The Medicare, Medicare and SCHIP Extension Act of 2007 ("MMSEA") requires insurance companies and self-insured employers to report payments and settlements made to claimants who are Medicare-eligible.  42 U.S.C. § 1395y; 42 CFR § 411.24.   After several delays, this requirement was implemented in early 2011.  The Medicare reporting requirement only applies to claimants that are Medicare beneficiaries.  Nonetheless, because the penalties for non-reporting are severe, it may prove prudent to report the claim in all cases and allow The Center for Medicare and Medicaid Services ("CMS") to make the determination of whether the claimant is a Medicare beneficiary.  This becomes increasingly pressing considering that a claimant may become Medicare eligible during the pendency of the claim.  Consideration should be given in cases where the claimant is (1) 65 years or older; (2) on social security disability; (3) suffering from end stage renal disorder; or (4) has a reasonable expectation of becoming Medicare eligible in 6 months.  Currently, the CMS has established a schedule in which the reporting of certain claims will become mandatory.  The schedule is as follows: April 1, 2012, the reporting threshold was $50,000; on July 1, 2012 the threshold will be $25,000; on October 1, 2012 it will be $5,000; and by 2015 the threshold will drop to zero and all claims will have to be reported.

MMSEA mandates reporting requirements by which CMS recovers conditional payments from any interested parties; which includes self-insured employees or defense counsel.  The statute mandates reimbursement within 60 days of settlement or satisfaction of judgments.   Nonetheless, collection attempts by CMS within 60 days of settlement when the Medicare beneficiary disputes the reimbursement claim may be considered "irrational."  Haro v. Sebelius, 789 F. Supp. 2d 1179, 1190 (D. Ariz., 2011).

There are steep repercussions for failing to comply with the Medicare reporting requirements.  Specifically, an insurer may be fined $1,000 per day per claimant for failing to report.   The United States may also bring a private action against any and all persons or interested parties responsible for making payments.  This may result in defense counsel being liable to CMS for reimbursement.   Nonetheless, at least one court has found that Congress never expressly made attorneys responsible for Medicare reimbursements. See Haro, 789 F. Supp. at 1192.

As a result of the mandatory requirements of reporting, it has become increasingly important for defense counsel to report potential claims to CMS.   In the initial phase of the claim, plaintiff's counsel should report the potential claim to CMS.  This information should be disclosed as early as possible in order to facilitate settlement discussions and satisfactions of judgments.  Further, defense counsel should direct discovery to obtain the claimants potential Medicare eligibility; such as requesting production of the claimant's Medicare card and Medicare conditional payment letter.  Defense counsel should also (1) include Medicare indemnification language in any settlement agreement; (2) include Medicaid and Medicare as an additional payee; and (3) tender proceeds with the disclaimer that CMS will be reimbursed.   The Supreme Court of New York took the position that the plaintiffs were responsible for satisfying the Medicare lien considering that when settlement was placed on the record, plaintiff's' counsel stated that they would hold harmless and release the settling defendants from the Medicaid and Medicare liens.  Fried v. City of New York, 940 N.Y.S. 2d 795, 803 (N.Y. Sup., 2012).


Marie Giraud is currently an associate in the Boston office of Morrison Mahoney LLP. 

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