CMS Gears Up to Address MSAs on Personal Liability Cases

There has always been some ambiguity about how personal injury attorneys should handle Medicare Set Asides in liability cases. Absent clear guidance from CMS, Plaintiffs settling a liability case should a) adequately consider Medicare’s future interest and b) appropriately document their file that they have done so.

New Change Request to Medicare’s Common Working File

However, CMS recently released a change request to modify Medicare’s Common Working File (CWF). The change request instructs the Medicare Administrative Contractors when to deny payment of a claim because it should be paid from a Liability Medicare Set-Aside Arrangement (LMSA) or a No-Fault Medicare Set-Aside Arrangement (NFMSA). A copy of the notice can be found here.

The notice explains the policy behind the change request as follows:

“Pursuant to 42 U.S.C. §1395y(b)(2) and §1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from making payment when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” Medicare does not make claims payment for future medical expenses associated with a settlement, judgment, award, or other payment because payment “has been made” for such items or services through use of LMSA or NFMSA funds. However, Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”

Testing on the new changes will begin October 2, 2017.

Final Insights Regarding the Proposed Changes

While CMS’ change request notice provides insight as to what requirements may be forthcoming, there are no new requirements as this time and Plaintiffs should continue to adequately consider Medicare’s future interest and document their file that they have done so.

Oral Arguments from the Recent U.S. Supreme Court Regarding FEHBA

On March 1, 2017, U.S. Supreme Court heard oral arguments on Coventry Health Care of Missouri v. Nevils.  As we previously reported, this case will decide two issues –

  1. It will decide whether FEHBA preempts state laws that prevent carriers from seeking subrogation or reimbursement pursuant to their FEHBA contracts.
  2. The case will determine whether FEHBA’s express-preemption provision, 5 U.S.C. § 8902(m)(1), violates the Supremacy Clause.

For a copy of the oral arguments, please click here.

Fairness in Class Action Litigation Act of 2017 – The Plaintiff’s Burden

Dear Friend,

A close friend in the defense bar mentioned to me after reading H.R. 985 that it really looks like “the plaintiff’s burden”, and indeed it is. Unfortunately, quickly on the heels of H.R. 985 came H.R. 1215, the Protecting Access to Care Act of 2017. While H.R. 985 could eviscerate Class Action and Mass Tort litigation as we know it, H.R. 1215 takes direct aim at future damages in health care lawsuits. Now is the time to speak up and take action. Call your representatives, contribute money to fight the legislation and work on changing these bills to truly help the consumer. Please read the most current copy of H.R. 985 and the following statement released by AAJ.

Best,

Will Shapiro

Washington, DC– The following is a statement from American Association for Justice CEO Linda Lipsen on the markup of the “Fairness in Class Action Litigation Act of 2017” [H.R. 985] in the U.S. House of Representatives Judiciary Committee. The bill would eviscerate nearly every type of class action and mass tort action brought in the United States, and prevent the enforcement of fundamental civil rights, and consumer, employee, and investor protection laws.

“When Americans are unwittingly victimized by widespread corporate wrongdoing, justice demands that they have an opportunity to join together to hold those corporations accountable. However, H.R. 985 will deny groups of injured consumers, workers, and investors of their right to be represented by an attorney, while also providing corporations with new ways to hide evidence of wrongdoing.”

“Shockingly, this committee has not held a single hearing to consider the consequences of this ill-conceived, overly-broad legislation. Supporting a bill that rigs the legal system against your constituents is offensive; doing so without even bothering to hold a public hearing and debate the merits is reprehensible.”

U.S. Supreme Court to Hear Arguments on FEHBA Preemption Issue

Today, the U.S. Supreme Court will hear arguments in Coventry Health Care of Missouri, Inc v. Nevils. The case will decide two issues. First, it will decide whether FEHBA preempts state laws that prevent carriers from seeking subrogation or reimbursement pursuant to their FEHBA contracts. Second, the case will determine whether FEHBA’s express-preemption provision, 5 U.S.C. § 8902(m)(1), violates the Supremacy Clause. A decision should come in the middle of this year.  Click here for a copy of the questions presented and writ of certiorari.

NC Court Rules that WC MSA Funds are not a Countable Asset for Purposes of Determining Medicaid Eligibility

In the case of Phoebe Williford v. North Carolina Department of Health and Human Services North Carolina Division of Medical Assistance, 2016 WL 6694573 (N.C. App. Nov. 15, 2016) the North Carolina Court of Appeals has sided with the plaintiff in her argument that funds in her WCMSA account, which was funded as a result of personal injury award, are not a countable resource for purposes of determining her eligibility for Medicaid.  Her use of the funds for her support and maintenance is subject to “legal restrictions” pursuant to a “legally binding agreement.”

As you may be aware, “any claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account.” (WCMSA Reference Guide, May 29, 2014, COBR-M5-2014-v2.2).  (Click here for our comments on considering Medicare’s future interest in a liability settlement).  The parties in the above-captioned case chose to account for Medicare’s future interest via a Workers’ Compensation Medicare Set-Aside arrangement, and determined that Ms. Williford was reasonably expected to require future injury-related medical care in the amount of $46,484.12.  These funds were issued by the defendant and deposited by the plaintiff into a bank account in her name.  The settlement agreement stipulated that Ms. Williford was to “disburse only payments for Medicare-covered expenses which are work related from such account,” among other requirements.  In other words, Ms. Williford agreed to make Medicare secondary to the WCMSA account.

Unfortunately, as plaintiff and defense alike sought to consider and account for Medicare’s future interest, Medicaid took notice of the WCMSA account and terminated Ms. Williford’s Medicaid eligibility on the grounds that the funds in her WCMSA were a countable resource.  Medicaid, a state and federal program, is only available to applicants who meet various requirements and whose income and financial resources are below a specified amount.  In Ms. Williford’s case, she could have no more than $2,000 in liquid assets, such as bank accounts. In the Department of Health and Human Services’ (DHHS’) eyes, the $46,484.12 WCMSA account thrust her far above that threshold.  However, Ms. Williford argued that she was legally required to use the funds to pay for injury-related medical treatment that would otherwise be covered by Medicare. She appealed the termination of her benefits and petitioned to exclude the WCMSA from the calculation of her liquid assets.

After nearly 3 years of appeals, the North Carolina Court of Appeals stated on November 15, 2016 that “federal standards clearly establish that, in order for a given asset to be a countable resource, the asset must be legally available to the applicant without legal restriction on the applicant’s authority to use the resource for support and maintenance.” They reversed the Department of Health and Human Services’ earlier decision and concluded that a WCMSA is not a countable resource for purposes of determining petitioner’s eligibility for Medicaid.

Thank you to our friends at the National Academy of Elder Law Attorneys (NAELA) for sharing this decision.  At Shapiro Settlement Solutions, we are committed to ensuring plaintiffs consider all government agencies when settling their personal injury cases.  In Ms. Williford’s situation, she would have been well-served by considering a Special Needs Trust to preserve her Medicaid eligibility. The WCMSA funds could then have been held within the trust, thereby ensuring they were never mistaken for countable assets. Contact us today to discuss the often complicated interplay between various government benefits and how to best protect your clients.

CMS Decreases TPOC Reporting Threshold for Liability Cases

The Centers for Medicare and Medicaid Services (CMS) confirmed in a December 12, 2016 Technical Alert that starting on January 1, 2017, the TPOC (Total Payment Obligation to the Claimant) reporting threshold for physical-trauma based liability cases has been decreased from $1,000 to $750.  Previously, the $750 threshold was applied to Workers’ Compensation and No-Fault claims (effective October 1, 2016). The WC threshold increased to $750 from $300, and the No-Fault threshold increased to $750 from $0.  Notably, there is no TPOC threshold for exposure or ingestion-based liability claims.

Read the full CMS Technical Alert here.

An Important Word About ERISA Subrogation From Our Friend Professor Baron

Our friend Professor Roger J. Baron recently mailed a letter, the text of which is below, to President Obama, asking him to consider encouraging the U.S. Dept. of Labor (DOL) to require ERISA plans to disclose information concerning subrogated recoveries on Form 5500.  Although Professor Baron previously recommended this to the DOL, they did not implement his suggestion.

As you know, ERISA plans are governed by federal law, and often create huge obstacles in our clients’ personal injury cases.  Professor Baron’s suggestion to the President posits that the inclusion of subrogation recoveries on ERISA plans’ form 5500s would shed light on the aggressive nature by which ERISA plans pursue reimbursement, and would be a catalyst for “meaningful reform aimed at equitable treatment for these victims who are injured twice—once by a tortfeasor and then again by their health insurers.”

How can we help?

-If you know someone on the President’s staff, or if you are in a position to encourage a member of Congress, please reach out and ask that person to request President Obama review Professor Baron’s letter and consider his request

-If you are able to influence a trial lawyers association, or other lobby group sympathetic to the cause, please reach out

-Write a letter of support to the White House, or send an email message of support at http://www.whitehouse.gov/contact/

 

Click to download letter

read more…

CMS Once Again Chirping About Liability MSA Reviews

In a notice posted June 8, 2016, the Centers for Medicare and Medicaid Services (CMS) stated it will consider expanding its voluntary MSA review process to include the review of proposed liability and no-fault insurance MSA amounts.

As you may recall, this topic has come up before.  In 2012, CMS published an Advanced Notice of Public Rulemaking (ANPRM) on Medicare Secondary Payer and “Future Medicals” (CMS 6047-P) in response to affected parties’ requests for guidance on future medicals and MSP obligations. At the time, it was thought that CMS would begin reviewing liability Medicare Set-Aside arrangements (MSAs) in the same formal process that they use for workers’ compensation cases.  However, the ANPRM was withdrawn in October 2014 by the Office of Management and Budget.

The June 8 notice confirms that CMS is still considering implementing a review process for liability Medicare Set-Aside arrangements.  The agency expects to schedule town hall meetings on this topic later this year.

Notably, CMS’ position with regard to considering Medicare’s future interest in a liability setting has remained consistent.  The law requires that the Medicare Trust Funds be protected from payment for future services when a settlement, judgment or award provides funds for those future services.  Although the term “Medicare set-aside” does not exist in any statute or regulation, the MSA arrangement has become the industry standard and CMS’ method of choice for protecting the Medicare Trust.

It is difficult to predict if and when CMS will implement a formalized review process for liability Medicare-Set Aside arrangements.  In the meantime, plaintiff attorneys need to decide on a case-by-case basis if there is a need to protect the Medicare Trust, and if so, whether a comprehensive Medicare Set-Aside analysis (i.e. a review of medical records to project future treatment and prescriptions) is appropriate.

S3 will continue to monitor this ever-evolving issue, and, as always, help our clients ensure their cases comply with current Medicare statutes and regulations.

Fourth Circuit Sides with Medicare Advantage Plan

In Humana v. Paris Blank, LLP et al 2016 U.S. Dist. LEXIS 61814, Paris Blank, LLP, a plaintiff law firm, was sued by Humana Medicare Advantage for failing to reimburse Humana for conditional payments.  This is the first time an MSP Private Cause of Action has been filed against a plaintiff attorney or firm.  Paris Blank filed a motion to dismiss, which was denied by the Court on May 10, 2016.

The plaintiff, Humana Medicare Advantage, alleges that they paid nearly $200,000 in conditional payments on behalf of an injured party who was represented by Paris Blank, LLP.  Despite Paris Blank, the defendant, securing settlements in excess of $450,000 for the injured party, and receiving settlement checks from the insurance companies including Humana as a payee, the defendant deposited the checks without considering Humana.  Humana had previously communicated to the injured party the total of the conditional payments it was owed, and Paris Blank had submitted a waiver request to Humana on the injured party’s behalf.

After hearing numerous arguments from Plaintiff and Defendant, the Court agreed with the Plaintiff and found that the MSP law does not create exceptions for attorneys and law firms.  The Court found that the language of the MSP statute in question “is broad and unambiguous, placing no limitations upon which private (i.e., non-governmental) actors can bring suit for double damages when a primary plan fails to reimburse any secondary payer.”

This decision is not final, but regardless of what the Court ultimately decides, plaintiff law firms should take heed and ensure that their lien resolution process, whether internal or outsourced, addresses any potential Medicare Advantage liens prior to final settlement disbursement.

Download the Humana Complaint here

NJ federal court upholds application of NJ anti-subrogation law in class action against Rawlings and ERISA Insurers

In Roche v. Aetna, Inc., 2016 WL 797553, (D.N.J. March 1, 2016) plaintiffs filed a class action suit in New Jersey state court against ERISA insurers and The Rawlings Company, seeking refunds and damages related to ERISA subrogation collections made in violation of New Jersey law which prohibits subrogation.  In addition to relying on New Jersey’s anti-subrogation law, Plaintiffs asserted claims under the New Jersey Consumer Fraud Act (NJCFA) and common law (breach of contract, theft, conversion, unjust enrichment).  Defendants removed to federal court.  This decision sustains a summary judgment for defendants as to the NJCFA and common law claims but recognizes that New Jersey’s anti-subrogation law does in fact apply to ERISA insurers through ERISA’s “saving clause.”

This action is similar to the action brought in Wurtz v. Rawlings Co., LLC, 761 F.3d 232, 243–44 (2d Cir. 2014) wherein the 2nd Circuit upheld the application of the New York anti-subrogation law through ERISA’s “saving clause.”  Since New Jersey is in the 3rd Circuit, however, the Defendants sought to avoid the application of Wurtz by (once again) arguing complete preemption.  This court rejects the “complete preemption” argument and applies the “saving clause,” stating at *6 at [4]:

[T]he claims under [New Jersey’s anti-subrogation statute] Section 42.10 are conflict preempted by ERISA § 502(a) as claims for benefits due, but Section 42.10 itself is saved from preemption under ERISA § 514(b)(2)(A) as a law regulating insurance, and so provides the relevant rule of decision for determining what benefits are due under a claim properly pleaded under ERISA § 502(a).

 Note that, according to Wurtz, the 2nd Circuit view is that a state law anti-subrogation claim is not cognizable under ERISA § 502(a)(1)(B).  The 3rd Circuit takes a different approach, as stated at *7 at [7]:

[C]laims for return of subrogation payments or to avoid payment of subrogation liens are claims for “benefits due” under ERISA § 502(a).

 As a result, the plaintiffs’ claims are controlled by state law and may proceed under ERISA. The Court stated at *7 at [5,6]:

The subrogation prohibition contained with Section 42.10 therefore “supplies the relevant rule of decision” for any ERISA § 502(a) claim.

Under Wurtz, the 2nd Circuit follows the view that the NY state anti-subrogation law is applicable to ERISA insurers, with a remedy available outside the ERISA remedies.  Under the ruling in this case, the NJ state anti-subrogation law provides the “rule of decision” regarding subrogation/reimbursement claims, with a remedy provided under ERISA’s § 502(a).

Thank you Professor Baron for the above commentary

A copy of the Opinion is attached

Will Shapiro

President/Founder

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