LIENS
Welcome to Synergy’s blog page dedicated to the topic of lien resolution. Our team of subrogation experts share their InSights and knowledge on the latest developments and best practices in lien resolution. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complexities of lien resolution.
An intriguing case, Mayo v NYU Langone Med. Ctr., just came out of the Supreme Court of New York, reminding the trial bar that when resolving a conditional payment for a Medicare beneficiary only the “Final Demand” letter is final. Reliance upon a “Conditional Payment Letter” (CPL) is inappropriate. The Mayo case revolved around whether a settlement agreement may be declared void, based on an incorrect assumption of the Medicare conditional payment amount. The conditional payment amount in this specific case had been no higher than $2,824.50 for about a year according to Medicare CPLs. The Parties entered into a settlement agreement, thinking that the Medicare lien would not exceed $2,824.50, and distributed the funds. After the funds were distributed, the Centers for Medicare and Medicaid Services (CMS) came back and issued a Final Demand of $145,764.08 for related medical care. In the end, the Plaintiff was successful in showing that the settlement agreement was based on the incorrect assumption that the Medicare lien would not exceed $2,824.50, and the Settlement Agreement was vacated.
Synergy’s lien resolution group has seen many cases like this one, where attorneys settle a case based on the assumption that they know the final Medicare lien amount, only to later receive a Final Demand which is much greater than anticipated. Fortunately, Medicare has recently released a tool which is very useful in avoiding such situations. Synergy regularly utilizes this tool to achieve exceptional results in cases for clients which have enrolled in this process prior to settlement. Using this tool can eliminate cases, like Mayo, where attorneys are surprised once they receive a Final Demand from Medicare.
The tool is the Final Conditional Payment Process and was part of the revamped Medicare Secondary Payer Recovery Portal (MSPRP), which came online in January 2016. CMS added functionality to the old MSP Web portal that allows users to notify them when the specified case is approaching settlement, and download time and date stamped Final Conditional Payment Summary forms and final amounts, before reaching a settlement. Additionally, the new portal ensures that relatedness disputes and any other discrepancies are addressed within eleven (11) business days of receipt of dispute documentation.
The process is straightforward and addresses many of the issues that have plagued the plaintiff’s bar in attempting to settle a personal injury action without any certainty of the repayment amount due to Medicare. The process begins when the beneficiary, their attorney, or another representative (SLRS), provides the required notice of pending liability insurance settlement to the appropriate Medicare contractor at least one hundred twenty (120) days before the anticipated date of settlement. If the beneficiary, their attorney, or another representative, believes that claims included in the most up-to-date Conditional Payment Summary form are unrelated to the pending liability insurance “settlement”, they may address discrepancies through a dispute process available through the portal. This dispute may be made once and only once. Following the dispute, CMS has only eleven (11) business days to resolve the dispute. If CMS does not respond within that 11-day window the dispute is automatically granted.
After disputes have been fully resolved, a time and date stamped Final Conditional Payment Letter may be downloaded through the portal. This form will only constitute the Final Conditional Payment amount if settlement is reached within 3 days of the date the Conditional Payment Letter was downloaded. If settlement is not reached within these 3 days, it does not negatively impact your case, but rather will kick you out of this process, and you will be unable to use the Final Conditional Payment Process again for that specific case.
To complete the process, within thirty (30) days of the settlement Medicare is provided the settlement information. This information will include the total settlement/award amount, attorney fee amount or percentage, litigation costs, and any “No-Fault” benefits directly received by the plaintiff. If this information is not provided within thirty (30) days, the Final Conditional Payment amount obtained through the Web portal will expire. To avoid what happened in New York, and to speed the resolution of all your cases involving a Medicare beneficiary, Synergy recommends utilizing all the tools CMS has made available to the trial bar.
Synergy Lien Resolution deals with Medicare on a daily basis. We can help make the process easier and more efficient by handling the resolution of conditional payments directly with Medicare on your behalf. To learn more online about our services, go to Synergy’s Medicare Refund page Should you have questions about how to take advantage of these tools, or if they apply to your case please do not hesitate to contact our experienced and dedicated lien resolution team.
Jasmine Patel
Medicare Lien Resolution Specialist
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.
After nearly five years, on October 6, 2016, the Florida Supreme Court issued Opinion SC16-104 and declined to make any change to the existing Rules Regulating the Florida Bar in relation to lien resolution outsourcing. As Florida’s trial attorneys know, the issue of whether there was a need for a change in the existing rules has festered in the Florida Bar Association for years. The issue was raised by a lawyer who requested that the Florida Bar address a reverse contingency fee on the reduction of hospital liens. From there, the Florida Bar has tried to craft a rule regarding outsourcing which ultimately has been rejected by the Florida Supreme Court several times.
The Florida Bar Association had created a proposed rule to address a concern that outsourcing lien resolution services could further reduce an injury victim’s net recovery. In responding to that concern, the Supreme Court used dicta in Opinion SC16-104 to remind counsel that addressing repayment obligations is part of the representation that is expected during the underlying personal injury action. The Court said:
On balance, we wish to reemphasize that lawyers representing clients in personal injury, wrongful death, or other cases where there is a contingent fee should, as part of the representation, also represent those clients in resolving medical liens and subrogation claims related to the underlying case. This should be done at no additional charge to the client beyond the maximum contingency fee, even if the attorney outsources this work to another attorney or non-attorney.
The Court goes on to say in dicta that:
If the circumstances of a particular case are such that the fee generated under the contingency fee agreement is expected to be insufficient for the work of resolving any outstanding lien, the attorney and client can seek leave of court pursuant to rule 4-1.5(f)(4)(B)(ii) of the Rules Regulating the Florida Bar to obtain an increased fee appropriate for the circumstances of the specific case.
It is unfortunate that the Court’s dicta is focused on the financial circumstances of the trial attorney rather than on what is most beneficial to the injury victim. In their proposal for a change even the Florida Bar Association acknowledged that in order to “maximize the client’s net recovery,” it may be that the “client’s best interest [are] served by having the lien and subrogation matters resolved by another with significant experience in the field.”[1] Synergy Lien Resolution Services (SLRS) was founded on that principle and has always operated under policies/ procedures designed to maximize the plaintiff’s net recovery. Additionally, the backbone principle of SLRS’s industry leading fee structure is based upon our ability to demonstrate a quantifiable value add to the injury victim’s net recovery.
Understandably the disconnect between the issue presented by the Florida Bar, and the dicta from the Court has left many Florida trial attorneys confused. Thus, it is important to remember that the Court refused to make a rule change so as before this ruling trial counsel must make reasonable efforts to identify any lien, advise the client of the potential lien, and make reasonable efforts to resolve the matter. Should trial counsel believe it would be in the plaintiff’s best interest to engage an expert, then outsourcing to SLRS for an additional fee is ethically authorized.[2] If there is a concern regarding whether the fees to reduce the lien may be passed along to the client, SLRS will assist with getting an order from the court with jurisdiction to approve all fees in conformance with 1.5(f)(4)(B)(ii).
SLRS processes are designed to assist Florida attorneys in compliance with the existing rules. SLRS can provide lien resolution outsourcing language which can be incorporated into retainer agreements. Additionally, upon engagement, SLRS will provide the required separate written informed consent. This separate informed consent has been required by the American Bar Association since 2008 and is contained in all SLRS intake packages. Finally, as discussed above, SLRS will assist trial counsel in obtaining court approval of the lien resolution fee. SLRS regularly assists counsel (specifically guardians of our minor and catastrophically injured clients) in obtaining court approval of our “savings” based fees, wherein we are regularly complimented by the court for the reasonableness of our fees.
In the end, each Florida attorney will have to decide what they believe the best course of action is given all of the foregoing. SLRS stands ready to assist in any way we can.
[1] Rule 4-1.5(f)(4)(E) Comments
[2] IN RE: Amendments to Rule Regulating the Florida Bar 4-1.5-Fees and Costs for Legal Services.
Florida Sup. Ct. No. SC16-104
Medicare has reduced the threshold for when a physical trauma-based liability settlement is large enough that the beneficiary needs to report it and repay conditional payments. On November 15, 2016, the Centers for Medicare & Medicaid Services (“CMS”) issued an alert which decreased the current reporting threshold from $1,000 to $750. The threshold decrease is a result of the mandatory annual review required by Section 202 of the Strengthening Medicare and Repaying Tax Payers Act of 2012 (“SMART Act”) to determine at what level do the costs related to collecting data and determining the amount of Medicare’s recovery claim outweigh the benefits of recovering the conditional payments.
The new threshold is effective as of January 01, 2017 for cases where a recovery demand has not yet been issued. It is important to note this threshold does not apply to settlements for alleged ingestion, implantation, or exposure cases. This means that physical trauma-based liability settlements of $750 or less do not need to be reported, nor will the beneficiary need to repay Medicare’s conditional payments.
CMS determined the average cost of collection for Non-Group Health Plan (NGHP) cases is $368.75 per case. NGHP cases are: liability insurance (including self-insured liability), no-fault insurance, and workers’ compensation. To arrive at a threshold, CMS compared the average cost of collection per case to the average liability insurance demand amount per settlement range. Among liability insurance cases, the average cost of collection most closely aligns with settlements of $750 and below, which have an average final demand amount of $384.25.
Among workers’ compensation and no-fault insurance cases, the settlement ranges of $750 and less result in average demand amounts of $510.03 and $573.27 respectively. These ranges most closely align with the average cost of collection per case. Based on these findings, CMS revised their reporting thresholds.
The SMART Act was designed to save Medicare money. Part of the expected savings is to come from an annual review meant to ensure that the federal government does not spend more money pursuing a reimbursement amount than the cost of that recovery effort. The wise personal injury attorney can co-op this purpose and save his clients who receive de minimis recoveries from the hassle of dealing with the Medicare conditional payment issue.
The alert is available on the CMS website by click here.
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