Source: https://lienblog.wordpress.com/
Timestamp: 2019-04-24 04:12:43+00:00

Document:
Cigna Corp. v. Amara in the Supreme Court: Although the district court did not have authority under Section 502(a)(1)(B) of ERISA to reform CIGNA’s pension plan, it did have authority to do so under another provision, Section 502(a)(3). The SOCTUS Blog’s “Plain English Holding”: Courts may order changes to the terms of a pension plan to remedy false or otherwise unlawful disclosures by the plan to the plan participants. The progeny ofAmara will begin to take this holding a step further.
Zurich American Ins. Co. v. O’Hara, 11th Circuit: While Amara seemed to open the use of equitable defenses in ERISA liens, Zurich ignored this opening and relied strictly on the plain language of the ERISA plan.
U.S. Airways v. McCutchen, 3rd Circuit: Citing Amara, the Court noted that an ERISA Plan’s ability to recover was limited by statute to “appropriate equitable relief.” The court then reasoned that appropriate equitable relief requires application of defenses available in equity actions. These defenses include the common fund doctrine and perhaps the made whole doctrine.
CGI v. Rose, 9th Circuit: The 9th Circuit agreed with the 3rd Circuit, holding that “parties may not by contract deprive [a court] of its power to act as a court in equity,” and made clear that notwithstanding the express terms of a Plan, it is within a district court’s broad equitable powers under ERISA to apply principles of equity in fashioning appropriate relief.
Unfortunately for Plaintiffs, and fortunately for insurers, the Supreme Court overturned the 3rd Circuit holding in US Airways v. McCutchen. This also effectively overturns the 9th Circuit holding in CGI v. Rose.
In a §502(a)(3) action based on an equitable lien by agreement like this one—the ERISA plan’s terms govern. Neither general unjust enrichment principles nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules invoked by McCutchen—can override the applicable contract.
In reality, this leaves us with the status quo. Reduction becomes more of a negotiation and is likely available only as a pre-settlement agreement.
One pro-plaintiff result of the holding is seen where the Court noted, “US Airways’ plan is silent on the allocation of attorney’s fees, and the common-fund doctrine provides the appropriate default rule to fill that gap.” So, if the plan is silent as to any equitable remedy, that remedy can apply.
We believe the result of this case and the key to ERISA lien resolution becomes early discussion with the plan administrators and subrogation firms.
The Supreme Court has decided North Carolina’s Medicaid recoveries are limited by the federal anti-lien statute. The Court held the federal anti-lien provision pre-empts North Carolina’s irrebuttable statutory presumption that one-third of a tort recovery is attributable to medical expenses. This ruling has similarities to that of Arkansas v. Ahlborn.
We will update this post after an extensive review of the case holding.
Starting in October you should follow these rules to obtain a Final Conditional Amount. Just one slip up and you might not get it. Keep in mind the discrepancy dispute process allows the MSPRC an 11 business day response time or the dispute is deemed admitted. We expect plenty of dispute denials as a result of the tight time frame.
We will work with our contacts at CMS and the MSPRC to better understand this process. If you need help with any type of lien resolution we can assist you with Medicare lien resolution, Medicaid lien resolution, ERISA liens, private insurance liens, and more. We’ll take care of getting you the “lien” and reducing it too.
On January 10, 2013, President Obama signed H.R. 1845. Included on the Medicare IVIG Access Bill is the SMART Act. SMART was designed to reform the conditional payment, final demand, and MMSEA Section 111 reporting processes. Click here to read the full text of H.R. 1845. As you can see below, we aren’t as excited with SMART as we had been in the past.
Before SMART our answer was usually long, calculated, and not really an answer.
We would tell attorneys that we have a conditional payment amount of X and that it will reduce down to Y after you provide Medicare with your costs and fees. But we would remind them that the conditional payment amount would get one more review at that time, and, if Medicare found any new payments it deemed related, it would add those payments to the Final Demand. We could assume the lien may or may not change depending on the age of a conditional payment letter. For example, if the conditional payment letter was more than a year old we would worry that it would increase. Of course, as long as we were involved in the process, we wouldn’t allow the case to proceed without obtaining updated conditional payment letters every few months.
Now we ask two new questions: What does the final version of SMART look like? What changes?
At any time 120 days prior to the expected settlement, judgment, or award the claimant or applicable plan may notify the Secretary (of HHS, in reality they notify the MSPRC) of the expected date of settlement. You need not notify the MSPRC of the expected amount.
There is also a mechanism for a non-appeal reduction of this final conditional amount. Section IV states that the plaintiff can provide documentation describing and explaining the discrepancy between the amount and the amount he believes is fairly related to the case. There is no time frame for sending this discrepancy dispute; however, we believe the MSPRC will create a limited time frame. Then, the MSPRC is given just 11 business days (following receipt) to determine whether there is a reasonable basis for it to remove the claims. If no determination is made within the 11-business days the discrepancy dispute is deemed accepted. We also expect strict rules on that 11-day time frame (likely not based on your receipt of the MSPRC response). It is important to remember that this discrepancy dispute process is not connected to and does not limit the regular appeals process that currently exists.
Sections 202-205 are not as important to the Medicare lien resolution process. Section 202 creates a minimum threshold for both Mandatory Insurer reporting and conditional payment reimbursement. The Secretary of HHS is required to publish that threshold by November 15 each year. Application of this section begins in 2014.
Section 203 makes fines for noncompliance of Mandatory Insurer Reporting discretionary instead of mandatory. Guidelines are not yet developed.
Section 204 states that a Responsible Reporting Entity in Mandatory Insurer Reporting need not report SSNs or Health Insurance Claim Numbers. The time frame for implementing Section 204 is 18 to 30 months.
Section 205 creates a statute of limitations for conditional payment recovery of three years.
SMART has good intentions; however, it has very strict requirements. It may be difficult to qualify for a final conditional reimbursement amount. You have to be vigilant to get that amount and then you have to settle within 3 days of the download. If you forget to download the amount then it is not final.
We worry that the strict time frames on discrepancy disputes responses (just 11 days) will result in the MSPRC simply denying all disputes. You can still appeal.
SMART must be implemented within 9 months of January 10 (approximately October 10) – hopefully the MSPRC can keep up. The government will not allow the Medicare lien process to simply disappear through its own inability to keep up with time limits.
Both the House and Senate passed the SMART act prior to the Christmas holiday last week. In the House just 3 “no” votes were cast against 401 “yes” votes. The Senate passed the act without a single “no” vote. There is little doubt that President Obama will sign the bill into law.
The SMART, or, Strengthening Medicare and Repaying Taxpayers Act is designed to cause major changes to the Medicare Secondary Payer (MSP) process for nongroup health plans. This means it is aimed squarely at Medicare Parts A & B “liens.” The Act effectuates changes to both plaintiff-beneficiaries and primary payers (a/k/a/ defendant insurance companies). Plaintiffs and their attorneys should benefit from a provision locking in the Conditional Payment amount for three months. Primary payers will benefit from safe harbor provisions for RRE reporting.
The SMART Act will help primary payers primarily by creating a safe harbor where the primary payer is unable to obtain the plaintiffs’ Social Security Numbers after a good faith effort. This change was necessitated by plaintiffs’ refusal to provide their Medicare numbers or SSNs due to privacy concerns. Medicare numbers are often just as “private” as SSNs because they are generally the SSN followed by a letter.
The Centers for Medicare and Medicaid Services (CMS) had created a Query System to determine whether individuals are Medicare eligible; however, that system has been reliant on Medicare numbers and SSNs. It will be interesting to see if CMS can develop a workable system that avoids such personal information.
In addition to eliminating the use of SSNs and Medicare numbers, SMART creates a three-year statute of limitation for all MSP claims. The statute of limitations issue had been hotly contested prior to this change.
Finally, the $1,000/day penalty for non-reporting will be modified.
The key benefit for Plaintiffs and their attorneys will be the ability to “lock in” conditional payment amounts prior to settlement. If you provide the MSPRC with enough time to calculate the conditional payments prior to settlement, and, if you notify the MSPRC of settlement less than three months after its determination of conditional payments, it cannot increase that amount. We do question whether the MSPRC can comply with such a system. This rule could lead to an even longer waiting period for the initial conditional payment letter.
Nonetheless, this 3-Month Lock-In should be very exciting to plaintiff attorneys as it should take some of the guessing game out of MSP compliance. It is important to remember the SMART Act does not effect or create MSA rules.

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