Source: https://flagshipservicesgroup.com/medicare-compliance-for-pc-insurers/
Timestamp: 2019-04-24 17:47:44+00:00

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Auto, liability, no-fault, and work comp primary payers- if you didn’t take Medicare and Medicaid secondary payer issues seriously before, here are over 2 million reasons why you should.
On November 14, 2017, the United States of America, the State of New Jersey, Progressive Garden State Insurance Company, Progressive Casualty Insurance Company, and Relator Elizabeth Negron entered into a settlement agreement for $2,392,700 on a False Claims Act matter in which certain Progressive automobile insurance policies caused health care providers to submit medical claims to Medicare and Medicaid in violation of secondary payer laws.
On May 18, 2018, Congressman Gus Bilirakis (R-FL) and Congressman Ron Kind (D-WI) introduced HR 5881, amending the Medicare Secondary Payer (MSP) statute and clarifying its application to Medicare Part C Advantage Plans (MAP), Medicare Part D Prescription Drug Plans (PDP), and Medicaid. The Provide Accurate Information Directly (PAID) Act, provides employers, carriers, corporate defendants, insurers, third party administrators, and beneficiaries who are parties to third-party settlements — such as in an auto, liability, no-fault, or workers compensation claim, with the identity of a MAP, PDP, or Medicaid plan that may have paid for medical bills related to the auto, liability, no-fault, or work comp claim, other than Medicare.
On May 2, 2018, the Third Circuit Court of Appeal of Louisiana published its opinion on Mary Ortega v. Cantu Services, Inc., concluding that the settlement of the workers compensation claim at hand was conditioned on CMS approval of a Medicare Set-Aside. Because the settlement agreement did not include specific dates or amount of time within which such CMS approval should be obtained, employer/carrier were not required to pay the settlement funds prior to CMS approval of the MSA, as nonpayment was the result of conditions over which the employer/carrier had no control.
This case brings to light the never-ending questions of whether parties should submit their MSAs to CMS for approval, and whether to settle a Medicare file with an MSA continent or dependent upon CMS approval of the MSA. Time and time again CMS has indicated such submission is not mandatory, but completely voluntary. But at the same time, CMS is quick to remind litigants that without such approval, CMS is not bound by any agreement, stipulation, or settlement of the parties. If the parties are going to make approval of the MSA by CMS a centerpiece of their settlement, and are going to hold completion of settlement until such time as CMS approves the MSA, as based on this case and the many others similarly decided by courts throughout the country over the years, it is important to be as specific as possible.
This workers’ compensation case arises out of a work injury that Mary Ortega (Ortega), sustained while she was employed by Cantu Services, Inc. (Cantu). Ms. Ortega filed a Disputed Claim for Compensation on June 27, 2014. The parties reached a settlement agreement in 2016, for $120,000, with counsel for Cantu and its insurer Liberty Mutual agreeing to submit to the Centers for Medicare and Medicaid Services (CMS) a Medicare set aside (MSA) in the amount of $56,049. If CMS did not did not approve the requested MSA, Cantu and Liberty Mutual agreed to fund the MSA as directed by CMS and then adjust the amount to be paid in benefits accordingly, so that the total of the settlement still amounts to $120,000.
The agreement was judicially approved and recited in open court on September 1, 2016. The agreement was explained on the record by counsel for Cantu and its insurer, Liberty Mutual Insurance Company. The Workers Compensation Judge (WCJ), Judge Braddock, then approved the compromise and stayed the docket numbers until he heard from the parties in the future, after CMS approved the MSA, to then close out the cases.
On December 22, 2016, Ms. Ortega filed a Motion and Order to Amend, adding penalties and attorney fees for Appellees’ failure to pay the settlement within thirty days after the recitation of the agreement in open court. Ms. Ortega also filed a Motion to Enforce Settlement and for penalties and attorney fees, which was heard on June 1, 2017. The court considered the minutes from the September 1, 2016 hearing, the testimony of Ms. Ortega that she was present at the September hearing and understood the settlement was conditioned on CMS approval, and argument of counsel. The court concluded the settlement was conditioned on CMS approval of an MSA and accordingly denied Ms. Ortega’s Motion to Enforce Settlement and for penalties and attorney fees. Ms. Ortega filed a “Motion and Order for New Trial for Re-argument Only” and, after a hearing was held on August 21, 2017, this was also denied.
Ms. Ortega now appeals and asserts two assignments of error: (1) that the WCJ erred in finding the settlement of $120,000.00 did not need to be paid within thirty days of the judicial approval of the settlement agreement and therefore denying sanctions, and (2) that the WCJ erred in finding CMS approval was a suspensive condition that must be fulfilled before paying Ms. Ortega the $120,000.00 settlement.
Is need for CMS’s approval of the MSA a suspensive condition?
Ms. Ortega’s first assignment of error depends on the outcome of the second assignment of error, namely, whether the CMS approval of the MSA funding was a condition that suspended the payment of $120,000.00 to Ms. Ortega. The WCJ held that CMS approval was a suspensive condition. This court agrees and finds no manifest or legal error with this finding.
Louisiana Revised Statutes 23:1201(G) provides for penalties and attorney fees in workers’ compensation cases as follows: If any award payable under the terms of a final, non-appealable judgment is not paid within thirty days after it becomes due, there shall be added to such award an amount equal to twenty-four percent thereof or one hundred dollars per day together with reasonable attorney fees, for each calendar day after thirty days it remains unpaid, whichever is greater, which shall be paid at the same time as, and in addition to, such award, unless such nonpayment results from conditions over which the employer had no control. No amount paid as a penalty under this Subsection shall be included in any formula utilized to establish premium rates for workers’ compensation insurance. The total one hundred dollar per calendar day penalty provided for in this Subsection shall not exceed three thousand dollars in the aggregate.
A final, non-appealable judgment includes a workers’ compensation settlement agreement, and triggers La.R.S. 23:1201(G) upon court approval and entry into judgment. However, obligations may be suspended by a suspensive condition which prevents enforcement of the obligation until an uncertain event occurs. Conditions may be either expressed in a stipulation or implied by the law, the nature of the contract, or the intent of the parties. When the suspensive condition depends solely on the whim of the obligor, the obligation is null.
In Harrelson v. Arcadia, 10-1647 (La.App. 1 Cir. 6/10/11), 68 So.3d 663, writ denied, 11-1531 (La. 10/7/11), 71 So.3d 316, the first circuit found that a settlement agreement requiring CMS approval of funding for an MSA was a suspensive condition that suspended the obligation to fund the MSA account until CMS approval was received. The WCJ in this case correctly recognized that this case is factually like Harrelson. In Harrelson, the employer agreed to pay the claimant $125,000.00, with $42,010.00 of that amount to be placed in a MSA account to cover future medical expenses and $82,990.00 to be paid in one lump sum. The agreement further contained a clause stating that if CMS requires additional money be placed into the MSA, Bestaff/insurer will, at its option, pay all such additional amounts and comply with all Medicare requirements regarding such, or will withdraw the proposal for a MSA, and the claim for future medical care will remain open.
The agreement was judicially approved on December 10, 2009. The employer immediately paid the claimant $82,990.00 and withheld the remaining amount for the MSA funding while awaiting CMS approval. CMS ultimately approved the amount on January 27, 2010, and the employer issued a check for the balance of the funds on February 2, 2010, within thirty days of CMS’s approval, but over thirty days from the date of judicial approval of the agreement. The claimant then filed a motion to enforce settlement judgment seeking penalties and attorney fees pursuant to La.R.S. 23:1201(G) for the employer’s failure to pay the entirety of the settlement agreement within thirty days of the judgment. On appeal, the first circuit affirmed the WCJ, agreeing that the approval by CMS was an uncertain event that once it occurred made the WCJ’s order approving the entire settlement agreement final and enforceable.
As in Harrelson, the agreement between the parties in this case was that CMS needed to approve the funding of the MSA. The difference between this case and Harrelson, is that in Harrelson, $82,990.00 was to be paid in one lump sum regardless of the outcome of the CMS approval. In Harrelson, if CMS did not approve of the MSA funding, the employer had two options—to pay the additional amount requested by CMS or withdraw the proposal for a MSA. However, in the case before this Court, the calculation of the amount to be paid to Ms. Ortega in benefits is entirely dependent on the amount required to fund the MSA. The judicially approved agreement as evidenced by the court transcript was that if CMS does not approve the requested amount, but alters it in any way, we will fund the MSA as directed by CMS and then adjust the amount to be paid in benefits accordingly, so that the total of the settlement still amounts to $120,000.
Additionally, Exhibit P-2, submitted by Ms. Ortega and which is the affidavit of her counsel, states it was agreed that post-settlement documents would be prepared by defense counsel with the understanding that whatever amount for medical expenses was approved by CMS would be designated in the settlement documents as a full and final compromise of all claims for medical expenses and the remainder of the $120,000.00 settlement fund would be attributed to a full and final settlement of all claims for indemnity benefits, penalties and attorney fees.
Finally, the settlement documents signed by Ms. Ortega specify that Appellees would write two checks, one to Ms. Ortega, and one to the Mary Ortega MSA Account. Appellees could not possibly write these two checks without knowing the amount CMS approved to fund the MSA account. Therefore, the court agrees with the WCJ that the need for CMS’s approval of the MSA funding was a suspensive condition.
Does suspensive condition depend on the whim of the employer/carrier?
The next question is whether the suspensive condition depends on the whim of the employer/carrier, making the obligation null, or whether the employer had no control over CMS approving the MSA funding.
Ms. Ortega argues that the suspensive condition depends on the whim of the employer to file the request with CMS. This issue was also raised in Harrelson, however, in that case, the court received evidence that the request was in fact made to CMS, and therefore Appellees could not do anything more without the CMS approval. Ms. Ortega, on the other hand, asserts Appellees have not sought CMS approval and that there was no requirement in the settlement that Appellees do so within a certain timeframe. Therefore, under the WCJ ruling, Appellees can continue not funding the settlement because they were not required to obtain CMS approval by any specific date.
Ms. Ortega correctly stated that there is no evidence in the record that Appellees have sought CMS approval. The only contrary argument is just that, merely argument and not proof of fact. However, regardless of when Appellees apply for CMS approval, that approval will ultimately be beyond Appellees’ control. Therefore, the WCJ did not err in concluding that Appellees were not required to pay Ms. Ortega the settlement funds prior to CMS approval of the MSA funding.
Because the court concludes nonpayment was the result of conditions over which the employer/carrier had no control, the WCJ did not err in denying statutory penalties and attorney fees, in this case, for Appellees’ failure to pay the funds within thirty days of the final and non-appealable judgment.
This case brings to light the never-ending question of whether parties should submit their MSAs to CMS, or dispense with such approval and move forward without submitting their MSAs to CMS. It also questions whether settling a Medicare file contingent or dependent upon CMS approval of the MSA is still a worthwhile practice. Time and time again CMS has indicated such submission is not mandatory, but completely voluntary. But at the same time, CMS is quick to remind litigants that without such approval, CMS is not bound by any agreement, stipulation, or settlement of the parties. So, the answer still very much depends on the litigants’s appetite for risk. For the employer/carrier, what are the chances CMS may seek reimbursement of conditional payments made by Medicare associated with the claim a year, or two, or five down the road? For the claimant/counsel, what are the chances CMS may deny future care related to the claim; and if Medicare pays for same, what are the chances CMS may seek reimbursement of same?
Undeniably, more and more parties are choosing to forego CMS review and approval of MSAs. Coupled with professional administration of such MSA accounts, more and more litigants are finding ways to appropriately take Medicare’s future interests into account and become responsible stewards of the Medicare Trust Funds. But for those of us who still believe in total and complete closure, who never want any MSA issues to come back and create havoc, who want some measure of guarantee that CMS recognizes the parties have taken Medicare’s future interests into consideration, we continue to submit MSAs to CMS for their review and approval.
Who will be submitting the MSA to CMS?
Within how many days of settlement will the MSA be submitted to CMS?
If CMS requests further information, additional evidence, or workup, who will be responsible for obtaining same?
Within how many days must such information be provided? How many days to re-submit to CMS?
What happens if CMS doesn’t respond?
What happens if party responsible for providing updated or new evidence provides same late, or doesn’t provide it at all?
What consequences if submission deadlines are not met or abided by?
If CMS disagrees with MSA proposal and requests more than proposed, what happens? Who is responsible for extra funds?
What if parties change their minds after settlement, or even after submission to CMS, about lump sum vs. structured funding of the MSA?
Who is responsible for communicating same to CMS? Do the parties agree to seek CMS approval of this change?
If CMS changes the seed amount or the annual amount on structured funded MSA, how will such changes be handled? Will new annuity be purchased for extra amount?
What if claimant changes his/her mind about self-administration or professional administration?
Is it allowed? Who is responsible for communicating same to CMS? Do the parties agree to seek CMS approval of this change?
On April 16, 2018, the United States Sixth Circuit Court of Appeals published its opinion on Gucwa and Marusza v. Lawley, Ager, Baker, Rubin and Accident Fund Insurance Company, finding that because Gucwa and Marusza did not allege personal financial loss in the original complaint or the two amended complaints, they have not established standing to bring an MSP private cause of action for double damages.
Mark Marusza and Nancy Gucwa’s complaint alleged four causes of action in this matter: (1) Accident Fund and the defendant physicians defrauded Marusza, Gucwa, and others of benefits, in violation of the Racketeer Influenced and Corrupt Organizations Act; (2) Marusza is entitled to double damages under the Medicare Secondary Payer Act; (3) the defendant doctors tortiously interfered with Marusza’s contractual relationship and/or business expectancy by inducing Accident Fund to deny his benefits; and (4) Accident Fund falsely imprisoned Marusza by requiring him to attend an examination with a neuropsychologist. The analysis below focuses only on the MSP private cause of action for double damages.
A sport-utility vehicle struck Mark Marusza on October 18, 2011, while Marusza was in the course and scope of his employment. Marusza sustained injuries to his brain, shoulders, cervical spine, and ribs. Following his release from the hospital, Nancy Gucwa provided attendant care services for his brain and spinal injuries.
Marusza’s workers’ compensation carrier—Accident Fund Insurance Company— initially paid Marusza’s claims for Gucwa’s care but terminated payment in July 2012. Accident Fund retained the four defendant physicians—Dr. Jeffrey Lawley, Dr. Harvey Ager, Dr. W. John Baker, and Dr. Barry Rubin—to examine Marusza’s disability. Following the doctors’ reports, Accident Fund refused to pay for certain treatments, including drugs to control injury-induced aggression, psychiatric hospitalization, pain medication, attendant care, physical therapy, doctors’ visits, nurse case management, and surgeries for his neck, back, and shoulders.
As a result of Accident Fund’s refusal to pay for such care, Medicare paid $15,665.00 for such treatment. It is important to note that the opinion does not indicate or provide a breakdown of such payments. In other words, we do not know whether the payments made by Medicare were for drugs to control the injury-induced aggression, for the psychiatric hospitalization, for pain medication, for attendant care, for physical therapy, for doctors’ visits, for nurse case management, or for surgeries for his neck, back, and shoulders.
After Accident Fund’s denial of benefits, Marusza filed a workers compensation claim seeking payment of indemnity benefits and medical care associated with the injuries related to the accident with the Michigan Workers’ Compensation Agency. In May 2016, Workers’ Compensation Board Magistrate Beatrice B. Logan issued her opinion that Marusza required treatment for a mild traumatic brain injury, vision problems, and injuries to his neck, shoulders, and lower back caused by the 2011 accident. Because Marusza lost all wage earning capacity in the accident, Magistrate Logan ordered Accident Fund to pay Marusza workers’ compensation benefits owed from October 19, 2011, onward at the rate of $592.88 per week and for reasonable and necessary medical treatment of Marusza’s employment-related conditions. Based on this decision, on August 12, 2016, Accident Fund paid Marusza $74,382.00.
Prior to the Board’s decision and Accident Fund’s payment to Marusza, on March 5, 2015, Plaintiffs filed a complaint in the U.S. District Court for the Eastern District of Michigan naming Accident Fund and the four doctors as defendants. Plaintiffs filed their First Amended Complaint the next day. Each defendant moved to dismiss for failure to state a claim upon which relief can be granted in spring 2015.
Following the Board’s decision, Plaintiffs filed a Second Amended Complaint. In January 2017, the district court granted the defendants’ motions to dismiss each claim, denied Dr. Rubin’s and Plaintiffs’ motions for sanctions against each other, and denied Plaintiffs’ motion for leave to amend their Second Amended Complaint. Marusza and Gucwa, the plaintiffs, now appeal.
Congress enacted the Medicare Secondary Payer Act in 1980 to reduce federal healthcare expenses. The Act makes Medicare a secondary payer for a beneficiary’s medical services when payment is available from a different primary payer, such as a workers’ compensation plan. 42 U.S.C. § 1395y(b)(2)(ii). If that primary payer neglects its obligation to pay for a particular medical service, Medicare can cover the cost conditionally and seek reimbursement from the primary payer. 42 U.S.C. § 1395y(b)(2)(B)).
The Act also creates a private right of action with double recovery against primary payers who fail to provide the appropriate payment or reimbursement. 42 U.S.C. § 1395y(b)(3)(A). Marusza alleges that Accident Fund defrauded Medicare by forcing them to pay $15,665.00 in medical bills for which Accident Fund was responsible. Marusza seeks double damages under the Act.
As the party invoking federal subject matter jurisdiction, Plaintiffs bear the burden of establishing “the `irreducible constitutional minimum’ of standing”: that the plaintiff “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” The district court dismissed Marusza’s claim under the Act because he had not alleged financial harm. The court here affirms that decision. Because the Medicare Secondary Payer Act is not a qui tam statute, the financial injury suffered by the government does not confer standing upon other parties. In other words, this court holds private plaintiffs seeking MSP private cause of action double damages must suffer their own individual harm.
This court rules that a plaintiff does not satisfy the elements of standing simply by showing that the insurer failed to make payments “on his behalf”; the plaintiff must show that he “himself suffered an injury because a primary plan has failed” to pay. In other words, this court finds that Marusza must allege that he was injured by Accident Fund’s failure to pay. Because Marusza’s complaint alleged merely that Medicare suffered a financial injury when Accident Fund failed to pay, the complaint failed to establish that Marusza himself had standing.
After the district court’s decision, Marusza alleged for the first time in his February 6 motion for rehearing and reconsideration that he had suffered financial loss. The court concludes the district court correctly denied the motion because “a motion for reconsideration may not be used to raise issues that could have been raised in the previous motion.” Marusza had multiple prior opportunities to address the standing issue. Furthermore, the conclusory allegations in the affidavit stated simply that Marusza had to “pay co-pays because Medicare does not pay the entire bill,” but failed to provide any receipts, billing statements, or other information about the amount, recipient, or date of the co-pays.
This case continues a trend I have been writing and speaking about for some time, that Medicare beneficiaries are fast becoming and will continue to seek to become plaintiffs in MSP private cause of action for double damages. It is surprising to note that the decision does not mention the marquee cases in the 6th Circuit that gave way to such claims, including the July 16, 2014, United States Court of Appeals for the Sixth Circuit opinion on Michigan Spine and Brain Surgeons, LLC v. State Farm Mutual Automobile Insurance Company (allowing Michigan Spine to pursue its claim under the Medicare Secondary Payer Act against State Farm without showing of any financial loss), the September 2, 2014, United States District Court for the Western District of Kentucky opinion on Estate of Clinton McDonald v. Indemnity Insurance Company of North America (concluding that based on USCA 6th Circuit decision on Michigan Spine Clinic v. State Farm, as the Estate’s filing of the law suit prompted payment in the amount of $184,514. 24, the Estate was entitled to double damages per the MSP Private Cause of Action provision without showing personal financial loss), or the February 17, 2016, State of Michigan Circuit Court for the County of Oakland opinion on Hull v. Home Depot (finding that although Home Depot had already paid $42,233.16 to Medicare and Blue Cross Blue Shield Medicare Advantage Plan, because Mr. Hull’s filing of the MSP private cause of action prompted Home Depot’s payment of same, Mr. Hull was entitled to double damages without showing personal financial loss).
I do not anticipate this case will stop Medicare beneficiaries from becoming plaintiffs in MSP private cause of action for double damages. I do however anticipate such plaintiffs spending a considerable amount of time elaborating and enumerating the various ways in which they may have sustained personal financial loss as a result of the primary payer’s failure to reimburse Medicare for any accident related medical expenses that should have been the primary payer’s responsibility. Unfortunately, this may further complicate matters for primary payers, as it may allow such plaintiffs to file state causes of action permitted under specific state laws to prevent such financial losses to plaintiffs. Stay tuned as I continue to keep you updated on such trends and case law.
A Tale of Two Courts: Can MAPs Recoup MSP Double Damages from Medical Providers That Have Received Payment from Primary Payer?
What a difference a couple of miles and a couple of days make. On March 2, 2018, the United States District Court for the Middle District of Florida, (Orlando), published its opinion on MSPA Claims 1, LLC v. Halifax Health, Inc., in which the court found that a private right of action under the Medicare Secondary Payer Act, which provides for double damages when a primary payer does not reimburse Medicare payments that were the responsibility of the primary payer, is unavailable against providers of medical services. Just 18 days later, on March 20, 2018, the United States District Court for the Southern District of Florida (Miami), published its opinion on MSPA Claims 1, LLC v. Bayfront HMA Medical Center, LLC, concluding that because CMS has a right of action to recover its payments from any entity, including a beneficiary, supplier, physician, attorney, state agency, private insurer or medical provider that has received a primary payment, Medicare Advantage Organizations and their assignees also have a private cause of action for double damages against recipients of a primary payment, in this case Bayfront, a medical provider.
MSPA Claims 1, LLC v. Halifax Health, Inc., is one of many lawsuits filed by MSPA Claims 1 LLC (MSPA) against various entities, seeking to certify a class of all Florida Medicare Advantage Organizations (MAOs) and recover double damages for alleged untimely reimbursement for medical payments. The case, however, is unusual insofar as MSPA targeted a provider of medical services, in this case a hospital, as opposed to the primary payers or insurance companies usually named as defendants in such suits.
In the complaint, MSPA alleges to be the remote assignee of a now-defunct MAO, Florida Healthcare Plus Inc. (FHCP). The complaint alleges that a Medicare Advantage enrollee of FHCP was involved in a motor vehicle accident and, as a result, received treatment at Halifax Hospital Medical Center. In addition to being covered by a Medicare Advantage plan administered by FHCP, the enrollee had $10,000 in uninsured motorist coverage. The uninsured motorist policy was primary and the MAO’s obligations were secondary, with respect to the medical services provided by Halifax.
After the uninsured motorist insurer paid its full $10,000 policy limits to Halifax, Halifax billed FHCP for the balance, by way of an invoice that reflected the $10,000 already received from the other insurer. FHCP, however, erroneously failed to offset the $10,000 already paid by the uninsured motorist insurer, and rendered payment to Halifax in the full amount of the covered charges, resulting in a $10,000 overpayment to Halifax. The plaintiff’s complaint alleges that Halifax failed to reimburse the full $10,000 overpayment within 60 days of FHCP’s payment. As a result, MSPA, as the alleged assignee of FHCP, brought suit in Florida state court in Miami, seeking to certify a class and recover double damages for each medical claim covered by the MSP Act that was not reimbursed within 60 days of a secondary payment by FHCP.
Halifax had the case removed from state court in Miami, then successfully had it transferred from the U.S. District Court for the Southern District of Florida, Miami Division to the U.S. District Court for the Middle District of Florida, Orlando Division. Halifax then obtained a stay of the case in the Middle District pending the District Court’s ruling on Halifax’s motion to dismiss the lawsuit. In its motion to dismiss, Halifax argued, among other things, that the MSP Act’s private right of action does not provide a remedy against providers of medical services.
The MSP Act’s private right of action provides that ”there is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)(A). 42 U.S.C. §1395y(b)(3)(A). Halifax argued that MSPA had not sued a primary plan, and it was not alleged anywhere in the complaint that a primary plan failed to make primary payment. Indeed, the only primary plan identified in the complaint, the uninsured motorist insurer, paid its full $10,000 limit before FHCP made its erroneous overpayment.
In light of this ruling, the District Court did not reach Halifax’s alternative argument that the payment at issue in the case was not a “conditional payment” by an MAO under the MSP Act and was, instead, an erroneous overpayment made after payment of the primary insurer such that the remedies in the MSP Act did not apply.
On February 1, 2014, an enrollee of FHCP, was involved in an automobile accident. As a result of that accident, the enrollee received medical treatment at Bayfront HMA Medical Center (Bayfront). The enrollee was also covered by First Acceptance Insurance Company (FAIC), which provided no-fault benefits. On April 14, 2014, Bayfront billed FAIC $6,255.96 for medical items and services related to the accident. FAIC paid Bayfront $3,753.58. Thereafter, on May 12, 2014, Bayfront billed FHCP the same $6,255.96 for medical items and services related to the accident. FHCP paid $691.64 of the billed charges.
On March 9, 2017, MSPA, having received an assignment for MSP related causes of action from FHCP, filed an action in the Circuit Court of the 11th Judicial Circuit in Miami Dade County, Florida on behalf of itself and a class of similarly situated Florida Medicare advantage organizations against Bayfront. FHCP alleged an MSP private cause of action, Florida deceptive and unfair trade practices claim, and an unjust enrichment claim.
On May 10, 2017, Bayfront removed the action to federal court, the United States District Court for the Southern District of Florida. On June 5, 2017, Bayfront moved the court to dismiss the complaint arguing that the MSP claim must be dismissed because it is against a provider and it is barred by the applicable statute of limitations. In addition, Bayfront argued Plaintiff had no standing to bring the deceptive and unfair trade practices or unjust enrichment claims.
A. Can MAP Seek Double Damages from Medical Facility Under MSP?
In 1980, in an effort to reduce healthcare costs to the federal government, Congress enacted the MSP. The MSP contains nine paragraphs. Paragraphs two and three establish Medicare as a secondary payer and further establish a private cause of action. The conditional payment provision of the statute requires both a primary plan and an entity that receives payment from the primary plan to reimburse the government for any conditional payments made by Medicare if the primary plan has or had responsibility to make the primary payment. 42 USC 1395y(b).
The MSP permits the United States to bring an action for double damages against all entities that are or were required or responsible to make payment under a primary plan or any entity that has received payment from a primary plan or from the proceeds of a primary plan payment to any entity. Therefore, the government may file an action against a primary insurance company or any entity that receives a payment from a primary insurance company to collect double damages when the insurance company or recipient of those funds fail to reimburse Medicare. 42 USC 1395y(b)(2)(iii).
As specified in the CMS implementing regulations, a recipient could include the Medicare beneficiary, a medical provider, or a law firm receiving settlement proceeds. In other words, CMS has a right of action to recover its payments from any entity, including a beneficiary, a medical provider, a medical supplier, a physician, an attorney, a state agency, or a private insurer that has received payment from the primary payer. 42 CFR 411.
In 1997, Congress created the Medicare Advantage program, wherein private insurance companies, operating as MAOs, contract with CMS to administer Medicare benefits to individuals enrolled in a MAP under Medicare Part C. 42 USC 1395w-22(a)(4). Over the last 5 or 6 years, there has been extensive litigation over whether MAOs may utilize the MSP private cause of action provision to assert claims against primary plans. The 11th Circuit Court of Appeals has determined that a MAP may avail itself of the MSP private cause of action when a primary plan fails to make payment or to reimburse the MAO’s payment.
In this case, however, the court is faced with a new question, whether a MAP also has a private cause of action for reimbursement against the recipient of a payment, very specifically a medical facility that may have received payment from both the primary payer as well as the Medicare advantage plan.
42 USC 1395y(b)(2)(A) and (B) provides the government with a cause of action for double damages against both primary insurance and entities that received payment or proceeds from a primary plan. However, here, Plaintiff is proceeding under 42 USC 1395y(b)(3)(A), which allows a private party to bring an action for double damages in the case of a primary plan which fails to provide for primary payment. Bayfront argues this language only permits a private cause of action against primary plans and not medical providers.
The court finds that 42 USC 1395y(b)(3)(A) could be interpreted in more than one way. Because the provision does not specifically reference providers, it could be interpreted as only permitting the primary cause of action against a primary plan. However, the provision could also be interpreted to apply in the case of any entity’s failure to provide appropriate reimbursement. Both primary plans and providers are required to reimburse Medicare or a MAP for conditional payments. As a result, (3)(A) could be interpreted to mean that a private cause of action is available in cases where a primary plan fails to reimburse Medicare or any Advantage Plan or where a provider fails to make an appropriate reimbursement.
CMS regulations provide that MAOs will exercise the same rights to recover from a primary plan, entity, or individual that exercises under the MSP regulations. Very specifically, 42 CFR 411.24(g) provides that CMS has a right of action to cover its payment from any entity, including a beneficiary, provider, supplier, physician, attorney, Steve agency, or private insurer that has received a primary payment. Therefore, the court finds Medicare advantage organizations have the same recovery rights as Medicare when it comes to recovery from a provider.
The court further points out that Medicare Part C requires MAOs to provide their enrollees with the same benefits that are provided under traditional Medicare. Consequently, the court concludes that this statutory scheme does not make sense if MAPs are required to provide the same benefits in the same manner as the government but then are limited in ways that the government is not from pursuing reimbursement.
The court therefore finds that Plaintiff may bring a private cause of action against Bayfront for double damages if Bayfront received a primary payment that should have been reimbursed to Plaintiff.
As to the amount, Plaintiff alleges that it is entitled to $12,511.92, double the $6,255.96 amount Bayfront billed Plaintiff for services related to this claim. However, Plaintiff has only alleged it paid Bayfront $691.64 of the $6,255.96 bill, and that First Acceptance paid $3,753.58 of the bill. While the court finds, as a matter of law, that a MAP has a private cause of action against a provider under the MSP, Plaintiff will still be required to prove that the amount it paid Bayfront was actually a conditional payment subject to reimbursement under the MSP.
Bayfront also argues that Plaintiff’s MSP claim is barred by the limitations period in 42 USC 1395(b)(2)(B)(vi). That statutory section indicates that the United States may seek to recover conditional payments where the request for payment is submitted to the entity required responsible to pay within the three-year period beginning on the date on which the item or service was furnished. The court however disagrees with Bayfront’s use of that statute. Instead, the court finds the applicable statute of limitations is in 42 USC 1395y(b)(2)(B)(iii), which provides that action may not be brought by the United States with respect to payment owed if the complaint is filed not later than three years after the date of the receipt of notice of a settlement, judgment, award, or other payment relating to such payment owed. Here, Plaintiff brought this action on March 9, 2017, less than three years from the date it was billed by Bayfront or had any notice that a primary payment had been made to Bayfront. The court therefore concludes that the action is timely.
Regarding the deceptive and unfair trade practice, as well as unjust enrichment claims, neither of which were included in the assignment provided by Florida health care plan to the plaintiff here, the court finds plaintiff has no standing to bring those claims.
What a difference a couple of miles and a couple of days makes. Virtually the same facts, almost entirely the same parties, and certainly the same law and arguments, but profoundly different results with the United States District Court for the Middle District of Florida, Orlando Division, finding that a private right of action under the MSP is unavailable against providers of medical services, but with the United States District Court for the Southern District of Florida, Miami Division, finding that MAPs may file a private cause of action under the MSP for double damages against providers of medical services. I am sure we have not heard the last word on this issue in either of these cases, so stay tuned as other similar cases are decided and appeals on both of these matters are published.
As Required by Section 1893(h) of the Social Security Act, the United States Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), Medicare Secondary Payer (MSP) Commercial Repayment Center (CRC) published its third annual report to Congress for FY 2017 in March 2018. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Downloads/The-Medicare-Secondary-Payer-Commercial-Repayment-Center-in-Fiscal-Year-2017.pdf. Based on the Group Health Plan (GHP) and Non-Group Health Plan (NGHP) recovery work of the CRC, for FY 2017 (October 1, 2016 through September 30, 2017), CMS returned $131.78 million dollars to the Medicare Trust Funds.
On March 13, 2018, the United States District Court for the District of Connecticut published its decision on Aetna Life Insurance Company v. Nellina Guerrera, Carter Mario Injury Lawyers, attorney Sean Hammil, attorney Danielle Wisniowski, and Big Y Foods, Inc. concluding that the MSP Private Cause of Action provision unambiguously permits suit by MAOs and, further, that even if it was ambiguous, 42 CFR section 422.108(f) grants MAOs the right to sue under the Private Cause of Action provision. The court also finds that suit may be brought against a primary plan, but not against beneficiaries or their attorneys. The court also concludes that suit may be brought against Big Y, as its settlement payment to Guerrera and/or her attorneys was not appropriate reimbursement under the MSP.
On March 20, 2018, the United States District Court for the Southern District of Florida published its opinion on MSPA Claims 1, LLC v. Bayfront HMA Medical Center, LLC, concluding that because CMS has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment, Medicare Advantage Organizations also have a private cause of action for double damages against the recipient of a primary payment, in this case Bayfront, a medical provider.
On March 2, 2018, the United States District Court for the Middle District of Florida, Orlando Division, published its opinion on MSPA Claims 1, LLC v. Halifax Health, Inc., in which the court found that a private right of action under the Medicare Secondary Payer Act, 42 U.S.C. §1395y(b) et seq. (MSP Act), which provides for double damages in the event of untimely reimbursement of Medicare payments in certain circumstances, is unavailable against providers of medical services. Based on such ruling, the court dismissed with prejudice claims that had been raised under the MSP Act against Halifax Hospital Medical Center, a public hospital based in Daytona Beach, Fla.
It has been a long time coming, two years to be exact. After the Centers for Medicare and Medicaid Services (CMS) announced their anticipated release of a solicitation for the Workers’ Compensation Review Contractor (WCRC) in 2016 and 2017 and further announced it was continuing to consider expanding its voluntary MSA review process to include liability insurance (including self-insurance) and no-fault insurance MSA amounts in 2016 and 2017, Medicare Secondary Payer (MSP) stakeholders never thought the day would come. But, after a challenge of the awarded contract and after several months during which Provider Resources continued to work under an expired contract, on March 7, 2018, CMS finally held the WCRC Transition Webinar to introduce Capitol Bridge, LLC, the new workers’ compensation review contractor.
On February 8, 2018, the National Council on Compensation Insurance (NCCI) published its MEDICARE SET-ASIDES AND WORKERS COMPENSATION— 2018 UPDATE (study), written by Nedžad Arnautović. The study can be found at https://www.ncci.com/Articles/Documents/II_MSA-WC-Study.pdf What follows is a verbatim rendition of the facts, analysis, findings and conclusions found in the report.
After 35 years of seeking reimbursement of conditional payments post settlement, judgment, award, or payment of a case, in 2015, the Centers for Medicare & Medicaid Services (CMS) transitioned a portion of the Non-Group Health Plan (NGHP) Medicare Secondary Payer (MSP) recovery workload from the Benefits Coordination & Recovery Center (BCRC) to its Commercial Repayment Center (CRC). As a result, on October 5, 2015, the CRC assumed responsibility for the recovery of conditional payments where CMS is pursuing recovery directly from a liability insurer (including a self-insured entity), no-fault insurer or workers’ compensation entity, referred to as Applicable Plans (AP), as the identified debtor. Since then, CMS, through a contract with CGI, had been pursuing recovery directly from APs as the identified debtor when an applicable plan reports that it has ongoing responsibility for medicals (ORM) or otherwise notifies CMS of its primary payment responsibility.
On January 12, 2018, in the Circuit Court of the 11th Judicial Circuit in and for Miami Dade County, Florida, MSPA Claims 1 filed its motion for approval of a class action settlement against Ocean Harbor Casualty Insurance. The settlement agreement is intended by the parties to fully, finally, and forever resolve, discharge, and settle all claims. The motion indicates that the settlement agreement provides a fair, flexible, speedy, cost-effective, and assured monetary settlement to the class members. Thus, the settlement agreement provides considerable benefit to the class members while avoiding costly litigation of difficult and contentious issues. The parties also indicate that the settlement agreement is a compromise, and shall not be construed as, or deemed to be evidence of admission or concession of liability or wrongdoing on the part of Ocean Harbor with respect to any claim of any fault or liability or wrongdoing or damage whatsoever.
On behalf of everyone associated with Flagship, I wanted to take this opportunity to thank you, all of our friends, colleagues, and especially our customers, for your trust and confidence in Flagship. It truly means the world to us. To know that after all these years, despite all of the statutory amendments, the compliance challenges, and the regulatory changes, you still count on us for updates, information, training, guidance, and advice on all of your Medicare and Medicaid risk management issues is so very significant for each of us at Flagship.
On November 28, 2017, the United States District Court for the District of New Mexico published its opinion in Silva v. Burwell, concluding that the uncertainty created by CMS’s repeated failure to clarify its position on requiring MSAs in personal injury settlements generally and in specific cases is proving burdensome to the settlement process. The Court further finds this case is not ripe for review because no federal law mandates CMS to decide whether Plaintiff is required to create a MSA. The Court reiterates that just because CMS has not responded to Plaintiff’s requests to clarify whether an MSA is required in personal injury claims is not reason enough for this Court to step in and determine the propriety of its actions. There may be a day when CMS requires the creation of MSA’s in personal injury cases, but that day has not arrived.
On November 26, 2017, the United States District Court for the Northern District of Illinois published its opinion on Paraskevas v. Price, concluding that Medicare did not abuse its discretion in finding that the state court settlement order was not on the merits and was therefore not binding on CMS when seeking reimbursement of conditional payments. The Court finds the settlement compensated Plaintiff not only for the wrongful death action, but also the estate’s survivor claims in connection with the medical malpractice claim. Medicare’s decision is affirmed, and the Secretary’s final decision that Plaintiff owes $105,000 plus interest in reimbursement of conditional payments made stands.
With Medicare still in financial short and long term trouble, the US Department of Health and Human Services (HHS), and its Center for Medicare and Medicaid Services (CMS), have become increasingly more aggressive about making sure Medicare is the secondary payer pre and post settlement in auto, liability, no-fault, and workers compensation claims. As a result, insurers, self insureds, and third party administrators responsible for payment of auto, liability, no-fault, and work comp claims must be aware of and understand their responsibilities under the Medicare Secondary Payer Act (MSP), and be prepared for the multiple risks associated with MSP compliance. What follows is part two of a four-part analysis of risks associated with each of the MSP compliance components: Mandatory Insurer Reporting (MIR), Conditional Payment Resolution (CPR), and Medicare Set Asides (MSA). This second part focuses on CPR compliance risks for auto, liability, no-fault, and work comp primary payers.

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