Recently, the U.S. District Court for the Western District of Louisiana issued the Benoit v. Neustrom opinion. 2013 U.S. Dist. LEXIS 55971 (decided April 17, 2013). Here, the parties sought approval that CMS' future interest could be fully satisfied by funding an MSA for less than full value of the Claimant's future medicals. The parties agreed to resolve a liability claim for a gross amount of $100,000. Defendant had an MSA allocation prepared, which concluded that the Claimant would be expected to incur between $277,758.62 to $333,267.02 in future injury-related care otherwise covered by Medicare. Additionally, Medicare had made conditional payments on the Claimant’s behalf totaling $2,777.88. 

On March 20 the U.S. Supreme Court held that the anti-lien provision of the federal Medicaid Act preempts a state’s right to take any portion of a Medicaid beneficiary’s tort judgment or settlement not designated as payment for medical care.  The Court’s ruling in Wos v. E.M.A., effectively blocks North Carolina’s efforts to recover up to one-third of any damages a Medicaid beneficiary recovers from a third party, as reimbursement for the state’s Medicaid coverage of the beneficiary’s medical treatment. Wos v. E.M.A., U.S. Supreme Court No. 12-98, issued March 20, 2013 (Slip Opinion).

The Supreme Court of the United States is meeting today to decide which cert. petitions will be granted for the new term, which formally begins next Monday.  One of the petitions distributed for review at the conference will be that from Hadden v. United States, in which DRI – The Voice of the Defense Bar filed an amicus curiae brief in support of cert.  The issue in the case is whether, under the Medicare Secondary Payer Act, the government is entitled to full reimbursement of its Medicare payments when a beneficiary compromises a tort claim and recovers a reduced amount for medical expenses, or whether the government (like its beneficiary) is entitled to only a proportionate recovery from the settlement.  The petition is listed on the scotusblog.com (a blog devoted to coverage of the Supreme Court) as one of the “Petitions to Watch” at this conference.  Today, at about 9:30 a.m. eastern, the court is expected to release its list of the petitions granted in today’s conference.

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. 

This morning the Supreme Court issued its long–awaited decision on the constitutionality of the Patient Protection and Affordable Care Act. The Court upheld the most important feature of the act, the individual mandate, which requires that individuals not covered by health insurance buy coverage or face a “shared responsibility payment.” This mandate was critical to the success of the Act, since the availability of affordable coverage for the millions of uninsured Americans required a large pool of customers. In reviewing the authority of Congress to require this mandate, the Court found that it falls within the taxing power of Article I, Section 8 of the Constitution. The Court also noted that the individual mandate was not an appropriate exercise of Congressional power under the Commerce Clause or the Necessary and Proper Clause. Writing for a plurality of justices, Chief Justice Roberts noted that the questions of the soundness of the policy is not an issue for the court to consider, but only to decide whether it is an appropriate exercise of Congressional authority. Ultimately the Court found that the mandate’s imposition of a penalty for failing to purchase insurance was not commerce that could be regulated by Congress, but would fall within its taxing power. In finding that the mandate was a tax, the Court adopted the position of the Solicitor General, and guaranteed that the issue will continue to resonate in political debates through the November election.

On June 14, 2012, the Centers for Medicare & Medicaid Services (“CMS”) released an Advance Notice of Proposed Rulemaking (“ANPRM”).  This document solicits comments on standardized options that CMS is considering implementing to enable “beneficiaries and their representatives” to “meet their obligations to protect Medicare’s interest” with respect to future medicals in liability settlements (including self-insurance). Comments will be accepted for sixty (60) days from the date that the ANPRM is published in the Federal Register.

It is not surprising that plaintiffs claiming to be injured in auto accidents are often evasive about their prior medical history and treaters. In an article published by the American Medical Association, “Examinee-Reported History Is Not a Credible Basis for Clinic,” Robert Barth, Ph.D., cites numerous studies confirming that claimants tend to misrepresent their pre-claim functioning as having been “superhuman,” and distort their reported history in a fashion that potentially inflates the financial compensation for their claims.

This forces defense attorneys to utilize alternative methods in their ongoing attempt to locate the pre-accident smoking gun:

• Jail medical records: In a recent Michigan case, a plaintiff admitted he previously suffered a closed head injury from a prior auto accident. However, he claimed that he never had seizures before a subsequent auto/pedestrian incident, and was not taking Depakote for seizures. There was a gap in his post-MVA treatment, and it was discovered he was incarcerated. Indeed, the jail medical records confirmed a year before the accident that he suffered a seizure and was taking Depakote, an anti-seizure medication, for his condition.
  
• MasterTrace: This service bears fruit, particularly when a plaintiff has no prior history of health insurance, and has lived in other states. MasterTrace performs an extensive canvass profile of hospitals and pharmacies within a certain designated radius and matches up with the plaintiff’s background information to come up with potential “hits.” However, this service can be expensive, depending on the nature of the search.
• Prescription Drug Monitoring Programs (PDMP): A PDMP is an electronic database that collects designated data on substances dispensed to a patient in the state. Thirty-seven states currently have PDMPs. On September 1, 2011, pharmacists in Florida began submitting data to the recently implemented Florida Prescription Drug Monitoring Program. Across the country, access to this information is restricted to physicians and law enforcement personnel. While defense attorneys are not able to subpoena the information, if you are lucky, the plaintiff’s treating physician may request a PDMP if he or she suspects drug abuse or doctor shopping. Generally, the physician will not supply a copy of the PDMP in a standard subpoena unless requested, or if you happen to come across it during a review of the actual file in a doctor’s deposition. If you do land such a report, it may provide an abundance of information, including prior treaters and pharmacies, and demonstrate evidence of pre-accident drug abuse.
  
• Veteran Administration Records: Do not skim over the fact that a plaintiff served in the military 40 years ago. He or she may still be treating and receiving prescriptions from your local VA hospital. Further, if a plaintiff is receiving a pension from the VA, he or she periodically has to undergo a disability determination, and fill out paperwork. It is always compelling to see what the plaintiff tells the VA, as compared to Social Security Disability, workers’ compensation, and plaintiff's own treaters during the identical time frame.
• Health Insurance Cards: Somewhere in every treater’s medical record, hospital’s intake sheet, or hidden deep within a prior auto accident claim file is a copy of plaintiff’s health insurance card (if he or she has one). If located, these health insurance records may provide a precise history of all prior hospital, doctor and pharmacy visits.

A plaintiff is not going to hand you his or her pre-accident history on a platter, so expect to do some extra digging. With enough persistence, you may ultimately discover a wealth of information that could undermine the plaintiff’s credibility and case.

Robert Abramson is an associate in the law firm of Kopka, Pinkus, Dolin & Eads in Farmington Hills, MI. He specializes in first-party, third-party and uninsured motorist claims in Michigan. Mr. Abramson is a member of DRI's Young Lawyers and Insurance Law Committees.

CMS Announcements on Fixed Percentage Option for Settlements of $5,000 or less, $300 Threshold Limit for Reimbursement, and Identification of Contractor for Medicare Secondary Payer Recovery

On September 23, 2011 the MSPRC announced that it would be adding a Self Service Information Feature to its current Customer Service Line that will provide automated conditional payment information over the telephone. It is scheduled to go live on September 30, 2011. The announcement suggests the advantages of the new telephone feature would be:

We find that it raises more questions than it answers. For example:

More information was promised although none has been received to date. We will keep you up to date as we receive the information.

Federal courts in Florida have finally learned what is needed to cut into Medicare Fraud, long prison sentences to those convicted of stealing from Medicare. 

Lawrence Duran, 49, the owner of Miami-based American Therapeutic Corp, a Miami businessman was sentenced to 50 years in prison on September 16, 2011 for masterminding a healthcare fraud scheme that sought to bilk the U.S. government out of more than $200 million. Duran was arrested last October on charges that he executed what prosecutors described in court documents as "one of the largest and most brazen healthcare fraud conspiracies in recent memory." 

His prison sentence was believed to be the harshest ever for defrauding Medicare, the federal insurance plan for the elderly and disabled. He also was ordered to pay $87.5 million in restitution. American Therapeutic was one of the nation's largest chains of community mental health centers licensed by Medicare.

His co-conspirator, Marianella Valera,  will spend the next 35 years in prison for taking part in the $200 million Medicare fraud scam that targeted mental health centers. Marianella Valera manipulated records in order to keep patients at a facility longer than medically required which allowed for higher billings to Medicare bills.

Prosecutors said the company, operating out of the southeastern city widely viewed by law enforcement officials as the healthcare fraud capital of the United States, billed Medicare for more than $205 million in claims over eight years for mental health services that were either unnecessary or never provided to patients.

ZIFL agrees, this has to be the most severe sentence imposed for this type of crime. Judges, like the one in Miami, should understand that Medicare and other insurance fraud will never be deterred unless they impose severe sentences like that imposed on Duran.