Law firm reaches settlement with U.S. Department of Justice to reimburse Medicare conditional payments and start internal MSP compliance programBy Mark Popolizio | June 20, 2018
The United States Department of Justice (DOJ) for the Eastern District of Pennsylvania has issued a news release reporting that a Philadelphia personal injury law firm has agreed to pay the government $28,000.00 to resolve allegations that the firm failed to reimburse Medicare conditional payments, and agreed to start an internal compliance program to ensure timely repayment of conditional payments going forward.
This matter arises from a DOJ investigation under the Medicare Secondary Payer (MSP) provisions into various events before March 2017 where Medicare made conditional payments to medical providers to satisfy medical bills for nine of the firm’s clients. Medicare demanded repayment of these conditional payments between May 2011 and March 2017, which the firm allegedly failed to reimburse.
Under the terms of the settlement with the DOJ, the firm’s principal agreed to pay a lump sum of $28,000.00. In addition, the firm agreed to (1) designate a person 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, the firm acknowledged that any failure to submit timely repayment of Medicare secondary payer debt may result in liability under the False Claims Act.
In relation to this matter, the DOJ stated that “this settlement agreement should remind personal injury lawyers and others of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients.” U.S. Attorney William M. McSwain added further: “[w]hen an attorney fails to reimburse Medicare, the United States can recover from the attorney-even if the attorney already transmitted the proceeds to the client … Congress enacted these rules to ensure timely repayment from responsible parties, and we intend to hold attorneys accountable for failing to make good on their obligations.” The DOJ’s press release is reported at 2018 WL 3020310 (June 18, 2018).
Avoid liability: addressing Medicare conditional payment claims
This DOJ action highlights the potential liability parties face when it comes to conditional payments. Under the MSP, Medicare can pursue the claimant and/or their attorneys for recovery. In this matter, the DOJ directed its enforcement efforts against the plaintiff lawyers, eventually reaching a settlement for the firm’s alleged failure to reimburse conditional payments. The DOJ’s efforts against the law firm are reminiscent of United States v. Harris, 2009 WL 891931 (N.D. W. Va. 2009) where the government prevailed against a plaintiff lawyer (on summary judgment) for recovery of Medicare conditional payments in relation to a personal injury settlement.
Keep in mind that claims payers also face liability under the MSP for conditional payments. Against claims payers, Medicare has a direct right of recovery, subrogation rights, and can refer delinquent debts to the United States Department of Treasury for collection. In addition, the government can sue the payer for “double damages” if its interests are not properly addressed. Likewise, the MSP allows certain third parties to bring a private cause of action suit for “double damages” where the payer has failed to provide proper payment or appropriate reimbursement. Medicare can also pursue the claims payer in situations where the claimant has failed to reimburse Medicare, even though the payer has already reimbursed the claimant.
When the dust settles, both sides are in Medicare’s bull’s eye for conditional payments— and the government has strong and broad enforcement rights. The formula to avoid liability is simple: ensure Medicare conditional payment claims are properly addressed, disputed (if applicable), and repaid as part of claims handling and settlement. Developing best practices to address conditional payment claims is critical to avoid potential (and significant) liability under the MSP, including potential DOJ actions as outlined above.
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 See, 42 U.S.C. 1395y(b)(2)(B)(ii) and (iii);42 C.F.R. 411.22; 42 C.F.R. 411.24(g) and 42 C.F.R. 411.23.
 See, 42 U.S.C. 1395y(b)(2)(B)(ii), (iii) and (iv), and 42 C.F.R. 411.24(c)(2).
 See, 42 U.S.C. 1395y(b)(2)(B)(iii).
 See, 42 U.S.C. 1395y(b)(3)(A).
 42 C.F.R. 411.24 (i) states as follows: In the case of liability insurance settlements and disputed claims under employer group health plans, workers’ compensation insurance or plan, and no-fault insurance, the following rule applies: If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party. Paragraph (h) provides that “[i]f the beneficiary or other party receives a primary payment, the beneficiary or other party must reimburse Medicare within 60 days.”
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