A case is pending in a US District Court in West Virginia that should make all insurance professionals, attorneys, carriers, TPAs, employers, and anyone else associated with MSP compliance issues sit up and take notice.  The suit was filed by Medicare against an attorney in a liability case in which he secured a settlement for the claimant that included future medical services and, of course, his attorney fees.  Of note is that the claimant submitted bills for the liability accident to Medicare, which Medicare paid,  prior to claimant’s retention of the attorney for representation.

Subsequent to the settlement, the attorney sent notice to Medicare of the settlement specifics.  Medicare then recalculated their outstanding conditional payments, reduced the total outstanding by about half of the originally reported amount and advised that they expected to be paid from the proceeds of the settlement.   No payment was made to Medicare within the statutorily allowed 60 days, so Medicare then filed suit regarding its intent to collect outstanding payments plus interest directly from the attorney.  The attorney filed a motion to dismiss the suit claiming he could not individually be held liable for these payments.

The US District Court disagreed and denied his motion. They cited the MSP statute as well as other applicable law which supports Medicare’s claim.  The law clearly states that once payment has been received for medical services from an insurer or other primary payer,  Medicare becomes a secondary payer and, as such, has the right to collect it’s conditional payments from ANY entity that received money from the “primary plan or proceeds of the primary plan”  (42 U.S.C. 1395y(b)(2)(B)(ii)).    In this case, they found that the retailer involved demonstrated responsibility by making payment (regardless of liability concerns) and, as such, became the “primary plan” making anyone receiving proceeds from their “plan”  an “entity” from which Medicare can pursue recovery.

Bottom Line:  This case provides not only clarification on the issue of who can become an “entity” which Medicare can pursue in its effort to obtain reimbursement of its conditional payments, but also highlights some of the vital issues that must be addressed by the parties responsible for every property and casualty claim resulting in any type of medical settlement:  

• early identification of Medicare’s interests in a case
• open and ongoing dialogue with Medicare in negotiation of any outstanding conditional payments they may allege
• strict adherence to their statutory timelines for response and payment
  

SCHIP is on the horizon and will certainly fire up this issue.   Is this just the tip of the iceberg?  

Case cite:  (United States of America vs Paul J. Harris, US District Court for the Northern District of  West Virginia, Civil Action No. 5 :08CV102).

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