|Post By Rip Van Riper|
Shifting from my first blog, I would like to post some more serious commentary on a couple of workers compensation issue:
This section of my blog is bit technical. It is for lawyers dealing with MSAs and all of the sound and fury surrounding the need for CMS approval.
There is some general understanding among workers’ compensation lawyers and claims administrators that something bad is afoot when a claimant settles a workers’ compensation case and is, or is about to be, a Medicare recipient. The Social Security law was amended so that the runaway costs of Medicare might be controlled, and injured workers would have to first look to their workers’ compensation claims before seeking payment from Medicare. This initial reaction to this law was fright and uncertainty. A substantial industry has arisen composed of businesses that analyze medical records and submit approval requests to CMS.
First let’s look at some of the applicable law. Here is the statute that gives a U.S. attorney the right to recover payments from a workers’ compensation carrier. 42 U.S.C. §1395 (in part) says:
(ii) Repayment required.—A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this title with respect to an item or service if it is demonstrated that 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 against the primary plan or the primary plan’s insured, or by other means. If reimbursement is not made to the appropriate Trust Fund before the expiration of the 60-day period that begins on the date notice of, or information related to, a primary plan’s responsibility for such payment or other information is received, the Secretary may charge interest (beginning with the date on which the notice or other information is received) on the amount of the reimbursement until reimbursement is made (at a rate determined by the Secretary in accordance with regulations of the Secretary of the Treasury applicable to charges for late payments).
(iii) Action by United States.—In order to recover payment made under this title for an item or service, the United States may bring an action against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity. The United States may not recover from a third-party administrator under this clause in cases where the third-party administrator would not be able to recover the amount at issue from the employer or group health plan and is not employed by or under contract with the employer or group health plan at the time the action for recovery is initiated by the United States or for whom it provides administrative services due to the insolvency or bankruptcy of the employer or plan.
It is important to note that the United States can only pursue payments actually made. No matter how “shifty” the settlement might seem to CMS, there is no cause of action available to the U.S. attorney except for those actual payments made under Medicare and which were (allegedly) the responsibility of the primary plan. Private claimants may not pursue the UnitedState’s interest in Federal Court under a qui tam theory.
Once CMS is made knowledgeable that a medical service is or might be covered by workers’ compensation, then the agency theoretically should deny payment. With no payment having been made, the U.S. attorney will not have an action under 42 USC 1395y(b)(2)(B)(iii).
There is established a private cause of action available for damages under 42 U.S.C. § 1395y(b)(3)(A). It provides for damages which shall be in an amount double the amount otherwise provided in the case of a primary plan which fails to provide for a primary payment (or appropriate reimbursement). In other words, when a claimant does not get Medicare payment for a medical treatment which is otherwise payable by workers’ compensation, he or she could theoretically sue the carrier in Federal court for double damages.
Well so what! In genuinely contested cases, are Federal Courts going to become forums where all of the issues of an underlying workers’ compensation case is re-litigated? I am waiting to see this happen, and I doubt that it ever will. Although CMS is empowered to disregard the putative structure of a settlement, someone, whether a claimant under the private action or CMS seeking repayment, must establish that the settlement is in fact a commuted rather than the compromise settlement.
In order to figure out if the supposed compromise settlement is really in fact a commutation of future medical benefits, CMS’s regulations provide in part:
(i) Determine the ratio of the amount awarded (less the reasonable and necessary costs incurred in procuring the settlement) to the total amount that would have been payable under workers’ compensation if the claim had not been compromised.
This regulation requires that someone have a crystal ball and know to a certainty what would have been paid under workers’ compensation if the claim had not been compromised. Nobody in the universe knows that. That is why cases are compromised.
I would welcome an opportunity to raise this to a Federal judge. “Your honor ,we would respectfully request that you become a workers’ compensation commissioner and determine the award. By the way, we are ready to call our first witness on the compensation rate.” This could be a defense lawyer’s dream: All of the issues in a comp case, and we get to use all of the Federal Rules. (I’ll bet the former Commissioner and current federal judge Michelle Childs thinks this is behind her.)
Last, there appears to be something like a statute of limitations in all of this that is three years long and runs from the time the medical services are furnished.
For a really excellent summary and comment of the MSP statute (42 USC 1395y(b)(2)(B)(iii).), read Frazer v. CNA Insurance Company 374 F. Supp 2d 1067 (2005).
I doubt many adjusters are comfortable risking a challenge CMS. However, the damages are finite, and we need to test the limits of this statute with some reported decisions. I am hopeful that a self-insured (after a full disclosure by their attorney) might step up to the plate. And, if there is no real attempt to shift costs to CMS, one could take the risk. If a CMS decides to get the U.S. attorney to sue a carrier (and they don’t seem to be doing this much), it might prove a difficult case for CMS to win.
That’s it for now. Tune in next for “What to do when the workers’ comp claimant asserts the 5th admendment in response to a question.”