Steve Bruzonsky - Arizona\'s get well, get on with life attorney Peer Review Rated Steve Bruzonsky - Arizona\'s get well, get on with life attorney






Steven J. Bruzonsky

Attorney At Law

Law Office of
Steven J. Bruzonsky
917 E. San Angelo Ave.
Gilbert, AZ 85234
480-969-3003

Call 480-969-3003

 

Please note that Attorney Bruzonsky has been doing this regular “Liens Corner” column since April 2006. His last “Liens Corner” article was for the November/December 2017 issue of The Advocate, having stepped down from this regular column, as he now works part-time (and is part-time retired) exclusively handling large subrogation/lien claims in very large personal injury and medical malpractice cases for other attorneys. However, attorney Bruzonsky may add notes to this website under the subject lien article headers from time to time. (Please keep in mind that this site contains general information for educational purposes only. It is not intended to provide legal advise, which can only come from a qualified attorney who is familiair with all the facts and circumstances of your specific case and relevant law.) 

 

 

2009-05/08: Federal Medicare Advantage Liens Update, Parts 1 - 3

June 25th, 2016 12:07:51 pm


These articles have been published in "The Advocate", a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, May - August 2009 issues, @2009 by Steven J. Bruzonsky, Esq.


FEDERAL MEDICARE ADVANTAGE LIENS UPDATE, PART 1


(This is the first part of a three part series providing a comprehensive update concerning Medicare Advantage lien claims. The first part in this issue is an overview of the current status of Medicare Advantage lien claims. The second part is a form letter which you can use to respond to a Medicare Advantage lien claim, or which you can use as the basis to initially contact the Medicare Advantage carrier concerning their lien claim. The third part is a comprehensive "Memo re Medicare Advantage Lien Claims"which you may attach to the form letter.)


Federal Medicare Advantage (formerly known as "Medicare+Choice) healthplans provide a substitute for Federal Medicare coverage, and are established by 42 U.S.C. §§ 1395w-21 through 1395w-28; and 42 U.S.C. § 1395mm. Medicare enrollees can elect to remain with regular Medicare or enroll in a Medicare Advantage healthplan as a substitute for regular Medicare.


If regular Medicare pays accident-related medical bills, then it exercises "SUPERLIEN" rights against all injury settlements which a Medicare recipient receives. In this regard, please see the Federal Medicare MSP (Medicare Secondary Payer) statute, 42 U.S.C. § 1395y(b)(2) "Exclusions from Coverage and Medicare as Secondary Payer," and regulations 42 C.F.R. §§ 411.20 – 411.54 "Exclusions from Medicare and limitations on Medicare payment", which are written as broadly as possibly to provide for these "SUPERLIEN" rights. (Please see my three part series of "Liens Corner" articles concerning Medicare Liens: A Brief Primer, in the June, July-August, and September 2008 issues for detailed information concerning Medicare liens.)


Do Medicare Advantage plans exercise the same "SUPERLIEN" rights as Medicare?


42 USC Section 1395mm(e)(4) provides that the HMO/PPO "may" bill the primary payers. 42 USC 1395W-26(b)(3) provides that state law "cannot take away a" Medicare Advantage "organization's right - - - to bill - - - for services for which Medicare is not the primary payer." But the Medicare Advantage statutes nowhere mention "lien" or "subrogation" rights.


Courts have held that there is no Medicare Advantage lien in states with anti-subrogation law or caselaw, in consideration that the Medicare Advantage statutes nowhere mention "lien" or "subrogation", in Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003) and Nott v. Aetna U.S. Healthcare, Inc.,No. 03-CV-4044 (Eastern District Penn., Jan. 23, 2004). Similarly, the U.S. Supreme Court, in Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006), noted the OPM's (Office of Personnel Management) contract with BCBSA (Blue Cross Blue Shield Association) requiring express lien or subrogation rights, but held that there was no federal subject matter jurisdiction, that the lien or subrogation rights are governed by state law, and in that case state anti-subrogation caselaw applied.


Initially, Medicare Advantage regulations that the enrollee "is liable", and the Plan must agree "to charge" the enrollee, for payments made by the plan for services for which Medicare is not the primary payer. 42 C.F.R. §§ 417.452, 417.454. However, on January 28, 2005, amendments to Medicare Advantage regulations first set forth Medicare Advantage healthplen lien rights. "The MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D of part 411 of this chapter." 42 C.F.R § 422.108(f). "The standards established under this part [Part 422 Medicare Advantage Plans] supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to the MA plans that are offered by MA organizations." 42 C.F.R. § 422.402.


As of yet there is no federal caselaw considering the 2005 Medicare Advantage regulations which purport to preempt state anti-subrogation law or caselaw. I contend that when a Medicare Advantage plan pays accident-related medical bills, that the potential contractual debt, set forth in the Medicare Advantage statute and regulations, does not constitute either a lien or subrogation interest against the enrollee's personal injury settlement. However, the "debt" itself may be enforceable in Arizona courts, or the Medicare Advantage healthplan could perhaps attempt to reduce or cutoff payment of future health benefits due to nonpayment. Thus, there is a compelling argument that Arizona anti-subrogation caselaw isn't preempted and applies to Medicare Advantage healthplans regardless of any plan provisions which provide for lien or subrogation rights.


As fellow Arizona Trial Lawyers Association member Chris Jensen has noted: "These finalized regulations may be subject to challenge in several ways, for example, a facial challenge claiming that CMS has exceeded its statutory authority or misinterpreted the enabling statute or an "as applied" challenge following enforcement attempts in Arizona. However, challenges to the final regulations must be considered in the context of substantial deference afforded agencies in interpreting their enabling statutes and/or congressional intent. Chevron v. Natural Resources Defense Council, Inc., 467 U.S.A. 37 (1984). In addition, challenges brought under the APA face considerable hurdles based on restrictions on pre-enforcement review (ripeness), exhaustion of administrative remedies, and deferential standards. As a practical matter, attorneys should consider this regulation as final, yet subject to judicial challenge, for purposes of determining how to handle Medicare Advantage healthplan lien or subrogation claims. Although the new regulations may be determined to be invalid in the future, no court has made such a determination at this time."


In consideration of the new MIR (Mandatory Insurance Reporting) requirements for Medicare claims, regulations and requirements still being promulgated, to be effective January 1, 2009, insurance carriers and self-insureds will no doubt insist on protecting Medicare's interest, whether by including Medicare as a payee on the settlement check or by holding funds sufficient to cover Medicare's potential interest until the final lien amount can be verified. (Please see my "Liens Corner" article concerning Medicare Liens: A Brief Primer, Part 3 which covers the new mandatory insurance reporting, in the September 2008 issue for detailed information concerning mandatory insurance reporting.) I recommend that in each case where your client has either Medicare or even Medicare Advantage coverage, that you early on contact Medicare to start the lien process by contacting the Medicare Coordination of Benefits Call Center (1-800-999-1118). (Please see my "Liens Corner" article concerning Medicare Liens: A Brief Primer, Part 2 which covers contact information and procedures for Medicare liens in the July-August 2008 issue.) Assuming that only a Medicare Advantage plan has paid accident-related medical benefits, and regular Medicare has paid no benefits, Medicare will give you a letter stating that Medicare has paid no benefits and that you should contact the specific Medicare Advantage plan.


Although there is a most compelling argument that Medicare Advantage plans have no lien rights here in Arizona, an anti-subrogation state, I expect insurance carriers, particularly concerned with the new Mandatory Insurance Reporting requirements, to also insist on protecting the Medicare Advantage plan's interest, whether by including the Medicare Advantage plan as a payee on the settlement check or by holding funds sufficient to cover the plan's potential interest until the final lien amount can be verified. This may in effect require that we notify the Medicare Advantage plan and negotiate or litigate lien rights in each case, regardless of whether the plan has claimed a lien.


You will want to obtain the plan's SPD (Summary Plan Description, or healthplan benefits booklet) and Master Plan subrogation or lien provisions, to ensure that the language of both clear assert a lien in your liability or first party claim. Argue if either the SPD or Master Plan do not include the appropriate subrogation or lien provisions, that there is no lien under contract law (similar to arguments we sometimes make in ERISA healthplan lien cases).


Note that in the past several years, I have successfully negotiated substantial reduction in several Medicare Advantage lien cases, and outright closing of one lien claim with no payment whatsoever. Keep in mind that the subrogation claims representative will be of no or little help, they are there to collect the money and that's it. You need to get the lien moved over to legal counsel to negotiate successfully.


(The second part is a form letter which you can use to respond to a Medicare Advantage lien claim, or which you can use as the basis to initially contact the Medicare Advantage carrier concerning their lien claim. The third part is a comprehensive "Memo re Medicare Advantage Lien Claims"which you may attach to the form letter.)


FEDERAL MEDICARE ADVANTAGE LIENS UPDATE, PART 2


(This is the second part of a three part series providing a comprehensive update concerning Medicare Advantage lien claims. The first part in the last issue provided an overview of the current status of Medicare Advantage lien claims. This second part is a form letter which you can use to respond to a Medicare Advantage lien claim, or which you can use as the basis to initially contact the Medicare Advantage carrier concerning their lien claim. The third part will be a comprehensive "Memo re Medicare Advantage Lien Claims"which you may attach to the form letter.)


Following is my form letter which you may use to respond to a Medicare Advantage lien claim, or which you can use as the basis to initially contact the Medicare Advantage carrier concerning their lien claim:


LAW OFFICES OF STEVEN J. BRUZONSKY
1152 E. GREENWAY ST., STE. 5 MESA, AZ 85203 480-969-3003 FAX: 480-962-5879


Date

Certified Mail


[Name and Address of Subrogation Company]


Re: Our Client/Your Insured:
Plan:
Your File Number:
Date of Treatment:
Date of Accident:


Dear Sir:


This is in response to the letter dated __________ which you sent to our above-named client claiming that the above healthplan has subrogation rights against our client's personal injury settlement.


Please be advised regarding the following: Our client was injured in a _________ accident on the above date of accident. Our client received accident-related care primarily for ___________________ (injuries) at ________________________________ (healthcare providers). Since the accident, our client has also received non-accident care for pre-accident illness/injury or post-accident unrelated conditions of _______________________________ with ___________________________ (healthcare providers). Our office policy is not to provide information regarding the auto insurance carrier as our experience is that this can at times improperly and unnecessarily complicate our settlement negotiations; and although we are negotiating settlement we have not reached a formal and complete settlement yet.


We sincerely do not believe that your Medicare Advantage plan has any lien rights here in Arizona, especially in consideration of Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003) and Nott v. Aetna U.S. Healthcare, Inc.,No. 03-CV-4044 (Eastern District Penn., Jan. 23, 2004) holding no federal lien rights for Medicare Advantage in anti-subrogation states, noting that state anti-subrogation law isn't federally preempted because the Medicare Advantage statute nowhere mention "lien" or "subrogation" rights. Similarly, the U.S. Supreme Court, in Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006), noted the OPM's contract with BCBSA requiring express lien or subrogation rights but held that there was no federal subject matter jurisdiction and that the lien or subrogation rights are governed by state law, and in that case state anti-subrogation law applied. Whether the regulations are OPM for FEHBA healthplan lien claims, or CMS for Medicare Advantage lien claims, the lien regulations only apply in both cases in states which by law permit subrogation or liens against personal injury claims.


When our client's injury claim settles we intend to distribute settlement funds without any consideration of your invalid lien claim. However, if you desire to continue making a lien claim, then legal counsel, and only legal counsel (my experience is that subrogation claims representatives do not understand the legal issues and continue to claim full lien reimbursement regardless of unlawful or problematic lien claims, so I refuse to "waste" time with the subrogation claim representative), must provide me with the following information (and all of the information, not part) within thirty days from this date, and then we may consider a "nuisance" settlement at the very most (but I can't promise even this, as I require client approval and full disclosure of the requested documentation and information set forth below to even consider this):


1. To legal counsel in particular: Please advise of your client's intent regarding any sort of adverse action, whether legal or otherwise, that the plan intends to take against our client based on nonpayment of the alleged lien. Please keep in mind that it is unethical for an attorney to threaten to file a lawsuit unless you have authority from your client that you will actually do so. Has your client authorized any adverse action against our client, or authorized legal counsel to file an action in any Court and if so, which Court. Please explain the legal basis, attaching any pertinent documents, supporting any planned adverse or legal action against our client.


2. A complete copy of applicable plan provisions purporting to give the plan lien or subrogation rights, including the Summary Plan Description that was provided to our client, and any applicable Master Plan provisions (that are not provided to insureds) as well.


3. An itemization of the claimed reimbursement due the plan, itemized by provider, date of service, amount billed and amount paid. (If you by chance are making a reimbursement claim for capitated charges, please so indicate, as even a legitimate lien should not include this.)


4. Please explain if the plan provisions or practice expressly require or authorize lien reduction, compromise or waiver and provide a copy of applicable provisions (note that Medicare regulations require procurement cost – percentage attorney's fees and costs, reduction, and that this reduction is automatic, so even in a subrogation state this reduction must be applied).


[Please note that even if there was a Medicare Advantage lien in this case, the lien must be reduced for procurement costs (attorney's fees and costs pro-rated), and thanks to the U.S. Supreme Court decision in Arkansas Dept. of Health and Human Services v. Ahlborn, 126 S.Ct. 1752 (2006), the lien must be reduced based on the ratio of the amount collected vs the full value of the claim if there was adequate liability or coverage available. Similarly, the in equity "made-whole" rule requires equitable waiver or reduction of the lien because there is no right of reimbursement until the plaintiff has been made whole for his or her other injuries. The "made-whole" rule is the default interpretation under federal common law, UNLESS the plan language is directly inconsistent with it. Barnes v. Independent Auto Dealers' Assoc., 64 F.3d 1389 (9th Cir. 1995). The circumstances of this case and settlement which mandate application of Ahlborn and/or the "made whole" rule are as follows: *************** ]


If you do not respond in writing within thirty days (from the date of this letter) that you continue to assert a reimbursement claim, we will operate on the basis that you are no longer making or waiving any further such claim.


Thank you for your courtesy and assistance.


Very truly yours,


Steven J. Bruzonsky
Attorney At Law
cc: client
Enclosures: HIPAA/MA authorization & Memo re Medicare Advantage Lien Claims


(The third part will be a comprehensive "Memo re Medicare Advantage Lien Claims"which you may attach to the above form letter.)


FEDERAL MEDICARE ADVANTAGE LIENS UPDATE, PART 3


(This is the third part of a three part series providing a comprehensive update concerning Medicare Advantage lien claims. The first and second parts in the last two issues concerned an overview of the current status of Medicare Advantage lien claims and a form letter which you can use to respond to a Medicare Advantage lien claim, or which you can use as the basis to initially contact the Medicare Advantage carrier concerning their lien claim. The third part in this issue is a comprehensive "Memo re Medicare Advantage Lien Claims" which you may attach to the form letter.)


Following is my "Memo re Medicare Advantage Lien Claims"form letter which you may attach to my form letter which you use to contact the Medicare Advantage carrier or subrogation claims representative concerning their lien claim (I only ask that you retain my letterhead on the Memo to give me credit for writing it):


LAW OFFICES OF STEVEN J. BRUZONSKY
1152 E. GREENWAY ST., STE. 5 MESA, AZ 85203 480-969-3003 FAX: 480-962-5879


MEMO RE MEDICARE ADVANTAGE LIEN CLAIMS


1. Arizona Anti-Subrogation Caselaw:


The common law rule long followed in Arizona is that, absent a statute, an assignment of a cause of action for personal injuries against a third party tortfeasor is void and unenforceable. Harleysville Mutual Ins. Co. v. Lea, 2 Ariz. App. 538, 410 P.2d 495 (App. 1966) (auto medical payments); State Farm Fire and Casualty Co. v. Knapp, 107 Ariz. 184, 484 P.2d 180 (1971) (auto medical payments); Allstate Ins. Co. v. Druke, 118 Ariz. 301, 576 P.2d 49 (1978) (auto medical payments); Gallego v. Strickland, 121 Ariz. 160, 589 P.2d 34 (App. Div. 2 1978) (uninsured motorist) (prior to statutory amendment providing for uninsured motorist subrogation); Brockman v. Metropolitan Life Ins. Co., 125 Ariz. 246, 609 P. 2D 61 (1980) (group health insurance); Karp v. Speizer, 132 Ariz. 599, 647 P.2d 1197 (App. Div. 1 1982) (assignment to judgement creditor by judgement debtor of proceeds expected to be recovered from personal injury action) ; Piano v. Hunter, 173 Ariz. 172, 840 P.2d 1037 (App. 1992) (same rule applies to local school district health trust fund); and Lingel v. Olbin, 198 Ariz. 249, 8 P.3d 1163 (App.2000) (prohibition against assignment of personal injury claims is based on public policy). Also, ARS §20-1072 prohibits health insurance carriers from charging healthplan insured's anything other than co-pays and deductibles.


2. Express Language of Federal Medicare Advantage Compared to Medicare Statutes:


Medicare statutes clearly provide for Medicare subrogation/lien against personal injury settlements:


When Federal statutes and regulations refer to "services for which Medicare is not the primary payer" for purposes of both Medicare and also Medicare Advantage (MA), they are referring to health care services "also covered under State or Federal workers' compensation, any no-fault insurance, or any liability insurance policy or plan, including a self-insured plan." 42 U.S.C § 1395mm(e)(4); 42 U.S.C. §1395y(b)(2)(A)(ii); 42 U.S.C. §1395W-26(b)(3); 42 C.F.R. § 417.528; and 42 C.F.R. § 422.108.


Medicare statutes first state that payment of accident-related medical benefits is a "CONDITIONAL PAYMENT" with "REPAYMENT REQUIRED" at 42 USC §1395y(b)(2)(B)(i) and 42 USC §1395y(b)(2)(B)(ii). However, then the Medicare statutes establish subrogation and lien rights: 42 USC §1395y(b)(2)(B)(iii) provides for "ACTION BY UNITED STATES - - - to recover" Medicare's payment of accident-related medical benefits. 42 USC §1395y(b)(2)(B)(iv) expressly gives the United States "SUBROGATION RIGHTS".


Medicare Advantage statutes clearly do not provide for MA subrogation/lien against personal injury settlements:


MA statutes 42 U.S.C. §§ 1395w-21 through 1395w-28; and 42 U.S.C. §1395mm establish the MA program by which healthcare organizations substitute for Medicare. 42 U.S.C. §1395mm(e)(4) provides that the HMO/PPO "may" bill the primary payers. 42 U.S.C. §1395W-26(b)(3) provides that state law "cannot take away an M+C organization's right - - - to bill - - - for services for which Medicare is not the primary payer."


3. Federal MA Regulations:


42 C.F.R. §417.452 provides that the enrollee "is liable for payments made to the enrollee for all covered services for which Medicare is not the primary payer".


42 C.F.R. §417.454 provides that the M+C plan " must agree to charge its Medicare enrollees - - - for the - - - Services for which Medicare is not the primary payor as provided in Sec. 417.528."


42 C.F.R § 422.108(f) provides that "The MA organization will exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises under the MSP regulations in subparts B through D of part 411 of this chapter." (revised January 28, 2005) 42 C.F.R. §422.402 was added to state that "The standards established under this part [Part 422 MA Plans] supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to the MA plans that are offered by MA organizations." (revised January 28, 2005) 4. Federal Appellate Caselaw Upholds Application of State Anti-Subrogation Caselaw:


The only Federal appellate court that has ruled on the question of whether there is a MA lien or subrogation right held that there is no Federal MA lien or subrogation right; that any lien claim would have to be brought in state court (under state law); and mentioned that 42 U.S.C §1395mm(e)(4) gives MA HMOs the option to seek reimbursement from their members under certain circumstances but didn't state that any lien or subrogation rights were created by this provision. Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003).


Similarly, a District Court of Pennsylvania case, Nott v. Aetna U.S. Healthcare, Inc., No. 03-CV-4044 (Eastern District Penn., Jan. 23, 2004), held that although the MA statutes permit an MA plan to contract with their insureds for subrogation, that it does not provide a mechanism for the MA plan to enforce their private contractual rights in federal court; and that due to lack of federal subject matter jurisdiction the action was remanded to state court.


The U.S. Supreme Court, in Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006), held that there was no federal subject matter jurisdiction over a Federal Employees Health Benefits Act (FEHBA) healthplan lien claim, with the healthplan's lien or subrogation rights governed by state law. The Court noted that OPM has contracted with Blue Cross Blue Shield Association (BCBSA) to provide a nationwide healthplan administered by local companies. The Summary Plan Description (SPD) used by the local companies includes express lien or subrogation rights, as required by OPM regulations. The Court mentioned that 5 U.S.C. §8902(a) provides that the United States Office of Personal Management (OPM) negotiates and regulates health benefit plans for federal employees.


5. Preemption Clause of Federal Medicare and Medicare Advantage Statutes: MA healthplans nonetheless may contend that since the above Federal appellate MA decisions, that the Federal preemption clause of the Federal Medicare and MA statutes was revised in 2003 to remove all ambiguity related to state authority over the MA program, and that states are now prohibited from exercising authority over MA plans in any area other than state licensing laws or state laws relating to plan solvency. But this argument is simply not persuasive. Prior to amendment by Section 232 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), this preemption clause at 42 U.S.C. § 1395W-26(b)(3) read as follows:


"(3) Relation to State laws (A) In general The standards established under this subsection shall supersede any State law or regulation (including standards described in subparagraph (B)) with respect to Medicare+Choice plans which are offered by Medicare+Choice organizations under this part to the extent such law or regulation is inconsistent with such standards. (B) Standards specifically superseded State standards relating to the following are superseded under this paragraph: (i) Benefit requirements (including cost-sharing requirements). (ii) Requirements relating to inclusion or treatment of providers. (iii) Coverage determinations (including related appeals and grievance processes). (iv) Requirements relating to marketing materials and summaries and schedules of benefits regarding a Medicare+Choice plan."


After amendment by the MMA in 2003, this provision reads as follows: "(3) Relation to State laws The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under this part."


The U.S. Supreme Court, in Empire Healthchoice Assurance, Inc. v. McVeigh, supra, mentioned the similar FEHBA preemption clause, 5 USC §8902(m)(1), which provides that the terms of any contract under FEHBA "which relates to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any state or local law, or any regulation issued there under, which relates to health insurance or plans." Yet the Court didn't consider that preemption clause significant and refused to preempt state anti-subrogation law where the Federal FEHBA statutes create no express "lien" or "subrogation" rights.


6. Applicable Lien Language Must Be In Both the SPD and the Master Plan: Both the plan's SPD (Summary Plan Description, or healthplan benefits booklet) and Master Plan must have provisions which clearly provide for a lien or subrogation interest in order for the Plan to assert this interest against settlement proceeds in the first place, regardless of the legal validity of the lien claim in an anti-subrogation state such as Arizona. Following are a few ERISA healthplan lien cases in this regard: The ERISA plan lien language was in the SPD but not in the Master Plan, and the court held that the lien was not enforceable. Grosz-Salomon v. Paul Revere Insurance, 237 F.3d 1154 (9th Cir. 2001). In interpreting ERISA plan provisions, the court must consider all documents, including the Master Plan and the SPD, and any conflicts that cannot be harmonized and which favor employee will be construed in employee's favor, citing Bergt v. Retirement Plan for Pilots Employed by Markair Inc., 293 F.3d 1139 (9th Circuit 2002). Providence Health Plans of Oregon v. Simnitt, 209 WL 700873 (Dist. Ct. Oregon) (March 13, 2009).


7. Reduction, Compromise or Waiver Authorities: As MA lien claims are based on the regulatory authority for Medicare liens in the first place, they are subject to lien reduction, compromise or waiver as required for Medicare liens:


A. Reduction for Pro-Rated Attorney's Fees and Costs: The Medicare lien must be reduced for procurement costs per 42 C.F.R. §411.37.


B. Compromise and Waiver:


42 U.S.C. §1395y(b)(2)(B)(v) provides that the "Secretary may waive (in whole or in part)" the Medicare lien "if the Secretary determines that the waiver is in the best interests of the program established under this title."


42 C.F.R. §411.28 states that "CMS may waive recovery, in whole or in part, if the probability of recovery, or the amount involved, does not warrant pursuit of the claim."


42 C.F.R. §401.613 states that CMS may compromise claims based on "Litigative probabilities," etc.


The Federal Medical Care Recovery Act, 42 U.S.C. §§ 2651-2653, and corresponding regulations, 28 C.F.R. §§ 43.1 to 43.3, give CMS the authority to waive/compromise the Medicaid lien.


42 C.F.R. §401.613 CMS "General Administrative Requirements/Compromise of Claims" states that CMS may compromise claims based on "Litigative probabilities," etc.


Arkansas Dept. of Health and Human Services v. Ahlborn, 126 S.Ct. 1752 (2006), a unanimous ruling of the Supreme Court, holds that state Medicaid agencies' claims for reimbursement from tort settlements are limited to that portion of any settlement attributable to past medical expenses, and requires state Medicaid agencies to proportionately reduce the lien if full claim value is not obtained (whether due to limited insurance proceeds, liability problems, etc.). This ruling means that the state Medicaid agencies may not lay claim to any portion of a patient's recovery for lost wages, pain and suffering, or future damages of any kind. Due to the language of this ruling, repayment claims from tort recoveries by other federal programs such as the Medical Care Recovery Act (MCRA) and the Medicare Secondary Payer Act (MSPA), despite differences in the language of each statute, should be controlled by the logic of Ahlborn, because the repayment obligation is the same under all three federal statutes, and all three share a common legislative intent.


Ahlborn by necessity requires that AHCCCS/Medicaid do not include in the lien medical treatment expenses which are not accident-related. Its not unusual for disputes regarding whether some post-accident medical care is accident-related; and for this to be considered in compromising claim value. Ahlborn by necessity requires that AHCCCS/Medicaid compromise/reduce its lien by the percentage of compromised medical expense or claim value in such cases. The same logic applies to Medicare liens.


In Ahlborn, the injured party was a 19 year old college student and aspiring teacher. She suffered severe and permanent injuries as a result of a car accident. She was left brain damaged, unable to complete her college education, and incapable of pursuing her chosen career. She claimed damages not only for past medical costs, but also for permanent physical injury; future medical expenses; past and future pain, suffering, and mental anguish; past loss of earnings and working time; and permanent impairment of the ability to earn in the future. The case was settled out of court for a total of $550,000. The parties did not allocate the settlement between categories of damages. The ADHS (Arkansas Dept. of Health Services) asserted a lien for $215,645.30—the total cost of payments made by ADHS under the state's Medicaid plan for Ahlborn's care. ADHS and Ahlborn stipulated that the full value of Alhorn's personal injury claim was $3,040,708.18; that the settlement of $550,000.00 amounted to approximately one-sixth of the claim's full value; and that, if Ahlborn's construction of federal law was correct, ADHS would be entitled to only the (pro-rated) portion of the settlement ($35,581.47) that constituted reimbursement for medical payments made. The U.S. Supreme Court affirmed the holding of the Eighth Circuit and held that ADHS cannot claim more than the portion of the Ahlborn's settlement ($35,581.47) that represents medical expenses; that the "the federal third-party liability provisions require an assignment of no more than the right to recover that portion of a settlement that represents payments for medical care".


8. Regulated by Fair Debt Collection Practices Act:


Collection activities are strictly regulated by the Fair Debt Collection Practices Act, 15 U.S.C. § 1692a(5) ("FDCPA"). Hamilton v. United Healthcare of Louisiana, Inc., 310 F.3d 385 (5th Cir. 2002) (holding that group health insurer's contract-based subrogation claim, for reimbursement of benefits which it had paid to injured employee from employee's recovery of third-party uninsured motorist benefits, was in nature of "debt," collection of which by Healthcare Recoveries, Inc. was subject to requirements of the FDCPA). To the extent that you are misrepresenting whether the plan has subrogation rights or the character, amount and/or legal status of the alleged debt, you are in violation of 15 U.S.C. § 1692e(2)(A), engaging in unfair and/or unconscionable means to collect the alleged unlawful debt in violation of 15 U.S.C. § 1692f and failing to provide proper notices or validation required by the FDCPA. As you probably know, this subjects you to statutory damages and exposure to attorneys' fees. ting to collect this unlawful debt, our client intends to file an action against your companies for intentional interference with economic relations and bad-faith. On a final note, please be advised that your collection activities are strictly regulated by the Fair Debt Collection Practices Act, 15 U.S.C. § 1692a(5) ("FDCPA"). Hamilton v. United Healthcare of Louisiana, Inc., 310 F.3d 385 (5th Cir. 2002) (holding that group health insurer's contract-based subrogation claim, for reimbursement of benefits which it had paid to injured employee from employee's recovery of third-party uninsured motorist benefits, was in nature of "debt," collection of which by Healthcare Recoveries, Inc. was subject to requirements of the FDCPA). You have already violated the FDCPA by, among other things, misrepresenting the character, amount and/or legal status of the alleged debt in violation of 15 U.S.C. § 1692e(2)(A), engaging in unfair and/or unconscionable means to collect the alleged unlawful debt in violation of 15 U.S.C. § 1692f and failing to provide proper notices or validation required by the FDCPA. As you probably know, this subjects you to statutory damages and exposure to attorneys' fees.



Return to Articles

© Copyright 2006, Steven J. Bruzonsky, Attorney
Terms of Use: This site contains general information for educational purposes only. It is not intended to provide legal advise, which can only come from a qualified attorney who is familiar with all the facts and circumstances of your specific case and relevant law. If you use this site, or send information or e-mail the attorney, such action does not create an attorney-client relationship. For legal advise please personally consult with an experienced attorney like Steven J. Bruzonsky.