LIENS

On June 18, 2018, the U.S. Department of Justice’s Attorney’s Office for the Eastern District of Pennsylvania announced a recently concluded settlement with a plaintiff firm involving the repayment of Medicare Conditional Payments.  The government’s investigation arose under the Medicare Secondary Payer provisions of the Social Security Act, which 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.

In their claim, the government alleged that Rosenbaum failed to submit timely payment for nine (9) of his cases between May 10, 2011, through March 2, 2017.   Pursuant to the Medicare Secondary Payer provisions of the Social Security Act,42 U.S.C. $ 1395y, if Medicare does not receive timely repayment, these same regulations permit the government to recover the conditional payments from the injured person’s attorney and others who received the settlement or judgment proceeds.

Under the terms of the settlement agreement, Rosenbaum agreed to pay a lump sum of $28,000. Rosenbaum 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. In addition, Rosenbaum acknowledged that any 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.  You can review the settlement agreement HERE

In their press announcement, the United States Attorney’s Office for the Eastern District of Pennsylvania was clear.

“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. ‘When an attorney fails to reimburse Medicare, the United States can recover from the attorney—even if the attorney already transmitted the proceeds to the client,’ said U.S. Attorney William M. McSwain. ‘Congress enacted these rules to ensure timely repayment from responsible parties, and we intend to hold attorneys accountable for failing to make good on their obligations.’”

In addition to utilizing the Medicare Secondary Payer Act as a means to ensure compliance, the U.S. Attorney’s office reminds trial counsel of the applicability of the Federal False Claim Act.  As part of the settlement agreement Rosenbaum acknowledged:

“…failure to submit timely repayment of Medicare Secondary Payer debts may result in its liability for the wrongful retention of a government overpayment pursuant to the False Claims Act, 31 U.S.C. $$ 3729(a)(1XD), (G), and other applicable law.”

A violation of the False Claims Act can result in triple damages, attorney’s fees, and fines (per each fraudulent claim).

Synergy’s Medicare services are designed to ensure that the trial attorney complies with obligations to Medicare while at the same time making sure the injury victim realizes as much of their settlement proceeds as possible.  Our Medicare Audit & Verification Services will take the entire Medicare reporting and auditing process off your plate and allow you to focus on what you do best.  This service includes the utilization of a little-known process allowing expedited disputing of unrelated charges and obtaining a final conditional payment amount before mediation.

Once settlement has been secured and a Final Demand obtained from Medicare, Synergy can continue working to add value to your case by attempting to secure a refund of the Final Demand payment from Medicare. To date, Synergy has obtained over $5,000,000 in refunds for our clients.  Understanding the complex world of Medicare Conditional Payments is necessary to not only avoid potential pitfalls but also to maximize your client’s recovery.

If your firm is struggling to comply with the Medicare Secondary Payer Act, then turn to Synergy to see how we can reduce your workload, increase your firm’s efficiency, help avoid liability, and even secure additional settlement dollars for your client.

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 decision.  Many states continued to apply third party recover statutes that seemingly violated Ahlborn.  In the 2012 WOS v. EMA matter, 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, in 2012, 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”.   WOS reaffirmed Ahlborn and strengthened the argument that Medicaid could only recover from the portion of the recovery that represented past medical expenses.  After the WOS decision, Congress passed a law (Bipartisan Budget Act of 2013) attempting to legislatively overturn Ahlborn.

The Bipartisan Budget Act (BBA) passed and became law in 2013. The BBA included a provision overturning the Supreme Court decision Arkansas Department of Health and Human Services et al. v. Ahlborn (Ahlborn). Under Ahlborn, Medicaid could only seek reimbursement for medical care received by a Medicaid enrolled plaintiff from the portion of a settlement that was attributable to medical costs. The new provision in the BBA permitted Medicaid to seek full reimbursement for all related medical costs it covered.  Section 202(b) of the Bipartisan Budget Act of 2013 made changes in three key areas:

• Language was stricken from 42 U.S.C. § 1396a(a)(25)(B) so that the clause “to the extent of such legal liability” was removed;
• Language was stricken and added to 42 U.S.C. § 1396a(a)(25)(B) so that rather than expressly limiting Medicaid’s reimbursement rights for payments made for “health care items or services” the language now has no limitation and Medicaid ‘s rights are against “any payments from [a] third party.” and;
• Finally, 42 U.S.C. § 1396k(a)(1)(A) was changed to remove the limitation on Medicaid’s recovery rights which previously had stated that those rights extended only to payments for “medical care” now there is no limitation and their rights are against “any payment.”

AAJ was quick to understand the significance of the repeal of Ahlborn and in 2013 alerted the membership stating:

“The Bipartisan Budget Act (BBA) which was just approved by Congress and signed into law contains language damaging to plaintiffs covered by Medicaid … The provision in the new law overturns a unanimous 2006 United States Supreme Court decision in United States vs. Ahlborn. In Ahlborn, the Court ruled that only the portion of the settlement that represented payment for medical expenses could be claimed by the state Medicaid agency. The BBA allows a state to claim ALL of a settlement or judgment. The BBA also counters a 2013 Supreme Court decision (Wos vs. E.M.A.) that rejected (6-3) North Carolina’s lien on Medicaid claimants’ tort recoveries. We expect the result of the new law to be that plaintiffs who are Medicaid recipients will recover less and in many cases will be unable to pursue claims at all because any recovery would have to be reimbursed to Medicaid.”

Due to AAJ’s efforts and others who lobbied against its implementation, the BBA’s harmful Medicaid lien provisions never took effect and were finally permanently repealed this past week.  After its latest victory on behalf of injury victims, AAJ’s CEO Linda Lipsen said:

“I am pleased to announce that after years of hard work, we were able to secure a permanent and retroactive repeal of the Bipartisan Budget Act (BBA) language that overturned the Supreme Court decision Arkansas Department of Health and Human Services et al. v. Ahlborn (Ahlborn).

In a 9-0 decision, the Court held in Ahlborn that Medicaid could only seek reimbursement from Medicaid enrollees from the portion of a settlement attributable to medical costs. The Ahlborn decision was universally lauded as promoting fair and proportionate settlements for Medicaid recipients. But, in 2013, the BBA was enacted and included a provision overturning Ahlborn. This granted Medicaid a right of first recovery for full reimbursement of covered medical costs before plaintiffs could receive any recovery for lost wages, non-economic damages, or any other type of recovery.

AAJ worked hard to delay implementation of the harmful BBA provision and it was initially delayed until October 2016. We secured a second delay which ran through October 1, 2017, but expired, effectively overturning Ahlborn. Since the expiration of the second delay, AAJ has been working around the clock to secure a permanent and retroactive repeal of the harmful BBA provision. This repeal was finally realized in the budget deal reached by the House and Senate this week.

We believe this is a great victory that will ensure Medicaid recipients retain access to the courts. I want to thank the AAJ staff, especially Sarah Rooney, who worked tirelessly to secure this incredible result!”

 
Synergy enthusiastically agrees with the AAJ’s comment that this is a “great victory” for Medicaid recipients and for the trial lawyers who serve them.  Medicaid’s recovery rights now continue to be limited to only the portion of a Medicaid beneficiary’s tort judgment or settlement designated as payments for [past] medical care.   Pursuant to WOS v. EMA, “[t]he federal Medicaid statute’s anti-lien provision, 42 U. S. C. §1396p(a)(1), pre-empts a State’s effort to take any portion of a Medicaid beneficiary’s tort judgment or settlement not “designated as payments for medical care,” Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U. S. 268, 284.”  Synergy’s lien resolution group continues to fight on behalf of Medicaid beneficiaries when the state Medicaid agency attempts to take more than the law allows.  Armed with Ahlborn and WOS, the fight is made easier.

When attempting to resolve a Medicaid lien regardless of Ahlborn, utilizing state law is now more important than ever.  Many state statutes allow for attorney fee reductions, reductions for litigation costs, and even for compromises based upon equity.  Often these reduction provisions are not known, and certainly not raised, by the various recovery vendors who work on behalf of state Medicaid agencies so it is very important to be informed and use the appropriate reduction arguments available.

An example of the type of issues that still remain in negotiating Medicaid liens, is whether or not the Medicaid plan is traditional Medicaid or a Medicaid HMO.  In some states, such as our home state of Florida, this makes a significant difference as to the strength of the plan’s recovery rights and methods for seeking reduction.

To best address these complex issues for your clients we encourage you to contact one of Synergy’s Medicaid lien specialists.

One of the most difficult issues trial counsel must resolve involves addressing hospitals/providers liens for Medicare clients.   Recently the Centers for Medicare and Medicaid Services (CMS), via the Medicare Learning Network (MLN), released policy memo SE17018 which provides excellent and concise answers to most of these issues. This memo addresses when a hospital/provider should bill, how much they can bill, and when they must withdraw their claim against the plaintiff.

Hospitals/Providers are increasingly telling trial counsel that they cannot bill Medicare in third party liability (TPL) situations.  Although providers, physicians, and other suppliers must bill liability insurance rather than bill Medicare, after the “promptly period” they can submit bills to CMS.  The “promptly period” is a 120-day period that begins to run when the hospital/provider submits a bill to an insurer, files a lien against the plaintiff, provides the service or discharges the plaintiff from the hospital, whichever is earliest.  After this 120 days has expired the hospital/provider has the option of either submitting the claim to CMS or maintaining their claim against the plaintiff.  They cannot do both.

According to the memo:

“Billing both Medicare and maintaining a claim against the liability insurance/beneficiary’s liability insurance settlement is not permitted.” Id. A2; Medicare Secondary Payer Recovery Manual Chapter 2, Section 40.2(B).

The expiration of the “timely filing period” is another vital event to place in trial counsel’s calendar.  The “timely filing period” is one calendar year from the date of service, and the existence of liability insurance does not toll or extend this filing period.  This is critcal information for the trial attorney as once the “timely filing period” has passed the hospital/provider must withdraw their claim against the plaintiff.

According to the memo:

“The existence of a liability insurance or potential liability insurance situation does not change or extend Medicare’s timely filing requirements…. claims/liens against the liability insurance/beneficiary’s liability insurance settlement (with certain exceptions) be withdrawn once the timely filing period has expired.” Id. A4

And

Claims/liens against … liability settlement must be dropped once Medicare’s timely filing period has expired Id. A2

And

“CMS’ liability insurance billing policy is that providers are required to drop their claims/liens and terminate all billing efforts to collect from a liability insurer or a beneficiary once the Medicare timely filing period expires[.]” Id. A5

In complex cases where litigation takes longer than one year, trial counsel should be able to use this memo to have the hospitals/providers withdraw their claims. Additionally, in cases that do resolve within the one year “timely filing period”, this memo along with Chapter 2 of the Medicare Secondary Payer Recovery Manual provides separate limitations on the recovery rights of hospitals and providers.

If the hospital/provider does submit a bill to Medicare then they are forever limited to the Medicare approved payment amount. This is true even if the hospital/provider has their bill denied by CMS, or even if they refund to Medicare the amount they were paid.

According to the memo:

“Is limited to the Medicare approved amount … once they have billed Medicare, even if they return any payment received from Medicare.” Id. A6, A2, See; Medicare Secondary Payer Recovery Manual Chapter 2, Section 40.2(D).

Finally, if the hospital/provider did not submit a bill to Medicare, but rather after the expiration of the “promptly period” asserted a claim against the plaintiff, then their claim must be reduced by procurement costs.

According to the memo:

“May charge actual charges but is limited to the amount available from the settlement less applicable procurement costs (for example, attorney fees, other litigation costs).” Id. A6; See Also, Medicare Secondary Payer Recovery Manual Chapter 2, Section 40.2(D).

Understanding and calendaring the “promptly period” and “timely filing period” is essential for trial attorneys who represent Medicare beneficiaries.  The billing departments of most hospitals and providers are staffed with individuals who do not recognize the significance of the Medicare billing guidelines.  It is common for these groups to assert unenforceable repayment demands, and knowing how best to turn these rules to your client’s benefit will result in a significant increase to the injury victim’s net recovery.

On April 18, 2017 in Coventry Health Care Of Mo., Inc. V. Nevils the United States Supreme Court held that the subrogation/reimbursement plan language contained in the health insurance contracts of Federal Employee Health Benefit plans (FEHBA) preempted state law.   This decision by the Supreme Court puts to rest over a decade of uncertainty in the area of FEHBA subrogation.  Unfortunately, that certainty deals a serious blow to injury victims who are covered by FEHBA plans.

The FEHBA Act contains an express-preemption provision, §8902(m)(1), which states that the “terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law . . . which relates to health insurance or plans.”  The question for the courts since McVeigh in 2006 was do subrogation/reimbursement provisions “relate to” “coverage and benefits”.

Justice Ginsburg, writing the majority opinion for the Court found that:

“Contractual provisions for subrogation and reimbursement ‘relate to . . . payments with respect to benefits’ because subrogation and reimbursement rights yield just such payments. When a carrier exercises its right to either reimbursement or subrogation, it receives from either the beneficiary or a third party “payment” respecting the benefits the carrier had previously paid.”

Id.

Continuing with the theme that all reason bends to financial gain the court made clear the monetary benefit to government was just too large to ignore.

“The Federal Government, more-over, has a significant financial stake. OPM estimates that, in 2014 alone, FEHBA ‘carriers were reimbursed by approximately $126 million in subrogation recoveries.’ 80 Fed. Reg. 29203. Such ‘recoveries translate to premium cost savings for the federal government and [FEHBA] enrollees.]’”

Id.

In explaining that it is the FEHBA statute, and not the individual FEHBA contracts, that provides for the preemption of state law the Supreme Court raises the trial bar’s other subrogation nemesis, ERISA.

“We conclude, however, that the statute, not a contract, strips state law of its force. … FEHBA contract terms have preemptive force … when the contract terms fall within the statute’s preemptive scope. It is therefore the statute that ‘ensures that [FEHBA contract] terms will be uniformly enforceable nationwide, notwithstanding any state law relating to health insurance or plans.’ Brief for United States as Amicus Curiae 28 (internal quotation marks omitted).

Many other federal statutes preempt state law in this way, leaving the context-specific scope of preemption to contractual terms. The Employee Retirement Income Security Act of 1974 (ERISA), 29 U. S. C. §1001 et seq., for example, preempts “any and all State laws insofar as they . . . relate to any employee benefit plan.” §1144(a).

Id.

Placing FEHBA subrogation rights in the same context as ERISA plans should be a clear and sobering indication to the plaintiff’s bar of how the courts will now view FEHBA subrogation/reimbursement demands.  Fortunately, most FEHBA plans are not drafted with the same draconian language as ERISA plans, often allowing for reasonable compromises to be reached. In resolving your client’s FEHBA subrogation/reimbursement issues the first step should be to obtain a copy of the specific FEHBA plan in which you client is enrolled.  You can find all FEHBA plans on this link.  https://www.opm.gov/healthcare-insurance/healthcare/plan-information/plans/.

As always, Synergy is here to help negotiate and resolve all lien types.  While FEHBA recovery has been strengthened by Nevils, we believe there are still avenues to travel down based on plan language to get a reduction.  We remain committed to getting the best possible outcome for an injury victim with all types of subrogation claims.