifically, the holiday can oftentimes be a barrier to washing out the workers’ comp medical claim since the carrier will not have to pay for medicals again until the total amount the claimant received from the third-party case has been spent.

In some states, the lien is negotiated as a percentage based on what the full value of the case is compared to what the client is going to net in their pocket. Once the lien is negotiated, comp is then entitled to an offset for future medical benefits paid on behalf of the claimant. For example, let’s say that the liability case settled for 25% of the estimated full value, and the comp carrier agreed to a waiver of their lien in exchange for a compromised sum. In this example, going forward, the claimant would then be responsible for paying 25% out of pocket towards the cost of their medical care until the comp claim has resolved. It should be noted, if the workers’ comp lien is fully waived at the time of the third-party settlement, then the carrier will not be entitled to an offset on future benefits.

Implications for the Claimant

In both scenarios, if the claimant were to attempt to bill Medicare for accident-related care post-settlement, they would get denied because workers’ comp still has an ongoing responsibility for medicals (ORM).[2] There is the possibility that the claimant could seek medical benefits through either a Medicare Advantage Plan or through private insurance, but these policies typically exclude coverage if there is a workers’ compensation case. So, neither of these solutions would be appropriate. A set-aside must be a consideration but what are the practical implications going forward?

MSA Issue on Holiday States

If the medical claim is not closed out, then the claimant will be forced to pay out of pocket for any accident-related care until the holiday amount has been exhausted from the third-party settlement. Those out of pocket expenses could be much greater than any MSA obligation. Whereas if the workers’ comp claim was resolved, the claimant would then be able to use Medicare, Medicare Advantage, or private insurance coverage. In those states that are entitled to the holiday, the claimant should strongly consider closing out their medical claim with workers’ comp in order to be able to use private health insurance and/or establish a Medicare Set-Aside with the intent to use Medicare for accident-related care once the MSA has been spent appropriately.[3]

MSA Issue on Non-Holiday States

If the workers’ comp claim remains open in those states that are entitled to an offset on future benefits, the claimant would be responsible for paying 25% out of pocket indefinitely for future medical care related to the workers’ comp claim. One way to address this issue is using the settlement proceeds from the third-party cases, the claimant could buy a structured settlement annuity to cover the out of pocket differential.[4] That way, there are guaranteed monies available to take care of the claimant’s out of pocket expenses. If the workers’ comp piece ultimately settles, then the carrier will fund the MSA as part of the terms of any settlement. If that event were to occur, the claimant could use the structured settlement payments for anything instead of medical expenses.[5]

Conclusion

Finally, if there is a global resolution of both the workers’ comp and the third-party liability case simultaneously, then the MSA should be established through the workers’ comp side since there are formal guidelines in place for workers’ comp cases. That way, there are no unwanted delays in getting the case to the finish line. If the workers’ comp case meets the Centers for Medicare and Medicaid’s review thresholds for workers’ compensation MSAs, then attorneys must decide whether to submit for CMS approval. All parties to a workers’ comp or liability settlement must take into Medicare’s interests when resolving a claim.

[1] This is a credit for future benefits.

[2] Medicare will have the ORM information in their system and the claimant’s common working file which will flag/deny anything related to the accident related care.

[3] The exception to this would be if the claimant was receiving attendant care benefits or significant amount of care that is not covered by Medicare or private health insurance.

[4] That structured settlement would function as an informal “MSA” since workers comp pays 75% and the claimant pays the 25% balance. It is almost like a forced MSA on the third-party case.

[5] This assumes a WCMSA is set up and there are funds available to use for medical expenses.

Hospital Liens: Factual and Legal Reduction Strategies

February 13, 2020

By: Michael Walrath

Some of the most frustrating and murky issues facing attorneys representing injured clients stem from alleged direct provider “liens” against settlement proceeds. The positions of various state bar associations on these issues, and the limited law delineating them, have historically been ever-shifting and evolving.

Ethical Obligation to Protect Liens

One constant in this otherwise uncertain area, is this: Attorneys representing injured Plaintiffs in personal injury actions have an ethical responsibility to use all reasonable efforts to resolve disputes between clients and known third-party lienholders.

Pursuant to the rules of most state bar associations and the ethics opinions interpreting them, injury attorneys cannot unilaterally arbitrate lien disputes. If a dispute cannot be resolved through negotiation, then injury attorneys should consider the possibility of depositing the disputed funds into the registry of the applicable court and proceed to adjudicate the dispute. Ethics committees in many states have stated that injury attorneys should endeavor to assist clients and third-party lienholders in effecting a compromise and resolving lien disputes, if possible. If such efforts fail, lawyers are often encouraged to institute interpleader actions in a court of competent jurisdiction naming their client and the physician as co-defendants. For obvious reasons, this should be a last resort and is not the only option in so far as adjudication goes, even at impasse. Other options include suits against providers for overcharging, unfair or deceptive billing practices, unfair debt collection practices, declaratory relief, or similar.

Unreasonable Hospital Charges

While not necessarily in the lien context, the overarching issue of unreasonable medical charges, especially hospital charges, have become increasingly prevalent in national and local news. Headlines like the following are appearing across the country, almost daily:

‘I wasn’t doing anything crazy’ | Florida man faces $100K hospital bill after e-scooter crash (ABC News, July 19, 2019)

When a hospital sling costs 900% more than Amazon’s price, something is very wrong (Los Angeles Times, Sep 13, 2019)

‘Really astonishing’: Average cost of hospital ER visit surges 176% in a decade, report says (USA TODAY, Jun 4, 2019)

Hospital charges, untethered to their internal costs or the average amounts they negotiate, receive and accept as payment in full, have skyrocketed. Thankfully, only a small percentage of the patient population is even asked to pay full billed charges, and an even smaller fraction pays them. But unfortunately, plaintiffs injured in third-party liability scenarios are among those unlucky patients.

Thankfully, the law in most states allows patients to challenge unreasonable hospital charges. The touchstone of such a challenge usually centers on the reality that the parties to the agreement to pay for the services, i.e., the hospital and the patient, do not agree on a price term. The “open price term” doctrine ensures that while a contract can be concluded and binding without agreement to price, a “reasonable” price is imported into that “open price term” contract. A quote from the seminal case in Florida sums up this concept as follows:

A patient may not be bound by unreasonable charges in an agreement to pay charges in accordance with “standard and current rates.” When a contract fails to fix a price furthermore, a reasonable price is implied. Humana thus is limited to reasonable compensation.

Payne v. Humana Hospital Orange Park, 661 So.2d 1239 (Fla. 1^st DCA 1995). With the reasonableness challenge on solid legal footing, the common law in most states goes on to illuminate the types of evidence relevant to reasonable value. There are essentially types of evidence which show up in state case law across the country, as follows: 1) the average charges in the community for identical care (often referred to as “usual and customary rates” or UCR), 2) the average amounts providers accept as payment in full across the entire spectrum of payers, including managed care, often referred to as “average reimbursement rates,” and 3) the “cost of care” which includes evidence of the provider’s internal cost structure. A federal case which set these factors out clearly has been effectively adopted in several states, in whole or in part, describes these elements as follows:

Plaintiff’s claim of unreasonable pricing for hospital services could be proved based on the following non-exhaustive types of evidence: (1) the relevant market price for hospital services (including the rates charged by other similarly situated hospitals for similar services); (2) the usual and customary rate Mercy charges and receives for the services in question; and (3) Mercy’s internal cost structure.

Colomar v. Mercy Hospital, Inc., 2007 U.S. Dist. LEXIS 52659 (S.D. Fla. 2007). Texas is one such state, and its Supreme Court held as follows when addressing discovery issues in a case wherein a plaintiff challenged the reasonableness of hospital charges asserted under Texas’ hospital lien statute:

In any event, for discovery purposes a hospital’s costs surely have some bearing on the reasonableness of its patient charges. See Colomar, 461 F. Supp. 2d at 1272 (noting that a hospital’s internal cost structure could play a role in evaluating a claim of unreasonable pricing). Accordingly, we hold that the trial court did not order the production of irrelevant information.

In re N. Cypress Med. Ctr. Operating Co., No. 16-0851, 2018 Tex. LEXIS 1148, at *18 (Apr. 27, 2018). While not an exclusive list of evidence relevant to reasonable value, the above factors lend a good starting point, in most states.

Hospital Liens

Hospital liens are the mechanism which “attach” a hospital “debt” to a personal injury settlement. These liens attach only to settlement proceeds, they do not attach to any other personal or real property of the patient/plaintiff. The easy way to understand and remember the difference between “liens” and “debts” is that DEBTS ATTACH TO PEOPLE, while LIENS ATTACH TO PROCEEDS. Hospital liens have been the subject of much litigation, nationally. Forty states and the District of Columbia[1] have enacted state statutes creating hospital liens. In contrast, Florida instead offers lien rights on a county by county basis. I strongly recommend a LEXIS or West Law search of your state statute and review of the cases cited below. Treatment, rights, and obligations, penalties for impairment, and general interpretation of everything from equity to timely filing, vary widely by state.

Case Study

As part of every presentation to injury firms across the country, I always start by asking about the status quo. Firstly, what size discounts do you typically see on cases with full settlements (what is the “worst” discount you would agree to and what is a good day) when negotiating a hospital lien? The numbers I am told are surprisingly consistent. Typically, I am told they would never settle for less than a 20% discount, and a 40% discount is a “home run” (on a fully-funded case; i.e., equitable reductions vary based upon settlement size).

Accordingly, the following chart displays an actual Synergy case, which was analyzed for “reasonable value” and ultimately resolved at a discount. Compare the values for the “worst” average discount (20% off), the “home run” discount (40% off) and the results of instead reducing to various percentages above “reasonable value.”

“Status Quo” negotiated discounts from Full Billed Charges ($95,457.12)

20% Discount	30% Discount	40% Discount
$76,365.70	$66,819.98	$57,274.27
(a 641% profit to the hospital)	(a 418% profit to the hospital)	(a 344% profit to the hospital)

Enhanced “Cost Up” Negotiations, from the Reasonable Value of Care ($20,000)

125% Reasonable Value	150% Reasonable Value	100% Reasonable Value
$25,000	$30,000	$40,000
(a 74% discount from FBC)	(a 69% discount from FBC)	(a 58% discount from FBC)

As illustrated above, negotiating up from the “Reasonable Value” (cost of care plus a reasonable profit), often results in much deeper discounts, while negotiating down from the Full Billed Charges often results in significant overpayments to the hospital.

Synergy offers two products to assist with hospital and other direct provider liens, as follows:

Reasonableness Reports. Synergy analyzes your provider bills/liens, eliminates all non-billable charges and reprices billable charges to a reasonable profit above cost. The fee for Reports is 15% of the additional savings you obtain in your negotiations, using the Report.
Full Negotiation Services. Using the same data, analysis and methodologies, coupled with Synergy’s hundreds of years of combined experience negotiating the release of health liens, Synergy will negotiate for you and charges 15% of the additional savings we obtain.

As you know, 100% of all post-settlement time and resources spent resolving liens are “sunk costs” on your files. Synergy’s efforts often result in deeper discounts than are typically obtained negotiating in-house. Accordingly, the “path of least resistance” also happens to the road to the deepest discount. Please consider Synergy on your next hospital/provider lien issue and see why thousands of attorneys across the country rely on Synergy to save their clients money, while also saving their staff time.

Please do not hesitate to contact us with any questions and thank you for your support.

[1] See Ala. Code § 35-11-370; Alaska Stat. § 34.35.450; Ariz. Rev. Stat. Ann. § 33-931; Ark. Code Ann. § 18-46-101; Cal. Civ. Code § 3045.1; Colo. Rev. Stat. Ann. § 38-27-101; Conn. Gen. Stat. Ann. § 49-73; Del. Code Ann. tit. 25, § 4301; D.C. Code § 40-201; Ga. Code Ann. § 44-14-470; Haw. Rev. Stat. § 507-4; Idaho Code Ann. § 45-701; 770 Ill. Comp. Stat. Ann. 23/1; Ind. Code Ann. § 32-33-4-1; Iowa Code Ann. § 582; Kan. Stat. Ann. § 65-406; La. Rev. Stat. Ann. § 9:4751; Me. Rev. Stat. tit. 10, § 3411; Md. Code Ann., Com. Law § 16-601; Mass. Gen. Laws Ann. Ch. 111, § 70a; Minn. Stat. § 514.68; Mo. Ann. Stat. § 430.230; Neb. Rev. Stat. Ann. §§52-401 & 52-402; Nev. Rev. Stat. Ann. § 108.590; N.H. Rev. Stat. Ann. § 448-A:1; N.J. Stat. Ann § 2a:44-35; N.M. Stat. Ann. § 48-8-1; N.Y. Lien Law § 189; N.C. Gen. Stat. Ann. § 44-49; N.D. Cent. Code Ann. § 35-18-01; Okla. Stat. Ann. tit. 42 §§43 & 44; Or. Rev. Stat. Ann. § 87.555; R.I. Gen. Laws Ann.§§9-3-4 to 9-3-8; S.D. Codified Laws § 44-12-1; Tenn. Code Ann. § 29-22-101; Tex. Prop. Code Ann. § 55.001; Utah Code Ann. § 38-7-1; Vt. Stat. Ann. tit. 18, § 2253; Va. Code Ann. § 8.01-66.2; Wash. Rev. Code Ann. § 60.44.010; Wis. Stat. Ann. § 779.80

Resolution of Conditional Payments for Personal Injury Settlements

January 17, 2020

By Jason D. Lazarus, J.D., LL.M., MSCC, CSSC

Failure to Pay Equals Personal Liability

The government takes its reimbursement rights seriously and is willing to pursue trial lawyers who ignore Medicare’s interest. On March 18, 2019, the United States Attorney for the District of Maryland announced that a Maryland personal injury law firm had agreed to pay the United States $250,000 to settle allegations that the firm failed to reimburse Medicare for payments made on behalf of its client. As part of the settlement, 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 is the second such settlement in last year. Back In June of 2018, the U.S. Department of Justice announced a settlement with a Philadelphia personal injury law firm involving failure to reimburse Medicare. The firm agreed to start a “compliance program” and the DOJ stated that this “settlement agreement should remind personal injury lawyers and others of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients.”

Consequently in today’s complicated regulatory landscape, a comprehensive plan for Medicare compliance has become vitally important to personal injury practices. Lawyers assisting Medicare beneficiaries are personally exposed to damages and malpractice risks daily when they handle or resolve cases for Medicare beneficiaries. A prime example of the risk and personal liability is U.S. v. Harris, a November 2008 opinion.[1] In Harris, a personal injury plaintiff lawyer lost his motion to dismiss against the U.S. Government in a suit involving the failure to satisfy a Medicare subrogation claim. The plaintiff, the United States of America, filed for declaratory judgment and money damages against the personal injury attorney owed to the Centers for Medicare and Medicaid Services by virtue of third party payments made to a Medicare beneficiary.[2] The personal injury attorney had settled a claim for a Medicare beneficiary (James Ritchea) for $25,000.[3] Medicare had made conditional payments in the amount of $22,549.67. After settlement, plaintiff counsel sent Medicare the details of the settlement and Medicare calculated they were owed approximately $10,253.59 out of the $25,000 settlement.[4] Plaintiff counsel failed to pay this amount and the Government filed suit.

A motion to dismiss filed by plaintiff counsel was denied by the United States District Court for the Northern District of West Virginia despite plaintiff counsel’s arguments that he had no personal liability. Plaintiff counsel argued that he could not be held liable individually under 42 U.S.C. 1395y(b)(2) because he forwarded the details of the settlement to the government and thus the settlement funds were distributed to his clients with the government’s knowledge and consent. The court disagreed. The court pointed out that the government may under 42 U.S.C. 1395y(b)(2)(B)(iii) “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.” Further, the court pointed to the federal regulations implementing the MSPS which state that CMS has a right of action to recover its payments from any entity including an attorney.[5] Subsequently, the U.S. Government filed a motion for summary judgment against plaintiff counsel. The United States District Court, in March of 2009, granted the motion for summary judgment against plaintiff counsel and held the Government was entitled to a judgment in the amount of $11,367.78 plus interest.[6]

Resolution of the Government’s interests concerning conditional payment obligations is simple in application but time-consuming. The process of reporting the settlement starts with contacting the Benefits Coordination Recovery Contractor (BCRC).[7] This starts prior to settlement so that you can obtain and review a conditional payment letter (CPL).[8] These letters are preliminary and cannot be relied upon to satisfy Medicare’s interest. However, they are necessary to review and audit for removal of unrelated care. Once settlement is achieved, Medicare must be given the details regarding settlement so that they issue a final demand. Once the final demand is issued, Medicare must be paid its final demand amount regardless of whether an appeal, compromise or waiver is sought.[9] Paying the final demand amount within sixty days of issuance is required or interest begins to accrue at over ten percent and ultimately it is referred to the U.S. Treasury for an enforcement action to recover the unpaid amount if not addressed.[10]

Resolution of Conditional Payments – Appeal, Compromise or Waiver

The repayment formula for Medicare is set by the Code of Federal Regulations. 411.37(c) & (d) prescribe a reduction for procurement costs and that is it.[11] The formula does not take into account liability related issues in the case, caps on damages or policy limits. The end result can be that the entire settlement must be used to reimburse Medicare. The only alternatives are to appeal, which requires you to go through four levels of internal Medicare appeals before you ever get to step foot before a federal judge or compromise/waiver. There is plenty of case law requiring exhaustion of the internal Medicare appeals processes which means that Medicare appeals are lengthy as well as an unattractive resolution method.[12] What makes them even more unattractive is the fact that interest continues to accrue during the appeal so long as the final demand amount remains unpaid.

An alternative resolution method is requesting a compromise or waiver post payment of the final demand. By paying Medicare their final demand and requesting compromise/waiver, the interest meter stops running. If Medicare grants a compromise or waiver, they actually issue a refund back to the Medicare beneficiary. There are three viable ways to request a compromise/waiver. The first is via Section 1870(c) of the Social Security Act which is the financial hardship waiver and is evaluated by the BCRC.[13] The second is via section 1862(b) of the Social Security Act which is the “best interest of the program” waiver and is evaluated by CMS itself.[14] The final is under the Federal Claims Collection Act and the compromise request is evaluated by CMS.[15] If any of these are successfully granted, Medicare will refund the amount that was paid via the final demand or a portion thereof depending on whether it is a full waiver or just a compromise.

[1] U.S. v. Harris, No. 5:08CV102, 2009 WL 891931 (N.D. W.Va. Mar. 26, 2009), aff’d 334 Fed. Appx 569 (4^th Cir. 2009).

[2] Id. at *1.

[3] Id.

[4] Id.

[5] See 42 C.F.R. 411.24 (g).

[6] U.S. v. Harris, No. 5:08CV102, 2009 WL 891931 at *5.

[7] See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Attorney-Services/Attorney-Services.html

[8] See https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Attorney-Services/Conditional-Payment-Information/Conditional-Payment-Information.html

[9] Id.

[10] 42 C.F.R. 411.24(m).

[11] 42 C.F.R. 411.37(c) &(d).

[12] A perfect example of this is Alcorn v. Pepples out of the Western District of Kentucky. In Alcorn, the court held that “Alcorn’s claim with respect to the Secretary arises under the Medicare Act because it rests on the repayment obligations set forth under 42 U.S.C. § 1395y. She therefore must exhaust the administrative remedies established under the Medicare Act before this court may exercise subject matter jurisdiction over her claim.” Alcorn v. Pepples, 2011 U.S. Dist. LEXIS 19627 (W.D. Ky. Feb. 25, 2011).

[13] 42 U.S.C. § 1395gg

[14] 42 U.S.C § 1395y

[15] 31 U.S.C. § 3711

Publix Super Markets, Inc. v. Figareau et. al.

January 17, 2020

In Publix Super Markets, Inc. v. Figareau et. al., Case No. 8:19-cv-545, 2019 WL 6311160 (M.D. Fla. Nov. 25, 2019), the Court permitted an ERISA self-funded health plan’s equitable lien claim to attach to the plaintiff attorney. This case is further evidence that using Synergy Settlement’s Lien Resolution service can be essential to fully resolve asserted liens and ensure that you, your client and your firm are protected.

Publix provides a health benefit plan that is ERISA self-funded (“The Plan”). Figareau and Paul are the parents of a child who sustained a birth injury. The Plan paid $88,846.39 in related medical expenses. The case settled and the “funds are housed in a designated structured settlement account established by [Paul and Figareau].”

Publix initiated an action against Figareau and Paul, as well as their attorney and the attorney’s firm (“Attorney Defendants”) seeking to obtain appropriate equitable relief to enforce the Plan’s reimbursement provisions. Specifically, Publix sought reimbursement of the settlement funds and equitable relief in the form of a constructive trust or equitable lien on the amounts held or controlled by the defendants as a result of the settlement of the underlying case.

Defendants argued numerous points including the fact that the attorney and law firm are not parties to the Plan and therefore the claims against them are not cognizable. The Court found that the claim against the Attorney Defendants are cognizable because they hold the settlement proceeds in trust or otherwise possess the funds. Specifically, a lien or constructive trust on funds in possession of the Attorney Defendants is imposed by the express terms of the Plan. The Court reiterated earlier decisions where it was stated that “the most important consideration is not the identity of the defendant, but rather that the settlement proceeds are still intact, and thus constitute an identifiable res that can be restored to its rightful recipient.”

Another point argued by the defendants is that this action “creates an impermissible conflict of interest between [the Attorney Defendants], the minor child, and Publix,” and that “[i]t would be unethical . . . for [the Attorney Defendants] to represent Publix in a contingency fee contract and protect the interest of Publix over the minor.” The Court found that “the funds held in trust by the Attorney Defendants are, as alleged, subject to a lien by agreement under the Plan. Their possession of the funds does not create a conflict of interest.”

It’s always best for lien resolution to not reach this level. Synergy is your partner to bring these matters to conclusion, limiting your liability and giving you peace of mind.

DOJ Pursues Philadelphia Law Firm Over Six Thousand Dollars’ Worth of Conditional Payments, Firm Settles with DOJ

January 8, 2020

By: Jason D. Lazarus, J.D., LL.M., MSCC

The Department of Justice (DOJ) is serious about and intent on enforcement of the Medicare Secondary Payer Act when it comes to conditional payments. There are now numerous examples of these actions being taken by the DOJ. In this instance, the case against a Philadelphia-based law firm was handled by Assistant United States Attorney Michael S. Macko, acting upon a referral from Eric S. Wolfish, Assistant Regional Counsel for the U.S. Department of Health and Human Services, Office of the General Counsel, Region III. In a recent release, U.S. Attorney William M. McSwain announced “that a Philadelphia-based personal injury law firm, Simon & Simon, P.C., 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.”

According to a press release issued by McSwain, “[t]he government alleged that at various points between 2014 and 2019, Medicare made conditional payments to healthcare providers to satisfy medical bills of eight of the firm’s clients. Although Medicare demanded that Simon & Simon repay the resulting Medicare debts, the firm allegedly failed to do so.” As part of the settlement, like in other cases, the firm agreed to pay $6,604.59 to satisfy the debt owed to Medicare. In addition, the firm agreed to “(1) name a person responsible for paying Medicare secondary payer debts; (2) train the employee to ensure that the firm pays these debts on a timely basis; (3) review any additional outstanding debts to ensure compliance; and (4) provide written certifications of compliance.” The firm also acknowledged that any future “failure to submit timely repayment of Medicare secondary payer debt may result in liability for the wrongful retention of a government overpayment under the False Claims Act.”

According to the release:

“The government’s investigation arose under the Social Security Act’s Medicare Secondary Payer provisions. This law authorizes Medicare, as a secondary payer, to make conditional payments for medical items or services under certain circumstances. When an injured person receives a settlement or judgment, Medicare regulations require entities who receive the settlement or judgment proceeds, such as the injured person’s attorney, to repay Medicare within 60 days for its conditional payments. If Medicare does not receive timely repayment, these regulations permit the government to recover the conditional payments from the injured person’s attorney and anyone else who received the settlement or judgment proceeds.”

No law firm wants to have the DOJ investigating them for failing to reimburse conditional payments. According to the press release by the DOJ, “[t]his settlement agreement should remind personal injury lawyers and others of their obligation to reimburse Medicare when they receive settlement or judgment proceeds for their clients,” said U.S. Attorney McSwain. “Lawyers need to set a good example and follow the rules of the road for Medicare reimbursement. If they don’t, we will move aggressively to recover the money for taxpayers.” Given the foregoing, in today’s complicated regulatory landscape, a comprehensive plan for Medicare compliance has become vitally important to personal injury practices. Lawyers assisting Medicare beneficiaries are personally exposed to damages and malpractice risks daily when they handle or resolve cases for Medicare beneficiaries. Synergy can be your resource for total Medicare compliance and help you avoid the liability illustrated by these types of government actions. For a deeper dive, you can view the following 15-minute video presentation on this subject at: https://youtu.be/2EH7QWjj2zw.