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By Steven G. Mehta


As you may know, I have written several articles on the issue of Medicare reimbursement rights.  The California Lawyer Magazine has recently published one of my articles on this topic discussing Medicare’s right to reimbursement against plaintiffs, defendants, and their attorneys.  The following is a brief excerpt:

Expert Advice
Reimbursing Medicare
by Steven G. Mehta

The federal government has long enjoyed reimbursement rights when Medicare recipients recover damages from third-party tortfeasors (42 U.S.C. § 1395y(b) (2)(B)(ii)). Although some attorneys have quietly taken advantage of the repayment obligation’s lax enforcement, the situation may change this month when new reporting requirements take effect.  The new rules, promulgated under the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), require defendants and their attorneys to notify the government whenever they learn that the plaintiff is a Medicare beneficiary.

 A Super Lien
Medicare is a secondary insurance plan that conditionally pays for medical treatment subject to reimbursement by a primary source such as private health insurance or a third-party tortfeasor.

 A Medicare beneficiary who receives payment from a primary source must reimburse Medicare within 60 days. Medicare’s right to reimbursement is a “super lien” that trumps everything else, even if a client’s recovery has already been distributed (42 U.S.C. § 1395y(b)(2)(B); 42 C.F.R. § 411.24(h)).

 Enforcement of reimbursement rights rests with the Centers for Medicare and Medicaid Services (CMS). CMS can seek reimbursement directly from the Medicare beneficiary and from anyone else who receives payment from the primary source—including the plaintiffs attorney (42 U.S.C. § 1395y(b)(2) (B); 42 C.F.R. § 411.24(g)).

To read the entire article, click here

Since my last post on the issue of medicare reimbursements, there are some new updates on the topic because Medicare posted an alert on May 11, 2009. the following reflect some of the changes and updates.

  • The Medicare, Medicaid and SCHIP Extension Act of 2007, or MMSEA, requires defendants and insurance carriers to report settlements with Medicare beneficiaries to the secretary of Health and Human Services. Section 111 of the MMSEA requires that insurers register electronically with the  CMS, and report all settlement claims for the purpose of providing the CMS within information to recover  on its superlien.
  • Insurers are to register with the CMS between May 1 and June 30. After that there is a process of testing the system to ensure smooth operation.
  • The penalty for non-compliance for failing to advise the CMS of a settlement is $1,000 per day per reportable Medicare claim.

Testing for mandatory reporting has been extended to Dec. 31, but claims must be reported retroactively to July 1.

The following changes are identified by the Garretson law firm, lien specialists,

Those changes are as follows:

1. Extension of Registration Period. The registration period for non-Group Health Plan RREs, previously scheduled to end on June 30, 2009, has been extended through September 30, 2009.

2. Submission of Live Production Files. RREs are now required to submit its first live production files no later than its assigned window in Q2 2010 (April – June) instead of Q1 2010 (January – March).

3. Testing Period. The testing period for the submission of Claim Input Files will take place from January 1, 2010 through March 31, 2010. Previously, this period was to last from July 1, 2009 through December 31, 2009.

4. Early Submission. If an RRE completes the registration process and completes testing successfully prior to its assigned submission window, it may begin submitting live production files starting January 1, 2010.

5. Query Files. Query files may be submitted starting on July 1, 2009, but only if the RRE has completed registration and is in testing status according to CMS standards.

6. TPOC Reporting Exception. A Total Payment Obligation to the Claimant (“TPOC”) does not have to be reported if the settlement occurs between July 1, 2009 and December 31, 2009.

7. ORM Reporting. Reporting related to Ongoing Responsibility for Medicals (“ORM”) must still be reported if it occurs on or after July 1, 2009, but should be reported according to the revised time periods provided in the Alert.

8. Multiple TPOCs. If there are multiple TPOCs present, only those occurring on or after January 1, 2010 should be reported.

In light of the Alert, the revised MMSEA implementation timeline looks like this:
• May 1, 2009 – Sept. 30, 2009: Registration
• July 1, 2009: Test/Production Query Input Files Accepted
• January 1, 2010: Claim Input File Testing Begins
• January 1, 2010: Production Claim Input Files Accepted
• April 1, 2010 – June 30, 2010: Initial Production Claim Input Files Due

To view the Complete Alert, please click here.

The following are recommendations previously suggested by Attorney Tom Annopol at his blog:

Recommendations for the Practitioner

While the insurer is now obligated to register all claims and verify lien resolution, plaintiffs must fully cooperate and provide all necessary information before a settlement can be finalized. Whether it’s a mass tort claim or an individual action, the verification and resolution process will be lengthy. In order to prevent unnecessary and unreasonable delay, both parties should begin the verification process early and well before any claims are resolved. To streamline the settlement process, we recommend the following actions.

• Start early: The CMS will be inundated with requests for proof of no lien statements and for lien payoff amounts. The sheer magnitude of the number of liability settlements effected by this law coupled with the anticipated bureaucratic delay of any expanded governmental program must create angst and concern with even the most organized and efficient attorneys. To avoid delays on the back end, best practice for plaintiffs’ counsel is to advise the CMS of the claim once suit is filed or well before resolution if pre-suit settlement is anticipated. This advance notice should allow the CMS ample time to provide the lien amount in advance of settlement. Not only will this help with the new MMSEA Act, but it will also help the parties better prepare for settlement by knowing the lien amounts. Additionally, accuracy is critical. A missing digit from a Social Security number or a misspelled name creates a reporting nightmare and will guarantee extensive delay. If the case ultimately fails to garner a recovery, a simple letter to the CMS that the claim was unsuccessful will close the file on their end.

• Stay in touch with the CMS: While the case is pending, make sure to stay in contact with the CMS to ensure that a lien amount is forthcoming. Be mindful that the lien amount is ever changing. A Medicare lien today will grow over time as additional services are provided. Final lien resolution must be timely with the settlement and distribution.

• Review services provided and negotiate: Plaintiff counsel must not simply accept the CMS accounting concerning lien amounts. Services provided must be examined to confirm that the treatment and billing is claim-related and reasonable. The CMS is prepared and routinely negotiates liens based upon a multitude of factors including the lien and settlement amounts, as well as liability and the likelihood of success or failure of a future judgment if a settlement offer is rejected.

• Coordinate settlement time: Settlement should occur in conjunction with lien resolution. If lien resolution is completed in conjunction with settlement, not only is the claimant provided with the best opportunity to negotiate the lien, the defendant can more quickly report and verify the settlement so as to not delay the release of funds to plaintiffs.

• Confirm: Once the CMS verifies in writing the lien resolution or the fact that no lien exists, settlements can be funded.

To print a handy reference guide regarding some of the requirements under the MMSEA, click here.

By Steven G. MehtaSteve Mehta


Medicare, Medicaid, and MediCal liens are big news in the legal world because of the enactment of the new law in effect July 1, 2009 regarding defendants notifying Medicare regarding the lien.  A new California case ruled on issues that relate to medical liens.  (See for prior discussion, Six Things That You Must Know (But Are Afraid to Know) About Medicare Reimbursement Rights: The Medicare Super Lien; Litigation Solutions To Medicare Reimbursement Rights — How to Avoid Liability to CMS)

In Lima v. Vous, 2009 WL 1464263, which was decided on May 27, 2009, the Court addressed the issue of extinguishing a government lien.

In Lima, as part of a proposed medical malpractice settlement that did not allocate the proceeds to categories of damages, plaintiff and appellant Guadalupe Lima (plaintiff) made a motion to extinguish a portion of a Medicaid lien asserted by the Department of Health Services (DHS). The trial court made findings, including the reasonableness of the amount of plaintiff’s total damages claimed and of the settlement, as well as the amount of plaintiff’s past medical expenses.The trial court denied plaintiff’s motion to extinguish the DHS lien, without determining the portion of the settlement proceeds allocable to plaintiff’s past medical expenses. In doing so, the trial court failed to follow the federal requirements as enunciated in Arkansas Department of Health and Human Services v. Ahlborn (2006) 547 U.S. 268 ( Ahlborn ).

The court addressed the following issues:

Under established case law, the order denying plaintiff’s motion to extinguish is appealable as a final collateral order directing the payment of money.

  • “States are not required to participate in Medicaid, but all of them do. States have to make reasonable efforts to collect on the amounts paid.   The states have a law to assist in this process giving them a lien.
  • The court addressed the ruling by the Supreme Court in Ahlborn.  According to the court in Ahlborn, under the third-party lien provisions of the Medicare law “the State must be assigned ‘the rights of [the recipient] to payment by any other party for such health care items or services.’ § 1396a(a)(25)(H). The statute does not sanction an assignment of rights to payment for anything other than medical expenses-not lost wages, not pain and suffering, not an inheritance. The ‘amount recovered … under an assignment’ is not, as ADHS assumes, the entire settlement; as explained above, under the federal statute the State’s assigned rights extend only to recovery of payments for medical care. Accordingly, what § 1396k(b) requires is that the State be paid first out of any damages representing payments for medical care before the recipient can recover any of her own costs for medical care.
  • the California court in Bolanos, recognized, the formula used in Ahlborn is not the only formula that may be used in cases where there is no allocation of damages by verdict, judgment, or stipulation. “What matters is that past medical expenses are distinguished in the settlement from other damages on the basis of a rational approach; it may be that the parties can reach an agreement without recourse to the Ahlborn formula. In fact, subdivision (a) of [Welfare and Institution Code] section 14124.76 urges the parties to do so.
  • Here, unlike in Bolanos, the trial court made findings concerning the reasonableness of plaintiff’s “assessment” of her total damages and the reasonableness of the $950,000 settlement amount in light of those damages. Those findings were sufficient to allow the trial court to allocate an amount attributable to past medical expenses.
  • As to future expenses claimed by the DHS, The court rejected that because of the lack of factual support. The court refused to decide whether the issue of whether DHS could theoretically impose a valid lien on medical expenses it may be required to pay in the future.

The ruling has a definite impact on how Medicare liens could be addressed.  See Six Things That You Must Know (But Are Afraid to Know) About Medicare Reimbursement Rights: The Medicare Super Lien and Litigation Solutions To Medicare Reimbursement Rights — How to Avoid Liability to CMS

The ruling in Lima helps to give some guidance to lawyers in determining how a lien can be imposed.  For example, this could help cases involving claims of wrongful death because the court, in relying on Ahlborn, demonstrates that the lien should be only for medical expenses and not other claims such as wrongful death. 

Further, it behooves the lawyers to make sure that there is an allocation, and especially one by the court.  This could assist in the resolution of the claim.

Finally, this may help in the concern that the lien is not all encompassing on all aspects of the recovery.

If you would like to get a copy of this case, feel free to contact Steve Mehta and he will email it to you.

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