With the ever-shifting landscape of law practice during a pandemic, the last thing an attorney needs is the Department of Justice (DOJ) investigating their firm for non-compliance with the Medicare Secondary Payer Act. Elder law attorneys, likely more than any other practice of law, encounter Medicare health care reimbursement obligations on a daily basis. Medicare liens are often referred to as “super liens” which can carry steep penalties for MSP Act noncompliance:
Medicare can bring an action against any or all parties, including the plaintiff, the plaintiff’s attorney, the defendant and the defendant’s attorney, for damages equal to two times the amount of the conditional payments made by Medicare on behalf of the injured party without regard to the settlement amount. For example, in a nursing home negligence case where Medicare paid $50,000 for an injured plaintiff’s care related to the case, a plaintiff’s failure to report could create $100,000 of damages which could be levied against any of the parties involved, including the plaintiff’s attorney. Furthermore, even if the settlement in question was only $25,000, Medicare could still recover up to their full $100,000.
Medicare has the authority to offset or completely terminate benefits. No attorney wants to be in the position of having to explain to their elderly client that due to their failure to comply with the MSP Act, in a settlement that they helped them to achieve, Medicare is now partially or permanently suspending all of their future health benefits, a consequence which could mean life or death.
There is a severe penalty for defendants who fail to report settlements to Medicare on a quarterly basis. When those deadlines are missed, Medicare can assess up to $1,000 per day for every day following the date a reporting was required. This penalty has greatly increased compliance with the MSP Act, including strict adherence to the release language parties now use to ensure the protection of Medicare’s rights under the Act.
Department of Justice Actions
Department of Justice cases in the past two years highlight Medicare’s ability to seek reimbursement under these circumstances. For example, a Pennsylvania firm had to pay a $28,000 fine for failing to reimburse the government for payments that Medicare made to providers on behalf of several of the firm’s clients. Similarly, a Maryland firm recently had to pay a $250,000 fine for failing to reimburse the government for Medicare payments to medical providers on behalf of a single client.
Many attorneys may mistakenly believe that the penalties for non-compliance do not apply to them in instances where a co-counsel relationship exists. However, the DOJ has made it clear that a co-counsel relationship does not exempt a firm from Medicare reimbursement obligations. In a 2019 Maryland action, US Attorney Robert Hur stated, “Plaintiffs’ attorneys cannot refer a case to and enter into a joint representation agreement with co-counsel and simply wash their hands clean of their obligations to reimburse Medicare for its conditional payments. We intend to hold attorneys accountable for failing to make good on their obligations to repay Medicare for its conditional payments, regardless of whether they were the ones primarily handling the litigation for the plaintiff.”
Tips on Resolving Medicare Liens
Reporting cases to Medicare as early as possible creates efficiencies in identifying the lien obligation, and allows for disputing unrelated charges prior to settlement negotiations. Traditionally, reporting a case to Medicare required either a written letter or telephone call. Today, attorneys can take advantage of Medicare’s online portal to report. The information required to report a case should, if possible, be gathered at the initial intake stage, which also helps to simplify this part of the process.
When a case is reported, an MSP record is immediately created. The record is given a unique case identification number which will be used in all correspondence throughout the life of the resolution process. Medicare will then begin to compile a claims listing associated with the reported injury, which is generally received within 60 days of establishing the record. It is important to remember that a Medicare beneficiary always receives a copy of correspondence sent from Medicare, which means attorneys should always be in close contact with their client during this process in order to address their questions.
Reporting detailed injuries utilizing the narrow ICD-10 codes can be very helpful in elder law litigation, especially nursing home negligence cases. One of the most frequent injuries sustained in nursing home negligence cases are pressure sores, which can be staged from levels I to IV. Historically, Medicare would pull the full spectrum of treatment for a pressure sore injury, often resulting in weeks of stage I charges before becoming stage IV. Depending on what is claimed, pled, or released in the case documents, a specific ICD-10 code allows attorneys to narrow the related pressure sores to stage IV only, which is important because stage IV is typically the only stage in which a sore is actionable in a lawsuit.
It is not uncommon for Medicare to establish duplicate records (same date of loss, injuries, etc.) arising from the requirement that both plaintiffs and defendants make a report. As one might expect, this dual reporting creates the opportunity for discrepancies to arise between the information reported from both sides, resulting in the establishment of duplicate records. Duplicate records can be closed by notifying Medicare that the duplicate records are from the same settlement. Medicare is aware that duplicate records are common and are generally receptive to closing them. Unfortunately, not all parties will be copied on every record that is established, making it crucial for attorneys to instruct clients to provide them with any correspondence received from Medicare. This helps to avoid the situation of Medicare escalating a duplicative debt and saves attorneys and their clients from the time-consuming pursuit of closing a duplicate record in its later stages.
Once a case settles and an attorney reports the settlement to Medicare, a final demand is issued. The final demand is the most important document received in the lien resolution process. The demand letter provides information on the procedure for resolving the debt by repayment, as well as on administrative appeal rights. A demand is time sensitive, not only for repayment purposes, but also for administrative appeal right deadlines.
The final demand will contain a listing of all claims Medicare contends are related to the compensable injury. It is vital that a comprehensive audit of the claims be performed in order to confirm that Medicare has not included unrelated charges. While Medicare is generous with the length of time allowed to file a first level appeal (120 days), they are equally strict with adhering to those timeframes. Late filings will be dismissed unless Medicare is provided with sufficient cause for an extension.
When reviewing a final demand, another consideration to be aware of is the time span of asserted claims. Medicare is only entitled to recover from the date of loss, injury or illness, through the date of settlement. A reported settlement date should toll any claims being pulled into the demand after the settlement date, and thus, a quick review of dates of service is prudent.
Lastly, even in cases where an attorney agrees that all the amounts Medicare is claiming is related to their client’s case, there are still other avenues for getting Medicare to reduce their final amount. Compromise and waiver requests are often the best option at making sure that a client receives the maximum amount of their recovery. Although, Medicare will not always grant these types of requests, in cases where a claimant will suffer a substantial financial hardship or the amount Medicare is requesting is inequitable based on the breakdown of settlement proceeds, either or both of these remedies should be pursued for a reduction. Firms with robust procedures for identifying cases where Medicare potentially has an interest, that follow the proper channels for reporting, and that exhaust all remedies for reduction, are typically those that are able to negotiate the best possible outcomes for their clients.