The Real Cost of MSP Mistakes

Why Medicare Compliance Can’t Be Ignored

If you represent injury victims who are Medicare eligible, strict Medicare Secondary Payer Act (MSPA) compliance is not an option. The risks are real, and the consequences can be serious. Missteps don’t only harm your clients, they also put your law firm in the government’s crosshairs. Enforcement actions, financial penalties, and malpractice exposure are becoming more and more common.

Government Enforcement Is Accelerating

The DOJ is very serious about MSP compliance. In one case, a Harrisburg personal injury firm paid over $53,000 to resolve its failure to reimburse Medicare more than $84,000 in conditional payments after settling a malpractice case involving a Medicare beneficiary. A Philadelphia firm settled a similar claim by paying over $6,600 and agreeing to firm-wide changes, including appointing a compliance officer and conducting regular debt reviews. In Baltimore, a firm that had referred a case to co-counsel was still held accountable when Medicare was not reimbursed. That firm paid over $91,000, and the DOJ made clear that joint representation does not absolve firms from their MSPA obligations. In another case, a Maryland firm paid $250,000 because it relied on a conditional payment letter rather than a final demand from Medicare before disbursing funds.

These enforcement actions underscore a consistent message: the government expects personal injury lawyers to address Medicare’s interests compliantly. Delegating the responsibility or assuming someone else will handle it is not a defense.

Common Errors That Create Risk

Several common mistakes repeatedly trigger liability. Disbursing settlement funds without waiting for a final demand letter from Medicare or relying upon a Conditinal Payment Letter is one common mistake. Others fail to identify or resolve Medicare Advantage (Part C) liens which can be a very costly mistake. Some lawyers assume that co-counsel or referring attorneys will take care of the Medicare obligations, but still end up being held accountable. Signing off on release language that includes misleading or overly broad “Medicare compliance” terms without proper review is another significant mistake. Failing to track the ICD codes reported to CMS or to educate clients about the potential impact on their future Medicare coverage are also frequent errors.

You do not have to willfully violate the MSPA to be exposed. Process failures or oversight can be enough.

What the Government Expects from Your Firm

In settlement enforcement actions, the Department of Justice has made its expectations clear. Law firms must appoint someone within the firm who is responsible for Medicare compliance. That individual must be properly trained. The firm must also regularly review and confirm compliance at least every six months.

Why Waiting Until Settlement Is a Mistake

A reactive approach to Medicare compliance is especially risky. Waiting until settlement to start Medicare compliance efforts often results in delays, misinformation, and missteps. Incorrect data may be reported to CMS through Mandatory Insurer Reporting (MIR). Conditional payments may be estimated too low if based on early letters rather than final demands. In some cases, settlement proceeds are disbursed before confirming the final Medicare lien amount, which can leave the firm directly liable for reimbursement. Late-stage engagement also means losing leverage to negotiate a compromise or waiver with CMS.

A Proactive Process Is Your Best Defense

The best way to manage MSP compliance is to treat it as a core part of case intake and your resolution process. This begins with identifying whether the client is a Medicare beneficiary or is likely to become one within 30 months. From there, you need to collect and verify their benefit status, consult Medicare compliance professionals early, and initiate the process of identifying and resolving all conditional payments and liens, including those from Medicare Advantage plans.

You also need to inform clients about the legal and practical risks of not addressing Medicare’s reimbursement rights or failing to plan for future injury-related care. If your client does not address Medicare’s future interest, Medicare may later deny coverage. Every step of this process, including the decision-making and client education, should be well documented in your file.

The Cost of Inaction

There’s more at stake than compliance. If your firm mishandles Medicare issues, the government may claw back funds, assess penalties, or face legal malpractice exposure if your client is denied care or forced to repay Medicare years later.

Medicare compliance is not a technicality. It’s a legal obligation with serious consequences when ignored.

How Synergy Can Help

Synergy’s MSP compliance experts work with law firms to prevent these problems. From identifying at-risk clients to final demand resolution and lien negotiation, we help your practice remain compliant and protect client recoveries.

The real cost of MSP mistakes is too high to ignore. Start protecting your clients and your firm now, before it becomes a problem you can’t fix.