I. Introduction

If you have heard me speak about Medicare Secondary Payer compliance over the last 20 years, then you have heard me sounding the bell about the importance, gravity, and seriousness of paying attention to conditional payment issues in your auto, med mal, products, nursing home, trucking, mass tort, liability, no-fault, and work comp claims. Undoubtedly, you have probably heard me provide best legal practice tips and best claims handling tips when dealing with a Medicare beneficiary in these types of claims.

Today, I am sounding the bell again. As a matter of fact, this time I am sounding the emergency alarm as well. There is no soft way of saying it, no easy manner to introduce it, no laid back method or process of alerting you to our new reality- the federal government is serious about recovering Medicare conditional payments, and they will do all they can possibly do under the full extent of the law to get their money back from your claim.

Make no mistake about it, the days of just being concerned with CMS are over. Today, and for the foreseeable future, all Medicare beneficiaries, their representatives, and all of the corporate entities, third party administrators, and insurers involved in any and all types of casualty claims dealing with personal injuries associated with such claims must be concerned, prepared, vigilant, and knowledgeable about the Medicare secondary payer statutory and regulatory scheme, the administration of conditional payment claims through the Commercial Repayment Center and the Benefits Coordination Recovery Center, as well as potential referral of outstanding debts to the United States Department of the Treasury and to the United States Department of Justice.

What follows is a breakdown of the steps, procedures, challenges, and trends in dealing with conditional payments pre and post settlement for beneficiaries and their representatives, as well as corporate defendants, their third party administrators if self-insured, and their insurers, if insured.

II. Medicare Secondary Payer Statutory and Regulatory Provisions

A. 42 U.S.C. § 1395y(b)(2)(A)

“Payment under this subchapter may not be made, with respect to any item or service to the extent that payment has been made, or can reasonably be expected to be made, under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.”

B. 42 U.S.C. § 1395y(b)(2)(B)

“The Secretary may make payment with respect to an item or service if a primary plan has not made or cannot reasonably be expected to make payment with respect to such item or service promptly. Any such payment shall be conditioned on reimbursement to the appropriate Trust Fund.”

“A primary plan and an entity that receives payment from a primary plan shall reimburse the Trust Fund for any payment made if such primary plan has or had a responsibility to make payment with respect to such item or service. A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim.”

“In order to recover payment made under this subchapter for an item or service, the United States may bring an action against any or all entities that are or were required or responsible to make payment with respect to the same item or service. The United States may collect double damages against any such entity. An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made.”

C. 42 C.F.R. § 411.24

“CMS may initiate recovery as soon as it learns that payment has been made or could be made under workers' compensation, any liability or no-fault insurance, or an employer group health plan. If it is not necessary for CMS to take legal action to recover, CMS recovers the amount of the Medicare payment. If it is necessary for CMS to take legal action to recover from the primary payer, CMS may recover twice the amount. CMS may recover by direct collection or by offset against any monies owed the entity responsible for refunding the conditional payment. CMS has a direct right of action to recover from any primary payer.”

“If Medicare is not reimbursed, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party. In other words, if a primary payer makes payment to an entity other than Medicare when it is, or should be, aware that Medicare has made a conditional payment, should Medicare remain unreimbursed, the primary payer must reimburse Medicare.”

D. 42 C.F.R. §411.26

“With respect to services for which Medicare paid, CMS is subrogated to any individual, provider, supplier, physician, private insurer, State agency, attorney, or any other entity entitled to payment by a primary payer. CMS may join or intervene in any action related to the events that gave rise to the need for services for which Medicare paid.”

III. The Administration of Medicare Conditional Payments

The Department of Health and Human Services (HHS) has 11 operating divisions, including eight public health service agencies and three human services agencies. These divisions administer a wide variety of health and human services, including the Centers for Medicare and Medicaid Services (CMS), which combines the oversight of the Medicare program, the federal portion of the Medicaid program, the State Children's Health Insurance Program, the Health Insurance Marketplace, and related quality assurance activities.

As part of the Medicare program, CMS oversees the Medicare Secondary Payer (MSP) program. The day-to-day administration of the MSP conditional payments resolution process is carried out by two contractors: the Commercial Repayment Center (CRC), and the Benefits Coordination & Recovery Center (BCRC).

Effective October 5, 2015, the Commercial Repayment Center (CRC) assumed responsibility for the recovery of conditional payments where the applicable plan, a liability/no-fault/workers' compensation entity, is the identified debtor. A liability/no-fault/workers compensation entity becomes an identified debtor when it accepts and reports ongoing responsibility for medical (ORM).

The Benefits Coordination & Recovery Center (BCRC) is responsible for ensuring that Medicare gets repaid by the beneficiary for any conditional payments it makes related to a liability, no-fault, or workers’ compensation case. The BCRC therefore generally engages the Medicare beneficiary, his/her attorney, or other representative in an attempt to resolve reimbursement of conditional payments after a total payment obligation to claimant (TPOC), or a settlement, judgment, award, or payment, has been reached, made, and reported.

A. The Commercial Repayment Center (CRC) Recovery Process  

The typical CRC recovery case, where Medicare is pursuing recovery directly from the applicable plan, involves the following steps:

1. Medicare is notified that the applicable plan has primary responsibility

Medicare may learn of other insurance through a Medicare, Medicaid, and SCHIP Extension Act (MMSEA) Section 111 report or beneficiary self-report. If Medicare is notified that the applicable plan is primary to Medicare, Medicare records are updated with this information.

2. CRC searches Medicare records for claims paid by Medicare based upon the information reported

The CRC begins identifying claims that Medicare has paid that are related to the case, based upon details about the type of incident, illness, or injury alleged. The claims search will include claims from the date of incident to the current date. If a termination date for Ongoing Responsibility for Medicals (ORM) has already been reported, the CRC will collect claims through and including the termination date.

3. CRC issues Conditional Payment Notice (CPN) to the applicable plan

The CPN provides conditional payment information. It advises the applicable plan that certain actions must be taken within 30 days of the date on the CPN or the CRC will automatically issue a demand letter. This notice includes a claims listing of all items and services that Medicare has paid that are related to the case. It also explains how to dispute any items and services that are not related to the case. A courtesy copy of the CPN is sent to the beneficiary and beneficiary’s attorney or other representative. The applicable plan’s recovery agent will also receive a copy of the CPN if the recovery agent’s information was submitted on the applicable plan’s MMSEA Section 111 report or the applicable plan has otherwise appointed a recovery agent by submitting a written authorization to the CRC.

4. Applicable plan submits a dispute

The applicable plan has 30 days to challenge the claims included in the CPN. The applicable plan may contact the CRC or use the Medicare Secondary Payer Recovery Portal (MSPRP) to respond to the CPN.

5. CRC issues a recovery demand letter advising the applicable plan of the amount of money owed to Medicare

The demand letter advises the applicable plan of the amount of money owed to the Medicare program and requests reimbursement within 60 days of the date of the letter. A courtesy copy of the demand letter is sent to the applicable plan’s recovery agent, the beneficiary and the beneficiary’s attorney or other representative.

6. Applicable plan submits an appeal

An applicable plan has 120 days from the date the applicable plan receives the demand letter to file an appeal. Receipt is presumed to be within 5 calendar days absent evidence to the contrary.

7. Applicable plan submits payment

If the CRC receives payment in full, it will issue a letter stating that the specified debt has been resolved. The letter will also note that new cases may be created if the applicable plan maintains ORM or the CRC receives information on additional items or services paid by Medicare during the period of ORM.

B. The Benefits Coordination Recovery Center (BCRC) Recovery Process

The BCRC process of recovering conditional payments from the Medicare beneficiary typically, involves the following steps:

1. Reporting the case to the BCRC:

Whenever there is a pending liability, no-fault, or workers’ compensation case, it must be reported to the BCRC. Reporting the case is the first step in the Medicare Secondary Payer (MSP) NGHP recovery process.  Once the case has been reported, the BCRC will collect information from multiple sources to research the MSP situation, as appropriate (e.g., information is collected from claims processors, Medicare, Medicaid, and SCHIP Extension Act (MMSEA Section) 111 Mandatory Insurer Reporting submissions, and worker’s compensation entities).

2. BCRC issues a Rights and Responsibilities letter:

After the MSP occurrence is posted, the BCRC will send the beneficiary the Rights and Responsibilities (RAR) letter. The RAR letter explains what information is needed from and what information can be expected from the BCRC.

Medicare does not release information from a beneficiary’s records without appropriate authorization. If the beneficiary has an attorney or other representative, he or she must send the BCRC documentation that authorizes them to release information. The attorney or other representative will receive a copy of the RAR letter and other letters from the BCRC as long as he or she has submitted a Consent to Release form. A Consent to Release (CTR) authorizes an individual or entity to receive certain information from the BCRC for a limited period of time. With that form on file, the attorney or other representative will also be sent a copy of the Conditional Payment Letter (CPL) and demand letter. If the attorney or other representative wants to enter into additional discussions with any of Medicare’s entities, he/she will need to submit a Proof of Representation document. A Proof of Representation (POR) authorizes an individual or entity (including an attorney) to act on behalf of the beneficiary.

3. BCRC identifies Medicare’s interim recovery amount and issues the CPL:

The BCRC begins identifying claims that Medicare has paid conditionally that are related to the case, based upon details about the type of incident, illness or injury alleged. Medicare's recovery case runs from the “date of incident” through the “date of settlement/judgment/award.”

Within 65 days of the issuance of the RAR Letter, the BCRC will send the CPL and Payment Summary Form (PSF). The PSF lists all items or services that Medicare has paid conditionally which the BCRC has identified as being related to the pending case.

The CPL explains how to dispute any unrelated claims and includes the BCRC’s best estimate, as of the date the letter is issued, of the amount Medicare should be reimbursed (i.e., the interim total conditional payment amount). The conditional payment amount is considered an interim amount because Medicare may make additional payments while the case is pending. If there is a significant delay between the initial notification to the BCRC and the settlement/judgment/award, the attorney or other representative may request an “interim conditional payment letter” which lists the claims paid to date that are related to the case. 

4. BCRC issues a Conditional Payment Notification (CPN):

If a settlement, judgment, award, or other payment has already occurred when you first report the case, a CPN will be issued. A CPN will also be issued when the BCRC is notified of settlement, judgment, award or other payment through an insurer/workers’ compensation entity’s MMSEA Section 111 report. The CPN provides conditional payment information and advises on what actions must be taken. You have 30 calendar days to respond.

If a response is received within 30 calendar days, it will be reviewed and the BCRC will issue a demand (request for repayment) as applicable.  If a response is not received in 30 calendar days, a demand letter will automatically be issued without any reduction for fees or costs. 

5. Dispute Process:

If the attorney or other representative believes that any claims included on CPL/PSF or CPN should be removed from Medicare's interim conditional payment amount, documentation supporting that position must be sent to the BCRC. This process can be handled via mail, fax, or the MSPRP. The BCRC will adjust the conditional payment amount to account for any claims it agrees are not related to the case.

During its review process, if the BCRC identifies additional payments that are related to the case, they will be included in a recalculated Conditional Payment Amount and updated CPL. If CMS determines that the documentation provided at the time of the dispute is not sufficient, the dispute will be denied. The attorney or other representative will receive a letter explaining Medicare’s determination once the review is complete.

6. BCRC issues a recovery demand letter:

When there is a settlement, judgment, award, or other payment, the beneficiary, attorney or other representative should notify the BCRC. The information sent to the BCRC must clearly identify: 1) the date of settlement, 2) the settlement amount, and 3) the amount of any attorney's fees and other procurement costs borne by the beneficiary. When submitting settlement information, the Final Settlement Detail document may be used. 

The BCRC will apply a termination date (generally the date of settlement, judgment, award, or other payment) to the case. The BCRC will identify any new, related claims that have been paid since the last time the CPL was issued up to and including the settlement/judgment/award date. Once this process is complete, the BCRC will issue a formal recovery demand letter advising you of the amount of money owed to the Medicare program. The amount of money owed is called the demand amount.

7. Assessment of Interest and Failure to Respond

Interest accrues from the date of the demand letter and, if the debt is not repaid or otherwise resolved within the time period specified in the recovery demand letter, is assessed for each 30-day period the debt remains unresolved. Payment is applied to interest first and principal second. Interest continues to accrue on the outstanding principal portion of the debt. If you request an appeal or a waiver, interest will continue to accrue. Parties may choose to pay the demand amount in order to avoid the accrual and assessment of interest. If the waiver/appeal is granted, you will receive a refund.

Failure to respond within the specified time frame may result in the initiation of additional recovery procedures, including the referral of the debt to the Department of the Treasury for collection action and/or to the Department of Justice for legal action.

IV. Referral of Debt to the Department of Treasury

31 U.S.C. Section 3711, the Debt Collection Improvement Act of 1996, provides the US Department of Treasury with government wide debt collection responsibilities. The law provides that delinquent non-tax debts must be turned over to the Treasury for appropriate action to collect the debt. This includes salary offset, government-wide cross servicing, tax refund offset, and wage garnishment.

31 CFR Part 285.1-13 and 31 CFR Part 900-904 authorizes Treasury to collect past-due debts by administrative offset of federal payments to collect past due, legally enforceable non-tax debt. Under the U.S.C. and C.F.R., administrative offset means withholding funds payable by the United States or a State government. The Treasury Offset Program (TOP) is a centralized offset program that intercepts funds, to collect on delinquent debts owed to federal agencies and states.

Over the last five years, employers, corporate defendants, insurers, carriers, and third party administrators handling auto, liability, no-fault, and workers compensation claims throughout the country have increasingly become the target of such recovery efforts.

A. The Treasury Collection Process

If no payment is received, the employer/carrier if ORM has been accepted and reported, or the beneficiary/counsel if TPOC has been reached and reported, will be notified of a delinquency through an “Intent to Refer Letter” (a notice of the CRC/BCRC’s intent to refer the debt to the Department of Treasury Offset Program for further collection activities). The Intent to Refer letter is sent day 90 (after demand letter) if full payment or valid documented appeal is not received.

If full repayment or valid documented defense/appeal is not received within 60 days of Intent to Refer Letter (150 days of demand letter), debt is referred to Treasury once any outstanding correspondence is worked by the CRC/BCRC. Once referred, depending on the geographic region of the country from which such debt emerges from, Treasury will refer the file to one of its collection agencies to attempt to collect the outstanding conditional payment amount.

Treasury uses 6 collection agencies to collect payments (payers may also use Treasury’s own payment hub):

• The CBE Group in Cedar Falls, IA
• Continental Service Group in Niagara Falls, NY
• Pioneer Credit Recovery in Arcade, NY
• Coast Professional in Geneseo, NY
• Transworld Systems in Ft. Washington, PA
• Performant Recovery in San Angelo, TX and Pleasanton, CA

1. The CBE Group, Inc.

PO Box 2040

Waterloo, IA 50704

866.910.3140

2. Continental Service Group, Inc. (ConServe)

PO Box 1528

Fairport, NY 14450

866.562.3255

3. Pioneer Credit Recovery, Inc.

PO Box 189

Arcade, NY 14009

888.261.7783

4. Coast Professional, Inc.

PO Box 246

Geneseo, NY 14454

800.963.4714

bfs@coastprofessional.com

5. Transworld Systems, Inc.

PO Box 15616

Wilmington, DE 19850

866.206.7443

6. Performant Recovery Inc.

PO Box 5501

San Angelo, TX 76902

800.258.1498

treasury@performantcorp.com

7. Federal Payment Hub

PO Box 979112

St. Louis, MO 63197

www.pay.gov/paygov/paymydebt

B. The Treasury Offset Program (TOP)

If after any of its collection agencies attempted to secure payment, the debt remains either in full or partially, the outstanding matter will be referred to the Treasury Offset Program (TOP).

The TOP collects past-due (delinquent) debts (for example, conditional payments made by Medicare) that people or organization owe to state and federal agencies. TOP matches people and businesses who owe delinquent debts with money that federal agencies are paying (for example, a tax refund for a claimant, a contractual amount for employer/carrier). To the extent allowed by law, when a match happens, TOP withholds (offsets) money to pay the delinquent debt. In fiscal year 2020, TOP recovered more than $10.4 billion in federal and state delinquent debts.

The TOP is operated by the Department of the Treasury’s Bureau of the Fiscal Service. Federal agencies must notify TOP of all nontax debts delinquent more than 120 days. Federal disbursing officials must offset payments to collect such debts. Debts must be delinquent & legally enforceable (i.e., not in bankruptcy, forbearance, or under appeal) and must be over $25.

Medicare conditional payments are considered Federal non-tax debts. They are normally collected from Federal Tax Refunds, Social Security, Black Lung, Railroad Benefits, or Federal Vendor Contracts.

1. Federal Tax Refunds

Funds to be offset: Federal Tax Refunds

Offset or levied for: Federal Non-Tax Debts

Statutory Authority: 26 U.S.C. § 6402(d) & 31 U.S.C. § 3720A

Regulatory Authority: 31 C.F.R. § 285.2 

Amount Deducted: 100%

2. Social Security, Black Lung, Railroad Benefits

Funds to be offset: Social Security, Black Lung, & Railroad Retirement Benefits

Offset or levied for: Federal Non-Tax Debts

Statutory Authority: 31 U.S.C. § 3716

Regulatory Authority: 31 C.F.R. § 285.4

Amount Deducted: Lesser of 15% or amount over $750.00

3. Federal/State Vendor Contract Payments

Funds to be offset: Federal/State Vendor Contract Payments

Offset or levied for: Federal Non-Tax Debts

Statutory Authority: 31 U.S.C. § 3716

Regulatory Authority: 31 C.F.R. Parts 900-904, 31 C.F.R. § 285.5

Amount Deducted: 100%

V. Referral of Debt to the Department of Justice

CMS may also refer debts to the Department of Justice for legal action if it determines that the required payment or a properly documented defense has not been provided. The law authorizes the Federal government to collect double damages from any party that is responsible for resolving the matter but which fails to do so.

Although we certainly hear a great deal about Medicare becoming increasingly more aggressive with primary payers (responsible employers, corporations, insurers, self insured entities, and third party administrators), the federal government is also becoming just as unforgiving with beneficiaries and their attorneys. Pursuant to the Medicare Secondary Payer provisions of the Social Security Act, 42 U.S.C. Section 1395y(b)(2), when Medicare has made a payment on an auto, liability, no-fault, or work comp claim, it is entitled to reimbursement from the primary payer, including the beneficiary and his/her attorney.

Several recent cases remind us that attorneys representing Medicare beneficiaries in auto, liability, no-fault, and work comp claims have responsibility in making sure Medicare is reimbursed if in fact Medicare has made payments related to such claims.

A. US v. Jeffrey Rosenbaum and Rosenbaum & Associates

On June 18, 2018, U.S. Attorney William M. McSwain announced that Philadelphia personal injury attorney Jeffrey Rosenbaum, and his law firm, Rosenbaum & Associates, entered into a settlement agreement with the United States to resolve allegations that they failed to reimburse the United States for certain Medicare payments the government had previously made to medical providers on behalf of firm clients who sought medical care.

“At various points before March 2017, Medicare made conditional payments to healthcare providers to satisfy medical bills on nine of the firm’s clients. Between May 2011 and March 2017, Medicare demanded repayment of the $28,000 Medicare debts incurred from those conditional payments.”

Under the terms of the settlement agreement, “Rosenbaum agreed to pay a lump sum of $28,000. Rosenbaum also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance. In addition, Rosenbaum acknowledged that any failure to submit timely repayment of Medicare secondary payer debt may result in liability for the wrongful retention of a government overpayment under the False Claims Act.” https://www.justice.gov/usao-edpa/pr/philadelphia-personal-injury-law-firm-agrees-start-compliance-program-and-reimburse

B. US v. Meyers, Rodbell & Rosenbaum, P.A.

On March 18, 2019, United States Attorney for the District of Maryland Robert K. Hur announced that Meyers, Rodbell & Rosenbaum, P.A., a Maryland law firm with offices in Riverdale Park and Gaithersburg, entered into a settlement agreement with the United States to resolve allegations that it failed to reimburse the United States for certain Medicare payments made to medical providers on behalf of a firm client.

According to the settlement agreement, “in and prior to 2012, Medicare made conditional payments to healthcare providers to satisfy medical bills for a client of the firm.  In December 2015, with the firm’s assistance and representation, the client received a $1,150,000 settlement in a medical malpractice action stemming from the client’s injuries.  After Medicare was notified of the settlement, Medicare demanded repayment of the Medicare debts incurred from those conditional payments. The firm refused to pay the debt in full, even when the debt became administratively final.” 

Under the terms of the settlement agreement, “the firm agreed to pay the United States $250,000 to resolve the Government’s claims.  The firm also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.” https://www.justice.gov/usao-md/pr/maryland-law-firm-meyers-rodbell-rosenbaum-pa-agrees-pay-united-states-250000-settle

C. US v. Saiontz & Kirk, P.A.

On November 4, 2019, United States Attorney for the District of Maryland Robert K. Hur announced that Saiontz & Kirk, P.A., a Baltimore-based law firm, paid the United States $91,406.98 to resolve allegations that it failed to reimburse Medicare for conditional payments that had been made to medical providers on behalf of firm clients.

“Plaintiffs’ attorneys cannot refer a case to or 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,” said U.S. Attorney Robert K. Hur.  “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.”

According to the settlement agreement, “over a number of years, Medicare made conditional payments to healthcare providers to satisfy medical bills for firm clients. During that period, the firm referred clients to or entered into joint representation agreements with co-counsel on four of the six matters about which the U.S. Attorney’s office contacted the firm.”  The government contends that the firm, either itself or together with co-counsel, negotiated for and received settlement proceeds for the firm’s clients, but neither the firm nor its clients repaid Medicare for conditional payments that Medicare made to medical providers. https://www.justice.gov/usao-md/pr/baltimore-plaintiffs-law-firm-saiontz-kirk-pa-pays-united-states-over-90000-settle

D. US v. Simon & Simon, P.C.

On January 8, 2020, United States Attorney for the Eastern District of Pennsylvania William M. McSwain announced that Simon & Simon, P.C., a Philadelphia-based personal injury law firm, entered into a settlement agreement with the United States to resolve allegations that it failed to reimburse the United States for certain Medicare payments.

The government alleged that “at various points between 2014 and 2019, Medicare made conditional payments to healthcare providers to satisfy medical bills of eight of the firm’s clients. Although Medicare demanded that Simon & Simon repay the resulting Medicare debts, the firm failed to do so.”

Under the terms of the settlement agreement, Simon & Simon agreed to “pay a lump sum of $6,604.59. Perhaps more significantly, the firm also agreed to (1) name a person responsible for paying Medicare secondary payer debts; (2) train the employee to ensure that the firm pays these debts on a timely basis; (3) review any additional outstanding debts to ensure compliance; and (4) provide written certifications of compliance. In addition, Simon & Simon acknowledged that any failure to submit timely repayment of Medicare secondary payer debt may result in liability for the wrongful retention of a government overpayment under the False Claims Act.” https://www.justice.gov/usao-edpa/pr/philadelphia-based-personal-injury-law-firm-agrees-resolve-allegations-unpaid-medicare

E. US v. Stephen P. Carrigan and Carrigan and Anderson, PLLC

On March 18, 2020, United States Attorney Ryan K. Patrick filed suit in the Southern District of Texas, Houston Division, on behalf of the Centers for Medicare and Medicaid Services (CMS), to recover payments made under the Medicare program on behalf of Medicare beneficiary Tomas R. Tijerina. The United States brought the suit against Stephen P. Carrigan, an attorney licensed to practice law in Texas, and Carrigan and Anderson, PLLC, a Texas professional limited liability company. Defendants Stephen P. Carrigan and Carrigan and Anderson, PLLC represented Mr. Tijerina in a personal injury lawsuit to recover damages and obtained a settlement for $70,000.00 on behalf of Mr. Tijerina.

The lawsuit indicates that on April 14, 2016, Defendants notified CMS’s Medicare Benefits Coordination and Recovery Center (BCRC) about Tijerina’s car accident on April 13, 2014, his resulting personal injuries, and his lawsuit to recover damages from the responsible parties. Almost a year later, on March 30, 2017, Defendants notified BCRC that Tijerina had settled his lawsuit with the responsible parties for $70,000.00. Consequently, on April 10, 2017, BCRC sought to recover the conditional payments and sent Defendants an initial determination demanding reimbursement of $46,244.74 that the Medicare program paid for Tijerina’s medical expenses related to his lawsuit.

Instead of reimbursing the requested amount, or disputing the outstanding debt with BCRC, the pleadings suggest that on April 19, 2017, Defendants filed a motion with the 278^th Judicial District Court in Waller County, Texas, that attempted to reduce the initial determination made by the Medicare program. The Defendants sent BCRC copies of their motion showing that, relying on US Supreme Court decisions Ahlborn and Wos, well known Medicaid opinions allowing for a pro-rata share reduction of Medicaid third party liens, Defendants asked the county district court to determine the portion of Tijerina’s settlement monies that constituted reimbursement for medical payments. Defendants asked the county district court to applying the ratio of the $70,000 settlement amount and the total value of damages of $470,000, to the $47,000 outstanding conditional payments due.

Since BCRC did not receive a response or payment, on July 20, 2017, BCRC renewed Medicare’s efforts to recover the conditional payments and sent Defendants a demand letter for $47,343.05, the amount the Medicare program paid for Tijerina’s medical expenses related to his lawsuit plus statutory accrued interest. On August 3, 2017, the Defendants, without responding to BCRC’s initial determination or demand letter, sent BCRC a copy of an order issued by the county district court, reducing the recovery of Medicare’s conditional payments by 90% to $4,700.00. Defendants also sent a check for $4,700.00, meant to be full reimbursement of all outstanding conditional payments due to Medicare resulting from Mr. Tijerina’s $70,000 settlement.

Not agreeing to accept the $4,700 check to do away with the federal debt of over $47,000 resulting from Medicare’s payments of such conditional payments, on March 18, 2020, the United States Attorney filed his complaint. In its action, the United States makes it clear that “Medicare has a right to recover conditional payments from either the primary plan or an entity that received payment from a primary plan. Such entities include beneficiaries or attorneys who represent them. 42 U.S.C. § 1395y(b)(2)(B)(ii); 42 C.F.R. § 411.24(g).” The United States also argues that “Medicare’s right to recover conditional payments includes reimbursement from payments, settlements, or judgments obtained by beneficiaries or their attorneys on personal injury claims related to medical expenses covered by Medicare’s Conditional Payments.” The United States therefore concludes it “may bring an action to recover conditional payments against any entity including beneficiaries or attorneys who have received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.”

The United States argues “the 278^th Judicial District Court lacked subject matter jurisdiction to adjudicate a challenge to Medicare’s recovery of conditional payments. Its order reducing or otherwise limiting Medicare’s recovery is void and unenforceable per the United States’ sovereign immunity.” As a result, pursuant to the Medicare Secondary Payer, the United States seeks “the current amount owed by Defendants to Medicare for its conditional payments totaling $53,445.93 ($42,643.05 principal, $10,802.88 interest).”

F. US v. Richard C. Angino and the Angino Law Firm

On August 21, 2020, US Attorney David J. Freed, United States Attorney for the Middle District of Pennsylvania, announced that the Angino Law Firm, P.C., and Bio-Medical Applications of Pennsylvania agreed to pay the United States $53,295 to resolve liability under the Medicare Secondary Payer Statue (MSPS).

In July 2011, a medical care center telephoned a pharmacy with a prescription for a Medicare beneficiary. The pharmacy did not dispense the prescription that had been called in, but instead dispensed an incorrect prescription. The incorrect medicine caused the Medicare beneficiary to become ill. As a result, the Medicare beneficiary was hospitalized for sixty-six (66) days from July 15, 2011 through mid-September 2011.

During this time period, the Medicare beneficiary accumulated nearly $100,000 in health care bills. Medicare paid $84,353.00 of the medical bills related to the ingesting the wrong medicine.

The Medicare beneficiary filed a lawsuit against the pharmacy and the medical care center. He was represented by attorney Richard C. Angino, of the Angino Law Firm, P.C. As attorney of record, Angino asked Medicare for the amount of such charges. The Centers for Medicare & Medicaid Services (CMS) reported initially that it had paid only $725.00. After asking again, CMS indicated that this amount had increased to $1,212.

Incorrectly relying on the interim notice of $1,212.00 as being the full and final amount due to Medicare, the parties reached a settlement agreement in July 2014.

After being notified of the settlement, Medicare reviewed its records and then determined that $84,353.00 in medical charges had been paid relating to the injuries. Medicare reduced this amount by its share of the attorneys' fees and costs, as required by law, and determined that Medicare was owed $53,295.00 from the settlement proceeds. It notified Angino that $53,295.00 was due from the settlement proceeds and payable within sixty (60) days from August 14, 2014. Neither the Medicare beneficiary or Angino ever paid.

Because no one reimbursed Medicare, the United States filed suit against the Angino Law Firm and Bio-Medical Applications of Pennsylvania to recover the money owed to Medicare in July 2017. After extensive litigation in the United States District Court, the parties agreed to amicably resolve the matter. Under the terms of the settlement, the Angino Law Firm paid the United States $19,545.15 and Bio-Medical Applications of Pennsylvania paid the Federal Government $33,750, which had been set aside in escrow from the state medical malpractice settlement. https://www.justice.gov/usao-mdpa/pr/harrisburg-law-firm-pays-53295-reimburse-medicare-program

VI. Conclusion

Make no mistake about it. It is a different world out there today when it comes to resolution of conditional payments. Whatever you were doing 5 years ago in this space is no longer enough. Whatever process and manpower you had come up with to resolve conditional payments 5 years ago is just not good enough today. Today, you must be able to respond to a conditional payment notice within 30 days, or it will turn into a final demand, allowing you only 60 days to pay or 120 days to appeal. Today, if no such payment or reimbursement is received, your case will be referred to US Treasury for collection, or even worse referred to US Justice for prosecution. Today, you better have a team of lawyers ready to file redeterminations, reconsiderations, attend hearings, provide evidence, testimony, and arguments as to why such conditional payments are not your responsibility. It is a different universe out there when it comes to these issues today, as it has become very, very clear the federal government is more serious than ever about recovering Medicare conditional payments from both beneficiaries and their representatives, as well corporate defendants, their third party administrators, and insurers.

By Rafael Gonzalez, Esq.

Rafael is a partner in Cattie & Gonzalez, PLLC, a national law firm focusing its practice on federal Medicare/Medicaid secondary payer compliance and legal issues. In addition to assisting clients with Medicare mandatory reporting, conditional payments, and set asides issues, he helps clients with Medicaid third party liability liens and Medicaid special needs trusts issues. He has over 40 years experience in the liability, no-fault, and work comp insurance industry. You can connect with him on LinkedIn, Twitter, Facebook, and YouTube, or reach him at rgonzalez@cattielaw.com, 844.546.3500, or www.cattielaw.com.

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