SCOTUS Limits Medicaid Lien Recoveries

On March 20, 2013 the Supreme Court released its decision in Wos v. EMA, a federal case determining the legality of North Carolina’s Medicaid recovery statute.  The Court held that the anti-lien provision of the federal Medicaid Act prevents a state from taking any portion of a judgment or settlement not designated as medical care.

More simply, Medicaid can only recover for the portion of the settlement that represents medical bills.

North Carolina’s statute stated that it could recover for Medicaid payments up to one-third the total amount of settlement.  The Court ruled that this statute is preempted by the federal anti-lien provision because it permits the state to “take a portion of a Medicaid beneficiary’s tort judgment or settlement not designated for medical care.  The Court continued by noting North Carolina’s statute failed to provide a scheme for determining if the one-third is a reasonable limit.

This decision has both positive and negative effects for Medicaid lien resolution.  The positive is that it provides more mechanisms for reducing Medicaid liens.  Unfortunately, those mechanisms may be more costly than simply applying a formula such as North Carolina’s now illegal one-third maximum.  The negatives continue where, in some cases, it might be possible for Medicaid to now take more than one-third of the settlement.

In order to take full advantage of Wos v. EMA you should consult a Medicaid lien specialist and work with Medicaid representatives throughout the settlement process.  Always be sure to “show your work” in calculating settlements.

The negatives of this decision will only apply where you fail to account for Medicaid’s reimbursement in your settlement preparations.

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.

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

SCOTUS: US Airways v. McCutchen Overruled

On April 16, 2013 the Supreme Court of the United States released its holding in US Airways v. McCutchen overruling the 3rd Circuit’s decision. The 3rd Circuit’s decision was part of a recent line of ERISA lien / ERISA reimbursement / ERISA subrogation cases with results in both directions.  The following four cases are listed in chronological order of their decisions:

1. 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.
2. 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.
3. 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.
4. 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.

The Supreme Court wrote:

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.

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.

 

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

SCOTUS: North Carolina Medicaid Recovery Limited by Federal Anti-Lien Statute

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.

SMART Act: Final/Conditional Medicare Lien Process

Looking back at yesterday’s SMART Act post it is hard to decipher how to properly obtain what we are calling a “Final Conditional” Amount or Lien.  We hope the following workflow (including our assumptions and expectations of the future process) will help:

1. T-120 days to settlement – Send an Expected Settlement Notice to the MSPRC;
2. T-115 days to settlement – Check to see if the MSPRC received the Expected Settlement Notice.  Everyone knows the MSPRC response, “we don’t have that in the file” or “I don’t see that here.”  If you don’t check you might waste the entire process.
3. T-55 days to settlement – You should receive notice that the Final Conditional Amount is available for download on the MSPRC website, or more likely, the Medicare Secondary Payer Recovery Portal (MSPRP).  If you have not, contact the MSPRC to check the status.  Keep in mind the rule states they have 65 days from receipt of your notice – so we will have to keep track of how they define the word receipt.  If your case qualifies for “exceptional circumstances” the MSPRC will tell you it needs another 30 days to process the Final Conditional Amount.
4. T-25 days to settlement – You should receive notice that your exceptional circumstances request is completed and the Final Conditional Amount is available for download.
5. T-3 days to settlement – You must download the Final Conditional Amount from the designated website.  If you do so at 4 days to settlement it is apparently invalid and does not constitute a Final amount.  If you do so more than 3 days after settlement (we believe after is still okay – the rule uses the word “within”) it is also invalid.

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.

 

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

 

SMART Act: Is Medicare Lien Resolution Smarter Now?

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.

The Problem Before SMART

The problems we have run into (say, prior to January 10, 2013) usually involve attorneys on both the plaintiff and defense side not realizing the Medicare lien is not final.  SMART was intended to address the question:

“How do I settle if I don’t know how much Medicare wants?”

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?

The SMART Act: Sections 201-205 of Medicare IVIG Access

Section 201 – Determination of reimbursement amount through CMS website to improve program efficiency

Section 201 is the most important section to Medicare lien resolution.  The section seeks to improve efficiency in the conditional payment system, including providing a mechanism for pre-settlement final demands.  In a nutshell, here’s how it works:

1. 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.
2. CMS then has 65 days from receipt of said notification/request to provide the Medicare reimbursement amount (via the Website).  This 65 day period can be extended to 95 days in exceptional circumstances; however, exceptional circumstances are limited to 1 percent of repayment obligation files. The time period after the 65-95 day period and before the end of the 120 day limit is deemed by the new 1862(b)(2)(B)(vii)(V) as the “Protected Period.”
3. If the plaintiff or applicable plan downloads a Medicare claims statement from the Website during the Protected Period, and, does so within 3 business days before the date of settlement, judgment, award, or other payment, that downloaded amount shall constitute the “final conditional amount.”
4. 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

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.

Will SMART help?

Yes. No. Maybe.

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.

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.

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

 

House & Senate Pass Medicare’s SMART Act

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.

What is the SMART Act?

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.

Primary Payer Benefits

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.

Plaintiff-Beneficiary Benefits

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.

At Lien Resolution Services 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.

 

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

US Senate Passes SMART Act

The US Senate passed the SMART Act tonight, promising major changes to the Medicare lien resolution system. More to come.

NJ Court: Federal Law Does NOT Mandate Medicare Set-Asides

The United States District Court of New Jersey recently stated (albeit in an Unpublished Opinion) that Federal Law does not mandate Medicare Set-Asides in a liability context.  The question arose in Sipler v. Trans. Am. Trucking Inc. following a general settlement for $225,000.  After the verbal settlement the defense attorney attempted to insert language stating:

1. The plaintiff cannot claim reimbursement from Medicare for healthcare arising out of the sued-for claim;
2. His health insurance will not pay for healthcare arising out of the sued-for claim because those injuries are pre-existing; and,
3. Medicare will not pay for future treatment and healthcare arising out of the sued-for claim.

The defendant’s first argument requiring a Liability Medicare Set-Aside comes from CMS’s September 2011 Memorandum where it stated, “[a]ll parties do have significant responsibilities under the MSP to protect Medicare’s interests when resolving cases that [include] future medical expenses. A recommended method to protect Medicare’s interest is a set-aside arrangement…”  (Emphasis in Original).  The court noted, “however, it is well-settled that ‘[i]nterpretations such as those in opinion letters-like interpretations contained in policy statements, agency manuals, and enforcement guidelines … lack the force of law…’ ” Citing Christensen v. Harris County, 529 US 576, 587 (2000).

Next, the court very clearly stated what would eventually become its holding:

Indeed, no federal law requires set-aside arrangements in personal injury settlements for future medical expenses.

What makes this decision most interesting is that it came after the Federal Register’s Advanced Notice for Proposed Rulemaking regarding Liability Medicare Set-Asides (LMSAs).  In the end, the Court enforced settlement without the three terms discussed above.  But our main takeaway from this case is the Court specifically stating there are no federal laws requiring LMSAs.

At Lien Resolution Services 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.

 

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

AAJ Working Toward 2nd Circuit Allocation of Medicare Lien

The AAJ sent out an update regarding a case where it is attempting to win a major victory for Medicare beneficiaries.  The plaintiffs are using Bradley v. Sebelius to try to convince a probate court to allocate the settlement funds and reduce Medicare’s lien.  The AAJ writes,

In Bradley, the probate court ordered an apportionment of a small settlement for medical negligence at a nursing home between the estate, which was obliged to reimburse Medicare for advanced medical expenses, and the decedant’s surviving children, who had no such obligation. In Guarneri, the parties settled a medical malpractice case, but lawyer Turkewitz was dealing with a probate court that would not give his client — the surviving spouse —authority to disburse funds from the settlement. When Turkewitz’s client asked the court to apportion the settlement funds and to allow her to distribute the funds, the probate court refused to move forward without the participation of the Centers for Medicare and Medicaid Services (CMS).
Sadly, this is a case that dragged out far too long with no word from CMS. The client’s husband died in January 2007, the case settled in February 2008, and then things grounded to a halt. The trial court told the probate court to apportion the money, the probate court sent it back to the trial court for apportionment, and the trial court sent it back to the probate court for allocation. All the while, no one has heard from CMS.
A Turning Point, at 10 Percent Interest

At long last, the New York City Department of Social Services agreed to the allocation, and said it will accept a proportional share of the settlement. When CMS finally surfaced, instead of compromising, it stated it would send the final debt to the U.S. Treasury Department for collection of the full amount of the debt, minus procurement costs, and it would charge interest on the full amount of the debt at a rate of 10 percent a year.
CCL Litigation Counsel Valerie M. Nannery has contacted the MSP recovery center to ask it to recall the debt from Treasury because no money has even gone to the Estate – meaning there is no money with which to pay Medicare or Treasury. Nannery has also contacted the MSP coordinator in New York to work with Medicare to compromise the debt owed. Medicare has never replied to Turkewitz, who contacted Medicare repeatedly requesting that it compromise its lien.
In the more than five years since Michael Guarneri died, the settlement money has been held in an escrow account. His surviving wife and children have only received enough money to cover funeral expenses.
Next Steps
CCL hopes that Medicare will compromise its lien amount. But if it continues to refuse to participate in an allocation proceeding in the probate court in New York, and if the probate court continues to refuse to act in Medicare’s absence, CCL may need to go to the state court’s appellate division to ask it to mandate the probate court to act and allocate the proceeds of the settlement that was reached more than four years ago.
Subsequent to any allocation and distribution of funds, if CMS maintains that it is entitled to recover its full lien amount, and refuses to take a reduced recovery, CCL will litigate the issue against CMS in the federal courts. The issue of whether Medicare is entitled to recovery only from the part of a settlement that is allocated to medical expenses would eventually be decided by the U.S. Court of Appeals for the Second Circuit

The obvious take away here is that they are nowhere near an authoritative victory.  But – CMS’s lack of response can only help the plaintiffs when the Second Circuit finally gets this case.  My only concern is that CMS might never appeal if it loses, knowing the trial court (even at a Federal level) will be nothing more than persuasive to future cases.

At Lien Resolution Services we can assist you with Medicare lien resolution, Medicaid lien resolution, ERISA liens, private insurance liens, and more.

 

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

 

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

 

ERISA: Amicus Briefs Filed in US Airways v. McCutchen

During the U.S. Supreme Court’s upcoming term, the court is scheduled to hear U.S. Airways v. McCutchen, 663 F.3d 671 (3d Cir. 2011).  We have previously written about the issue of equitable doctrines in ERISA:

• ERISA! ERISA! ERISA! A Primer;
• Ninth Circuit Reduces ERISA Lien Rights (CGI v. Rose);
• ERISA Liens: What You Need to Know (includes original analysis of McCutchen); and,
• ERISA Liens: Greed Was Never a Good Idea.

Now that the Supreme Court has granted Certiorari and agreed to hear the appeal of US Airways v. McCutchen we are beginning to see Amicus briefs.  As of September 13 we count six briefs filed so far.

ERISA and health insurance plans are arguing that the application of equitable doctrines harms other beneficiaries of theplan.  They argue that ERISA Subrogation and reimbursement recovery flows to the benefit of the pool of insureds.  They further argue this limits premium rate increases.

We disagree.  Plaintiffs disagree.  Plaintiffs’ attorneys disagree.  And we think most insured individuals will disagree.  We think it is clear that subrogated recoveries flow to the benefit of the ERISA plans.  Those plans (United HealthCare, Humana, BCBS, etc.), their subrogation providers (Ingenix, ACS, etc.) and companies like US Airways receive a windfall.  None of the recovery is returned to the insurance pool to help the insureds or to limit premium increases.

In its simplest terms, subrogation allows the health insurance to stand in the plaintiffs’ shoes and recover what they would not have paid but for the defendant’s negligence.  But ERISA subrogation supposedly is not subjected to the same limits (comparative fault, policy limits, risk limitation through settlement) to which the plaintiff is subject.  These are the bases for anti-ERISA arguments.

US Airways v. McCutchen should be decided in June or July of 2013.

If you need help reducing an ERISA lien please contact us.  At Lien Resolution Services we can assist you with Medicare lien resolution, Medicaid lien resolution, ERISA liens, private insurance liens, and more.

 

Ryan J. Weiner

Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

 

This Blog/Web Site is made available by the publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.