Vioxx Settlement Recipients May Be On Their Own For ERISA Lien Resolution

By Director of Lien Resolution

Families and individuals injured by Vioxx may still have lien claims to resolve despite the Lien Resolution Administrator’s attempt to manage these claims. In a December 4, 2012 ruling the United States District Court, E.D. Louisiana denied the motion of approximately forty six (46) insurance companies to have their lien claims resolved from the Vioxx settlement fund. These companies sought to have their ERISA, Medicare Advantage, and FEHBA claims for reimbursement added to the multi-jurisdiction litigation taking place in the Eastern District of Louisiana. Though nearly twenty five thousand (25,000) liens were resolved under the Court’s management of the litigation, there are still several thousand outstanding reimbursement claims that must be satisfied before the Vioxx plaintiffs can realize their net settlements.

This case relates to the multidistrict products liability litigation for the prescription drug Vioxx. On May 20, 1999, the Food and Drug Administration approved Vioxx for sale in the United States. It is estimated that 105 million prescriptions for Vioxx were written in the United States between May 20, 1999 and September 30, 2004. Based on this estimate, it is thought that approximately 20 million patients have taken Vioxx in the United States. Vioxx remained publicly available until September 30, 2004, when Merck withdrew it from the market after data from a clinical trial indicated that the use of Vioxx increased the risk of cardiovascular thrombolytic events such as myocardial infarction (heart attack) and ischemic stroke.

Consequently, thousands of individual suits and numerous class actions were filed against Merck, the maker of Vioxx, in state and federal courts throughout the country alleging various products liability, tort, fraud, and warranty claims. On November 9, 2007, Merck formally announced that they had reached a Settlement Agreement for an overall amount of $4.85 billion. Pursuant to the requirements of federal and state laws creating statutory liens under the Medicare and Medicaid programs, the Settlement Agreement provided that a “Lien Resolution Administrator” establish “procedures and protocols . . . to identify and resolve Governmental Authority Third Party Payor/Provider Statutory Liens.”

On April 14, 2008, approximately forty-six (46) insurance companies (the “Plan Plaintiffs”) filed suit against settlement fund (among others) asserting claims for reimbursement under ERISA, and asking for an injunction to stop the disbursal of settlement funds. The Court found that the prerequisites for an injunction were lacking in all respects. The Plan Plaintiffs sought review at the Fifth Circuit, which affirmed the lower court’s denial of an injunctionl. Avmed Inc. v. BrownGreer PLC, 300 Fed. App’x 261 (5th Cir. 2008) (“AvMed III“). Despite this ruling, the court remained aware of the ERISA reimbursement issue and on January 22, 2009, the parties announced at the monthly status conference an agreement establishing a program to assist with resolving private Vioxx-related lien issues (“the Private Lien Resolution Program” or “PLRP”). The Court authorized a nationally known private company to administer the program as Lien Resolution Administrator.

Despite their best efforts, the Lien Resolution Administrator did not address all the claims for reimbursement that could be brought against the class members. Thus, Plan Plaintiffs sought leave to amend their complaint to add members of ERISA plans who did not participate in the Private Lien Resolution Program and to add claims for reimbursement under the Medicare Secondary Payer Act and the Federal Employee Health Benefits Act

The court denied the motion to add these claims since the Plan Plaintiffs’ brought different claims pursuant to different health benefit plan language in different factual circumstances. This diversity between the claims of the individual Plan Plaintiffs means 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. (AvMed II, 2008 WL 4681368, at *5-8). 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.” (Id. At 8). The court concluded that “the proposed amendment is procedurally unworkable, for the same reasons set forth in AvMed II, and again poses the risk of expanding this litigation into a procedural morass.”

The court continued with the analysis of their denial of the motion by pointing out that pursuant to 29 U.S.C. § 1132(e)(2), ERISA claims may be brought “in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.” The proposed amendments would add a dozen defendants from different districts, none of them located in the Eastern District of Louisiana. It was also not clear from the record that any of Plaintiffs’ plans were administered in the Eastern District of Louisiana. Finally, the alleged breaches, if any, were centered on the location of the defendants. Though the Court supervised the PLRP with respect to active cases, the personal injury actions underlying the proposed amendment had been resolved and stipulations of dismissal filed in the Court. Thus, the opportunities for economies of scale were no longer as apparent. In short, the Court found that considerations of “judicial economy and the most expeditious way to dispose of the merits of the litigation” counsel against hosting these disputes in the MDL.

According to this ruling, plaintiff’s who recover funds from the $4.85 billion dollar settlement may need to resolve outstanding reimbursement claims before for they can realize their individual settlement. Thousands of plaintiffs must now confront plan administrators, third party administrators, and recovery agents in order to resolve outstanding ERISA, Medicare Advantage and FEHBA claims for reimbursement. Though judicial economy weighs against handing these matters as part of the Vioxx multiple district litigation, it leaves many plaintiffs in a troubling, and possibly inequitable situation. The result of failing to anticipate lien issues may leave some Vioxx plaintiffs in a far less advantageous position than others. If the Vioxx plaintiff lives in jurisdictions where defenses to these claims exist then the portion of the settlement apportioned to this claimant is greater than and equal apportionment to a plaintiff living in a jurisdiction where repayment to these plans will be mandatory.

WOS v. EMA – US Supreme Court Strikes Down North Carolina’s Medicaid Third Party Liability recovery statute and reaffirms Ahlborn

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

Since the landmark decision by the US Supreme Court in Arkansas Department of Health and Human Services v. Ahlborn in 2006, state Medicaid agencies have grappled with how to recover monies spent for injury related care through their third party liability statutes without violating the Ahlborn decisions. Many states, like Florida, have continued to apply third party recover statutes that seemingly violate Ahlborn. In WOS v. EMA, the Supreme Court was asked to review one such statute from North Carolina. North Carolina’s statute required that up to one-third of any damages recovered by a beneficiary for their injuries must be paid to Medicaid to reimburse it for payments it made on account of the injury. The Supreme Court found that this statute was not compatible with the federal anti-lien provision and violated the holding of Ahlborn which “precludes attachment or encumbrance” of any portion of a settlement not “designated as payments for medical care”.

In the EMA decision, the court again went through the tension between the mandate under federal law requiring an assignment to the state of “the right to recover that portion of a settlement that represents payments for medical care,” and the preclusion of “attachment or encumbrance of the remainder of the settlement.” The Ahlborn opinion held that the federal Medicaid statute sets both a floor and a ceiling on a state’s potential share of a beneficiary’s tort recovery. The EMA court pointed out that an injury victim has a property rig hint he proceeds of a settlement “bringing it within the ambit of the anti-lien provision.” “That property right is subject to the specific statutory “exception” requiring a State to seek reimbursement for medical expenses paid on the beneficiary’s behalf, but the anti-lien provision protects the beneficiary’s interest in the remainder of the settlement.”

North Carolina’s statute as applied ran afoul of the holding in Ahlborn because it set “forth no process for determining what portion of a beneficiary’s tort recovery is attributable to medical expenses.” Instead, the statute applies an arbitrary figure (one-third) and mandates that amount be the payment for medical care out of the tort recovery. Because, as applied, this violates the federal anti-lien law it is pre-empted. The EMA Court pointed out that if “a State arbitrarily may designate one-third of any recovery as payment for medical expenses, there is no logical reason why it could not designate half, three-quarters, or all of a tort recovery in the same way.” Since North Carolina could provide no evidence to substantiate the claim it made that the one-third allocation was reasonable and provided no mechanism for determining whether it was a reasonable approximation in any particular case, the Court rejected its application.

In a very important part of the decision, in my view, the court discusses when the state may not demand recovery from a portion of the settlement allocated to non-medical damages. The court stated that when “there has been a judicial finding or approval of an allocation between medical and nonmedical damages—in the form of either a jury verdict, court decree, or stipulation binding on all parties—that is the end of the matter.” “With a stipulation or judgment under this procedure, the anti-lien provision protects from state demand the portion of a beneficiary’s tort recovery that the stipulation or judgment does not attribute to medical expenses.”

In applying all of the foregoing to the facts of EMA, the high Court pointed out the flaws of the NC statute which didn’t allow for an allocation. The Court found that a substantial share of the damages in EMA must be allocated to skilled home care in the future. This would not be reachable by the state Medicaid agency to satisfy their lien. In addition, the Court noted that it may also be necessary to consider how much EMA and her parents could have expected to receive in terms of compensation for the other tort claims made in the suit had it gone to trial. “An irrebuttable, one-size-fits-all statutory presumption is incompatible with the Medicaid Act’s clear mandate that a State may not demand any portion of a beneficiary’s tort recovery except the share that is attributable to medical expenses.”

The final portion of the opinion addressed and rejected each of the five arguments made by North Carolina in defending its third party recovery statute. The first argument was that North Carolina was doing what Ahlborn said it could do which was “adop[t] special rules and procedures for allocating tort settlements.” According to EMA, that “misreads Ahlborn” as the decision did not endorse irrebuttable presumptions that designate some arbitrary fraction of a tort judgment to medical expenses in all cases.” Second, North Carolina argued that its statute falls within the scope of a state’s traditional authority to regulate tort actions. The EMA court stated that a “statute that singles out Medicaid beneficiaries in this manner cannot avoid compliance with the federal anti-lien provision merely by relying upon a connection to an area of traditional state regulation.” Third, North Carolina suggested that even though the one-third allocation might be arbitrary, other methods of allocation would be just as arbitrary. The EMA opinion’s response is that while no allocation is precise, it need not be arbitrary as trial judges and trial lawyers “can find objective benchmarks to make projections of the damages the plaintiff likely could have proved had the case gone to trial.”

The fourth argument made by North Carolina asserted that it would be “wasteful, time consuming and costly” to hold “mini-trials” to allocation settlements between medical and non-medical expenses. The Court stated that even if that were true, which it felt it wasn’t, that still “would not relieve the State of its obligation to comply with the terms of the Medicaid anti-lien provision”. The Court pointed to the sixteen states and the District of Columbia who provide for hearings of this sort with no indication that it is overly burdensome. “The State thus has ample means available to allocate Medicaid beneficiaries’ tort recoveries in an efficient manner that complies with federal law.” The fifth and final argument contended that CMS had approved North Carolina’s statutory scheme for Medicaid reimbursement. Citing the Brief for United States as Amicus Curiae, the Court found that was no longer the agency’s position. Furthermore, the documents North Carolina pointed to were “opinion letters, not regulations with the force of law.”

The question becomes what does this mean for other state Medicaid Third Party Recovery statutes that are similar to North Carolina’s invalidated statute? If you look at the EMA opinion’s holding and the analysis the US Supreme Court engages in relative to the North Carolina statute, one must conclude that any statute that provides for an arbitrary percentage would be interpreted in the exact same way. The question is will the state Medicaid agencies capitulate now with the EMA decision. In the long term I don’t think they will have a choice but to capitulate once the opinion has been digested.

To view the opinion click HERE

Medicare Secondary Payer Language in Your Release: Problems?

Are the defendants/insurance carriers throwing everything but the kitchen sink into your release language in regards to protecting Medicare’s interests? Be careful what you agree to include in the settlement documents. It can potentially cause a loss of itemized medical deductions on your client’s tax return and obligate them to set aside monies when it is inapplicable. Call Synergy at (877) 242-0022 or visit us at www.synergymsa.com to make sure you and your clients are protected.

Understanding the MSPRC Process

By Tal A. Wollschlaeger

Medicare Lien Analyst

Everybody expects to get paid back one way or another. Whether someone owes you money because you bought him or her lunch when times were tough or you owe money on your credit card bill and its past due, when money is owed there is an expectation on the other end to be paid back in some way shape or form, and Medicare is no different. The difference between Medicare and the preceding examples is that Medicare employs a recovery agent known as the Medicare Secondary Recovery Contractor (MSPRC). The MSPRC website has defined its role in the following manner: “The MSPRC protects the Medicare trust fund by recovering payments when another entity had primary payment responsibility and the MSPRC accomplish this under the authority of the Medicare Secondary Payer Act. MSPRC is tasked with identifying and recovering Medicare payments that should have been paid by another entity under either a group health plan or as part of a Non-Group Health plan. These plans include but are not limited to Liability insurance, No-Fault Insurance, and Workers’ Comp. MSPRC does NOT pursue supplier, physician, or other provider recovery.” As one can imagine this process is a long and arduous one but pretty straightforward and this post will outline said process from A-Z.

In order for Medicare to know about the potential recovery situation, they need to be informed of such by the parties to litigation. This is done by the beneficiary themselves or their representative notifying the Coordination of Benefits Contractor (COBC) via telephone. During this call information such as Name, Address, Date of Accident, Injuries sustained by beneficiary, Insurance coverage, and the Beneficiary’s Attorney’s name and address is given to COBC so they can report the claim properly to MSPRC. It typically takes 24-48 hours for the claim to be reported to MSPRC, during that time it is imperative that if the Beneficiary has an attorney or representative, he or she must send the MSPRC proper proof of representation in order for the MSPRC to release information to the representative. At this point in the process the case has been established and there is an authorized representative assisting the beneficiary with this matter. Now that this has been accomplished it’s time for MSPRC to begin identifying claims.

MSPRC only begins identifying claims for recovery when it receives notice of a pending no-fault, liability, or Workers Comp matter. As MSPRC is seeking out claims, Attorney’s for the injured party are trying to secure settlement with the at fault parties insurance carrier. MSPRC will NOT issue a formal demand letter until settlement, judgment, or award; instead they will produce the Conditional Payment Letter (CPL). The CPL lists all the claims paid to date that are related to the claim reported to the COBC. Claims are presented in a code format known as ICD-9 codes; these codes can be deciphered by inputting them into a code converter which can be found at the following link (http://www.aapc.com/icd-10/codes/index.aspx). These codes range from 3-5 digits and once they are plugged into the converter the diagnosis will be generated. For example, the code 4019 is associated with hypertension/high blood pressure and 7231 is associated with Neck Pain. Given that the letter doesn’t provide a final demand amount; Medicare might make additional conditional payments while the claim is pending. The CPL has no minimum and no maximum amount and tends to include unrelated claims frequently. For example, if the injuries reported to COBC were back and neck injuries and MSPRC includes a charge for chest pain, the chest pain would be considered an unrelated charge. However, fear not! The next step in the process can help take care of situations such as the one presented.

It is common practice when a CPL comes in for the representative to audit the bill using an ICD-9 Code Converter online and search for unrelated claims. Following the audit it can be determined whether or not the CPL contains unrelated charges or not. If all charges are related, then all MSPRC needs is settlement info and they will produce a Final Demand. Conversely, if there are unrelated charges found and the beneficiary/representative believes that those claims should be removed, then they must send correspondence to the MSPRC establishing that the claims are not related to what was initially claimed. Additionally, they must forward a copy of the CPL in question and circle any and all unrelated claims. If this is done then MSPRC will take between 30-45 days to review and process the dispute. They will either adjust the CPL amount to account for anything they agree is not related to what has been claimed, or they will send a letter notifying you that they disagree with the dispute and to please refer to the most up to date CPL. If the latter occurs, an additional dispute is not out of the question should the beneficiary or representative wish to pursue one. Basically, the process would be repeated however this time around MSPRC asks that you send them additional evidence or documentation such as medical records to support the dispute. This process can go on back and forth until the beneficiary/representative is ok with the amount and wants to go forward with the disbursement of settlement funds. Speaking of settlement that leads us to the final step in the recovery process, and that is the Final Demand Letter.

Earlier in this post it was mentioned that once MSPRC is notified of a settlement/judgment/award that it will produce the final demand letter. It is expected that the beneficiary/representative send the settlement documentation to the MSPRC. This information must clearly identify the date of settlement, the settlement amount, the amount of attorney’s fees and other costs. Upon receipt of this information MSPRC will identify any related (THUS THE IMPORTANCE OF AUDITING FOR UNRELATED CHARGES) claims provided up to and including the settlement date and will issue the formal demand letter. The final demand letter will include the beneficiary’s name and Medicare Health Insurance Claim Number (HICN); the date of incident, the date of incident, a summary of payments made by Medicare, the total demand amount which (in most cases) will always be less than the CPL amount, and information on the beneficiary’s waiver and appeal rights. All checks must be made payable to Medicare and include the beneficiary’s name and HICN. However, a Demand is like a ticking time bomb and needs to be taken care of by a certain date. Failure to respond within the specified time frame will result in interest accruing, and ultimately all debt will be referred to the Department of the Treasury. Interest will begin to accrue from the date of the demand letter but will only be assessed if the debt is not repaid within in the time period specified. When the deadline hits, interest is due and payable for each full 30-day period the debt remains unpaid. Interest will continue to be assessed on unpaid debts even if a beneficiary is pursuing an appeal or waiver, that’s why it’s vital to pay the demand amount in a timely manner even if you decide to fight. Better yet if the waiver/appeal is granted the beneficiary will receive a refund, thus it makes very little since to not pay Medicare within the time frame specified in the demand letter.

Hopefully, this information helped shed some light on what MSPRC does for Medicare and cleared up any confusion about the entire process. As noted earlier, this process can take quite some time but if one is mindful of deadlines and diligent in their work then it won’t be as painful as it ultimately can be.

US Congress Passes the Strengthening Medicare Secondary Payer Rules Act: Will it Help?

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

On December the 19^th the Strengthening Medicare Secondary Payer Rules Act was passed by the House. The Senate passed the Act on December the 21^st. It is on its way to President Obama to sign. The SMART Act will modify some of the current processes related to Medicare conditional payment recovery. While there are some significant improvements, it falls short of fixing all flaws in the MSP system when it comes to conditional payments. The good news is that it creates a 3 year Statute of Limitations for recovery actions relating to conditional payments. The mediocre news is that while it streamlines the process for obtaining conditional payment amounts it no longer has the enforcement provision originally proposed that would have stripped Medicare of the right to pursue recovery if they failed to timely provide the information. Below is a summary of the changes the bill makes to the Medicare Secondary Payer Act.

Bill Summary:

Requires CMS to issue a “potentially” final demand before settlement, judgment or award
Establish a right of appeal regarding conditional payments for insurance companies and self insureds
Create a 3 year SOL
Discontinue the use of the full SSN for mandatory insurer reporting
Make fines permissive for defendants/insurers who don’t comply with the mandatory reporting

Bill Details:

Either party, 120 days before the reasonably expected date of settlement, judgment, award or other payment, notify the Secretary of the impending resolution of the case.

The Secretary shall maintain a website portal that will provide access to information regarding items and services paid for by Medicare related to the notice. It must be updated timely but not later than 15 days after the date a payment is made. The website must include provider or supplier name, diagnosis codes, date of service and conditional payment amounts. It must also identify claims and payments that are related to a potential settlement, judgment, award or other payment. There has to be a secure method for electronic communications. Lastly, the website must permit a download of a statement of reimbursement amounts being claimed by Medicare.

Obtaining the statement of reimbursement, if done within the prescribed periods of time, shall constitute the final conditional demand amount. There is a protected period which is 65 days from the notice, which can be extended by another 30 days. If settlement occurs during this period and the statement was downloaded within 3 business days of settlement then it shall constitute the final demand.

If there are discrepancies in the statement of reimbursement amount, the Secretary must provide a timely process to resolve such discrepancies. The discrepancies must be resolved by the Secretary within 11 days after receiving documentation of the discrepancies or the Secretary loses the right to dispute those discrepancies.

A right to appeal and appeals process must be created by the Secretary through the promulgation of regulations. However the appeal rights would be limited to the applicable plan (so only for defendants/insurers) and only relate to the subsections of the SMART Act.

There are two provisions relating to Mandatory Insurer Reporting. The first makes assessment of fines for non-compliance with the reporting requirement discretionary versus mandatory. The second gives the Secretary 18 months to eliminate the use of the Medicare beneficiary’s Social Security number for the reporting process.

Lastly, the SMART Act provides for a 3 year Statute of Limitations on recovery actions by the government. The 3 years runs from receipt of notice of settlement, judgment, award or other payment.

To see a copy of the text of the Act, click HERE

Below is a statement issued by the AAJ after the passage on the 21^st:

Dear Colleague,

With the help and hard work of the AAJ Public Affairs team, the U.S. House and Senate have passed a bill that will bring certainty to the Medicare Secondary Payment (MSP) reimbursement process! This legislation is a huge victory for your clients on Medicare. It will simplify their lives—and your practices.

The version of the SMART Act that passed mandates a three-year statute of limitations on the Centers for Medicare & Medicaid Services (CMS) so that the agency cannot ask for additional money from clients or their attorneys after the statute expires.

In addition, the bill will simplify the current online portal process for calculating MSP reimbursement. An improved online process will help you resolve your Medicare Secondary Payer claims faster and easier. While the SMART Act offers great improvements, AAJ knows there is still more work to be done. We will continue working to improve the MSP process.

Much of the time at the end of this Congressional session has been consumed by the “fiscal cliff” negotiations. Lawmakers have resisted passing any legislation that deviated from this discussion. AAJ Public Affairs staff Sarah Rooney, Kate deGravelles, and Sue Steinman provided exceptional counsel to ensure that this legislation passed.

AAJ knows how many of you continuously struggled with CMS to receive timely, final reimbursement numbers. Many of you worked with AAJ Public Affairs to advocate for this legislation, and now, after more than two years, we have an accomplishment that will make a difference for lawyers all across the country.

Thank you for your support as an AAJ member. We could not have done this without you. When you stand with us it makes a tremendous difference in our ability to achieve positive advocacy results.

Best Regards and Happy Holidays,


Mary Alice McLarty	Linda Lipsen
President	CEO
American Association for Justice	American Association for Justice

ERISA: Put New Teeth Into Plan Document Requests with 1024(b)(4)

One of the keys to properly defending against an asserted subrogation or reimbursement claim from an ERISA plan is making requests to the plan administrator. ERISA places certain responsibilities upon the plan administrator to assist with the proper management of ERISA qualified employee welfare-benefit plans and to promote communication with the plan beneficiaries. One of the major responsibilities of the plan administrator, as to dealing with the providing of information to beneficiaries, is contained in 29 U.S.C. 1024(b)(4).

This section of the statute deals with requests for information made upon the plan administrator:

29 U.S.C. 1024(b)(4)– The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.

In attempting to determine the existence and validity of the purported ERISA subrogation or reimbursement claim, obtaining the items listed in 29 U.S.C. 1024(b)(4) is of the utmost importance. Attorneys should make a formal request under 29 U.S.C. 1024(b)(4) as the requested documents will establish the funding status, identify the plan sponsor, and establish the limits of the health plan’s recovery rights. However, attempting to obtain all of these documents can be fruitless and very frustrating. The U.S. District Court for North Carolina dealt with this issue in Strickland v. AT&T Benefit Plan, 2012 WL 4511367 (W.D.N.C.). In this case the court ordered the plan to produce its “plan document,” recognizing that terms of a Summary Plan Description are not, in and of themselves, enforceable under Cigna v. Amara, 131 S.Ct. 1866. You can use this case to your advantage with ERISA plan administrator or recovery agent.

The ERISA statute mandates that the Summary Plan Description be written in an understandable manner so as not to be confusing to the beneficiary.

29 U.S.C. § 1022(a) – [The SPD] shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.

In Cigna v. Amara the Supreme Court ruled that “taken together we conclude that the summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan” This language seems to make it clear that under 29 U.S.C. 1024(b)(4) the court would find that the plan administrator has an obligation to produce the Master Plan Document (MPD) as well as the Summary Plan Document (SPD).

Typically a claim summary and a SPD are the only documents returned to the requesting beneficiary, or their attorney following their 29 U.S.C. 1024(b)(4) request. In light of the recent string of cases following Cigna v. Amara, which speak to the need to compare the SPD to the MPD, the plaintiff attorney should insist that the plan administrator is required to provide both under 29 U.S.C. 1024(b)(4).(See Also, McCravy v. Metropolitan Life Ins. Co., Nos. 10–1074, 10–1131, 2012 WL 2589226 (4th Cir. Jul. 5, 2012); Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d 1162 (9th Cir.2012); Israel v. Prudential Ins. Co. of Am., No. 7:11–793–TMC, 2012 WL 3116544, at *5 (D.S.C. July 31, 2012)). In fact, the clear language of 29 U.S.C, 1024(b)(4) requires that “any…contract or other instrument under which the plan is establish or operated” be provided to the requesting beneficiary.

Under ERISA 502(a)(3), the self-funded ERISA qualified health plan only has the authority to enforce “the terms of the plan.” The cases cited above make it clear that to determine the “terms of the plan” the MPD must be compared with the SPD in order to establish the obligations of the beneficiary. It logically follows that the plan beneficiary must have the MPD to do this evaluation. The mechanism for the beneficiary to obtain these documents is 29 U.S.C. 1024(b)(4), so the educated plaintiff’s attorney will not agree that the plan administrator has complied with 29 U.S.C. 1024(b)(4) until he has possession of both documents.

These cases illustrate the need for the plaintiff attorney to make his 29 U.S.C. 1024(b)(4) requests early. This will not only allow the early evaluation of the alleged ERISA plan’s recovery rights, but also begins the penalty timer. It is our belief that failure to provide both the SPD and MPD within the 30 day time limit causes the $110.00 per day penalties under 29U.S.C. § 1132(c)(1)(b) & 29 CFR § 2575.502c-1 to begin.

Demand what your client is owed from the plan administrator. Do not accept the SPD as “good enough” from the ERISA plan administrator or their recovery agent. Use their lack of compliance as a tool to reduce the amount your client must pay back to the ERISA plan. Put some teeth in your 29 U.S.C. 1024(b)(4) requests by starting the penalty timer ticking.

From Roger Baron: 8th Circuit Exonerates Law Firm Doggedly Pursued for Liability on ERISA Reimbursement Claim

The 8^th Circuit Court of Appeals handed down its decision in Treasurer, Trustees of Drury Industries v. Sean Goding, No. 11-2885. This is a situation where the ERISA plan doggedly pursued the law firm which had represented the ERISA beneficiary in securing a tort recovery. The law firm had disbursed the settlement funds by paying its attorney fee to itself and releasing the remainder of the funds to the client (ERISA beneficiary) who eventually declared bankruptcy. Because the reimbursement claim of $11,423.79 was uncollectible from the beneficiary (due to the bankruptcy), the ERISA plan sued the law firm in federal court “asserting theories of equitable lien by agreement, restitution, imposition of a constructive trust, tortious interference with contractual relations, and conversion.” The federal trial court ruled against the plan. The plan would not accept the ruling, however, and “stretched out the litigation more than a year after the initial decision for no legitimate reason.” The trial court again ruled in favor of the law firm and assessed attorney fees against the plan. The ERISA plan then brought this appeal. This opinion “affirms the district court on all issues,” holding that

Although [the law firm] acknowledged the existence of the lien against the settlement proceedings, it never agreed with [the ERISA plan] and [ERISA beneficiary] to honor the Plan’s subrogation right. Because [the law firm] was not a party to the subrogation agreement, [the ERISA plan] cannot enforce that agreement against [the law firm].

Prior 8^th Circuit case law, the Ford case, had imposed liability on an attorney, but the Ford case was distinguished by virtue of the fact the attorney in Ford had agreed “to honor the plan’s subrogation right.” In this case, there was no such agreement. A mere acknowledgement of a lien assertion is not tantamount to an agreement to “honor the plan’s subrogation right.” This decision lines up with the 9^th Circuit decision of Hotel Emps. & Rest. Emps. Int’l Union Welfare Fund v. Gentner, 50 F.3d 719, 721 (9th Cir. 1995).

As to the award of attorney fees in favor of the law firm, the ERISA Plan argued, “ERISA does not permit the award of attorneys’ fees to attorneys that act as counsel to their own firms.” This opinion rejects that argument and finds that the trial court “did not abuse its discretion in awarding attorney’s fees in this case.”

Click HERE to view the opinion.

ERISA Liens: How to turn the McCutchen gray into green for your client

By Vice President & Director of Lien Resolution

The uncertainty that exists regarding a self-funded ERISA plan’s ability to refuse reduction of their claim based upon equitable principles can be used to increase your client’s net recovery. A gray area was created in ERSIA healthcare subrogation and reimbursement rights by the 11^th Circuit’s April 2010 ruling in Zurich American Insurance Co. v. O’Hara. This opinion stated that with proper language an ERISA qualified health plan could avoid the “common fund” doctrine. (See also, Admin. Comm. of Wal–Mart Stores, Inc. Associates’ Health & Welfare Plan v. Shank, 500 F.3d 834 (8th Cir.2007); Administrative Committee of Wal–Mart Stores, Inc. Assocs.’ Health & Welfare Plan v. Varco, 338 F.3d 680 (7th Cir.2003); Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348 (5th Cir.2003). Normally this doctrine would require the plan to reduce their recovery to reflect the attorney fees that were incurred to create the “common fund” from which both the plaintiff and the self-funded ERSIA plan recover their monies. For example if the injured plaintiff must pay a 33.3% contingency fee to his attorney for his efforts in obtaining the settlement or award, then the self-funded ERISA plan’s recovery should also be reduced by this percentage.

The gray area surfaced four months after Zurich American Insurance Co. v. O’Hara when the 3^rd Circuit ruled in U.S. Airways v. McCutchen that despite plan language to the contrary “US Airways’ claim for reimbursement under § 502(a)(3) of ERISA is subject to equitable limitations”. This gray area intensified in late June 2012 when the 9^th Circuit weighed in on the side of the 3rd Circuit and ruled in CGI Technolgies v. Rose that a Court in Equity cannot have its powers limited by contract. Therefore CGI Technologies’ attempt to have Ms. Rose contract away the equitable principles of “common fund” and “made whole” was not permissible. At this point the gray area deepened into a full split in the Circuits and on the following Monday the U.S. Supreme Court granted a writ of certiorari in U.S. Airways v. McCutchen.

Now that this question about the superiority of plan language over equitable principles is before the Supreme Court, it is the perfect time to turn this gray area of case law into green for your injured client. Before the week wherein CGI Technolgies v. Rose was decided and U.S. Airways v. McCutchen was granted certiorari, the recovery vendors for the self-funded ERISA groups thought themselves immune to equitable defenses. They would direct any plaintiffs’ counsel or plan participant to the 5^th, 7^th, 8^th and 11^th Circuits when asked for reduction based upon “common fund” or “made whole”. Those same vendors and recovery agents would counter the power of the 3^rd Circuit’s ruling in U.S. Airways v. McCutchen by saying that was only law in one Circuit. Things have changed and so should the plaintiff lawyer’s negotiation tactics.

When attempting to obtain a reduction for your client be sure to raise the fact that Supreme Court is considering overriding express plan language with traditional equitable principles. The self-funded groups and their recovery vendors are well aware that U.S. Airways v. McCutchen has been granted certiorari and that the influential 9^th Circuit has articulated support for this position in CGI Technolgies v. Rose. Though they are aware of the status of these cases, they are more keenly aware that time may be running out for their practice of recovering 100% of their claim without regard to equity. It is essential that a plaintiff‘s attorney place the self-funded ERISA plan or its agent on notice that they are also aware of this potential for significant shift in the power paradigm.

Plaintiff’s counsel should articulate that any demand by the self-funded ERISA qualified health plan for a 100% repayment without regard to equitable principles, especially “common fund” is a gamble. It is key for the plaintiff’s attorney to remember that neither the self-funded ERISA group nor their recovery vendor has a business model based upon litigation. The ERISA subrogation and reimbursement recovery business model is dependent on negotiation and compromise. You should stress the time value of money to the ERISA group or its agent. A two-thirds repayment today is better than a two-thirds repayment next summer. This old concept is strengthened by the argument that by next summer it may very well be the law that the maximum a self-funded ERISA plan would be entitled to is less than two-thirds.

Uncertainty in how the U.S. Supreme Court will decide U.S. Airways v. McCutchen has created insecurity on the part of self-funded ERISA plans already. The plaintiffs’ bar needs to leverage this uncertainty and insecurity into large reductions for their injured clients.

Medicare Secondary Payer Recovery Portal is Live

The Medicare Secondary Payer Recovery Portal is Live!

A new online Self-Service Tool to help manage your Medicare recovery case.

The Centers for Medicare & Medicaid Services (CMS) has implemented a new web-based tool designed to assist in the resolution of Liability Insurance, No-Fault Insurance, and Workers’ Compensation Medicare recovery cases. The new tool is called, The Medicare Secondary Payer Recovery Portal (MSPRP).

The MSPRP gives users (attorneys, insurers, beneficiaries, and TPAs) the ability to access and update certain case specific information online. Activities that currently require written communication or telephone calls to the Medicare Secondary Payer Recovery Contractor will soon be able to be done through the portal.

The MSPRP will allow users the ability to electronically perform the following activities:

Submit Proof of Representation or Consent to Release documentation – Instead of mailing in an authorization, users will be able to upload authorizations through the portal.
Request conditional payment information – Requesting an updated conditional payment amount or a copy of a current conditional payment letter will be as simple as clicking a few buttons.
Dispute claims included in a conditional payment letter – Users will be able to view the claims listed on the conditional payment letter and dispute unrelated claims online.
Submit case settlement information – Users will be able to input settlement information online and upload a copy of the settlement documentation through the portal.

Click here to learn how to register and access the portal. All information on the new portal is located in the Tool Kits section above.