Section 111 of the MMSEA & Medicare Liens: A Harbinger of Settlement Delays?

Part 2 of 2 – Avoiding Delays

This post is part two of a two-part series.  You can find part one here.  This entry deals with non-payment of settlements as a result of Section 111 of the MMSEA.  There is a solution: prepare.

An Agreement is an Agreement – Except When it Isn’t

The first thing you should know is that a settlement agreement is an agreement – if you can get your judge to say so.  Without going to the judge where there is no mention of Medicare, the settlement payment should be made immediately.

One example is Tomlinson v. Landers, 2009 WL 1117399 (M.D.Fla.) where the defendant put Medicare’s name on the settlement check even though the settlement agreement made no mention of Medicare.  The defendant insisted that federal law (namely 42 CFR 411.24) forced it to put Medicare’s name on the check.  The plaintiff assured the defendant that Medicare would be reimbursed out of the settlement proceeds and went so far as to agree to indemnify the defendant for any Medicare claims.  The defendant refused to remove Medicare as a payee on the check.  Predictably, the attorneys went back to the judge.

The Tomlinson court held:

  1. Federal law does not require a primary payer (the defendant) make payment directly to Medicare;
  2. The defendant would not have violated federal law by omitting Medicare’s name from the check; and,
  3. A primary payer may be liable to Medicare if the beneficiary (plaintiff) fails to reimburse Medicare within 60 days of the final lien demand.

Unfortunately, this meant that the parties failed to reach a meeting of the minds with regard to this issue of reimbursing Medicare.  The court rejected the settlement.

A similar situation, but different result, occurred in the Circuit Court of Wayne County, Michigan.  Once again, the settlement releases made no mention of the Medicare lien.  However, the plaintiff’s counsel received an email from the defense stating it required final documentation of Medicare’s lien before it would release the check.  There, the defendants already had the case dismissed pursuant to the settlement order.

The judge entered an order compelling payment.  No written reasons were given, although the plaintiff’s attorneys, Erik Stone and Cyril Weiner of Weiner & Associates, LLC, in Southfield, MI, believed that the judge was swayed by the firm’s offer to indemnify the defense for lack of payment if Medicare were to go after the defense.  Additionally, at the urging of Marcy Spitz, Co-Founder of Lien Resolution Services, the plaintiff’s attorney also included arguments citing U.S. v. Harris, 2009 WL 891931 (N.D. W.Va. 2009).

In U.S. v. Harris, the plaintiff failed to satisfy the final lien and the courts held that the plaintiff’s attorney was liable to Medicare for the lien amount.  He had taken fees and costs from the defendant as payment for a defective ladder that caused injury to his client.  In Harris, the court ruled that an attorney can be held individually liable under 42 U.S.C. §1395y(b)(2) when he or she distributes settlement funds without satisfying an existing Medicare reimbursement right.  Essentially, this is another example of courts holding a plaintiff and his or her attorney to be liable for the lien first – before a defendant could be turned into the scapegoat.  It also proves that plaintiffs’ attorneys must report all Medicare beneficiaries’ lawsuits to the MSPRC.

Unfortunately, the law is inconsistent for Medicare lien and distribution disagreements.  One judge might reject settlement due to no meeting of the minds.  Another might compel payment.

The Middle Ground

A simpler option for the plaintiff is to report the case to the Coordination of Benefits Contractor (COBC) as soon as possible.  You can do this even before filing a complaint.  The Medicare Secondary Payer Recovery Contractor (MSPRC) will receive the file shortly thereafter.  After allowing 10-15 days for a Rights and Responsibilities letter to reach you and your client, you must wait another 65 days for a Conditional Payment Letter.

After reporting, you may choose to employ a lien resolution organization to dispute any unrelated payment amounts.  These types of litigation assistance companies offer to report the case for you as well.  The dispute process can take months.  Once you have a settlement amount you should immediately notify the MSPRC.  You will have a Final Lien Demand in less than a month.  This should satisfy an uncooperative defendant.  At that point, you can compel payment using an emergency motion because you have just 60 days to pay before interest begins to accrue.

If the defense is weary of letting the plaintiff’s attorney pay, you can ask for two checks.  One for the Final Lien Demand amount and the other for the remaining settlement proceeds.  Because the plaintiff is the first to be charged interest under current Medicare practices, the plaintiff’s attorney should mail the check for the Final Lien Demand (which will satisfy the lien).  This two check system should show that plaintiff and defendant alike have acted with due diligence to pay the Medicare lien.

More importantly, your diligence in administering the Medicare lien will avoid any undue delays in settlement.  If you have prepared, the Final Lien Demand will arrive in approximately 21 days.  As plaintiff, you should talk to the defense too – explain what you have set up and how long it will take to get a Final Demand Letter.  Then each side will be prepared for a quick exchange of checks.  As long as you keep track of the lien, or have someone do so for you, you will experience only minimal delays.

Please remember, the above processes are simply suggestions.  Each individual judge may not accept these arguments.  The law has not yet settled on the new and upcoming Medicare procedures and laws.  If you have questions or special situations, please contact us.

The cited cases will be available at our website shortly.

Ryan J. Weiner
Co-Founder Lien Resolution Services
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.

About Ryan J. Weiner

Co-Founder of Lien Resolution Services, LLC, a national healthcare lien resolution firm. Our goal is to assist in the fair administration and resolution of healthcare liens on personal injury cases. Please visit our website for more information: www.lienresolutionusa.com.

6 comments on “Section 111 of the MMSEA & Medicare Liens: A Harbinger of Settlement Delays?

  1. […] Lien Resolution Services – Healthcare Lien Resolution Blog News and Analysis of the Latest in Subrogation « Section 111 of the MMSEA & Medicare Liens: A Harbinger of Settlement Delays? […]

  2. […] always: be careful and prepare.  Hard work and time spent will help to avoid settlement delays or worse – MSPRC fines of double damages plus […]

  3. […] other changes were discussed in the town hall meeting/webinar.  MMSEA Section 111 reporting remains permissive until October 1, 2010.  All cases settled from that day on must be […]

  4. […] Data Points“).  However, at Lien Resolution Services, we believe cooperation is paramount in avoiding settlement delays.  Preparation will become even more important as January 1, 2011 approaches.  Be sure to ask for […]

  5. […] 22, 2010, Lien Resolution Services first suggested this to the public-at-large in our post: “Section 111 of the MMSEA & Medicare Liens: A Harbinger of Settlement Delays?‘  In pertinent part, we suggested the following to plaintiffs: If the defense is weary of […]

  6. […] LRS, we continue to suggest a two check system.  One check to the plaintiff and attorney, the other to Medicare.  Both checks should be […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: