New Medicare Reporting Requirements and How it Affects Plaintiffs Attorneys

New Medicare Law and how it affects the Plaintiffs Bar

If you primarily practice personal injury law then you need to be aware of the new Medicare reporting law otherwise you and your client will not see the money from your recent settlements.

The Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) has now gone into effect as of January 1, 2010 and has brought with it new issues for Plaintiffs and their attorneys. It is important to be aware of these changes as they can now seriously delay your settlements.

The amendments, codified at 42 U.S.C. ? 1395 y(b)(8), now require liability insurers (which are defined to include self-insured entities) to report payments related to bodily injuries incurred by Medicare beneficiaries. It also requires that the Medicare beneficiary or "other party," defined by the regulations as including the entity making the payment, must reimburse Medicare within 60 days of the payment or be subjected to a $1,000 a day fine along with interest. The regulations further provide that if Medicare is not reimbursed within 60 days the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.

This means that an insurance company settling a claim may be liable for paying the Medicare lien, even after paying the plaintiff, if the Plaintiff does not reimburse Medicare within 60 days of the date of payment. So now more than ever insurance company adjusters and their attorneys are making sure that Plaintiff's attorneys are resolving Medicare liens before they will issue payment of any settlement check.

If you have dealt with Medicare in the past you know the problems inherent in notifying them of your claim and trying to resolve your client's lien. If you have not dealt with Medicare before you need to seriously consider co-counseling with an attorney experienced in the area.

Whenever Medicare provides a lien they simply provide a search from the date of the accident through the date of the request. This means that the lien will include charges that are not related to your client's accident that you will have to dispute. Unfortunately, Medicare will not provide your final lien amount until 10 days after they are notified that the case has settled. Further problems arise because it takes Medicare in excess of 45 days to evaluate and remove unrelated charges from their lien so even if a plaintiff's attorney puts Medicare on notice at the inception of a claim and provides the information necessary for Medicare's contractors to evaluate the claim, the contractor will not issue a final demand letter setting forth Medicare's entitlement until notified of the settlement. This means that your client's lien amount can change at any time and you will have to pay Medicare whatever they are claiming or your client will be responsible for late fees and fines. Medicare's position is that it should receive its full demand entitlement pending resolution of such issues.

This is now causing insurance companies to be directly involved in the Plaintiff's negotiations with Medicare. Insurance companies and their attorneys will now want to include Medicare on any settlement checks as an essential element of any proposed settlement despite the fact that there is nothing in the current statute or implementing regulations requiring that payment be directed to Medicare or CMS.

So how do we avoid this?

Make sure to put Medicare on notice at the inception of a claim and negotiate their lien before settling your case. This is the only way to avoid significant delays at the end of the case when the Plaintiff is waiting on their money. If you do not know how to handle a Medicare lien then be sure to review my pamphlet "How to handle a Medicare lien" available on my website.

Then try to have the insurance company agree to a hold harmless and release providing indemnification from any claims by Medicare including fines and/or interest.

If they will not agree then as a last resort negotiate with the adjuster or attorney to enter into an enforceable Settlement Agreement, which would be reported to Medicare, but deferring the actual payment of the settlement funds until such time as you have obtained a final demand letter from Medicare setting forth Medicare's entitlement. Separate checks can then be issued to Medicare on the one hand, and the plaintiff and plaintiff's attorney on the other.

Christopher Wigand is a trial attorney and partner with Winston & Clark, P.A. in Plantation, Florida. The majority of his practice involves handling cases for other attorneys who do not litigate. Mr. Wigand has devoted his career to helping injured individuals and families. He is always available to discuss a co-counsel arrangement or for direct client referrals. For more information on contacting Mr. Wigand please see his website at http://www.christopherwigandlaw.com.