The United States Department of Justice (DOJ), United States Attorney’s Office for the District of Maryland has issued a news release reporting that a Maryland personal injury law firm has entered into a settlement for $250,000 with the United States to resolve allegations that it failed to reimburse certain Medicare payments made to medical providers on behalf of a firm client. The firm has also agreed to start an internal compliance program to ensure timely repayment of conditional payments going forward.
This matter arose from a medical malpractice claim in which the law firm’s client received a $1,150,000 settlement in 2015. Medicare was notified of the settlement and asserted a conditional payment recovery claim, but the firm allegedly refused to pay Medicare’s claim in full, even when the debt became administratively final.
According to the news release, as part of this settlement, 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 and 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 connection with this matter, the DOJ stated “[t[his settlement reminds attorneys of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgment proceeds for their clients. This settlement should also remind attorneys not to disburse settlement proceeds until receipt of a final demand from Medicare to pay the outstanding debt.” U.S. Attorney Robert K. Hur further added that “[w]e intend to hold attorneys accountable for failing to make good on their obligations to repay Medicare for its conditional payments.”
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 in this matter 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. Also, the DOJ out of Philadelphia reached a similar settlement last year against a plaintiff law firm. See our article on this prior DOJ action.
Keep in mind 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. The government can also 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.
How we can help
ISO Claims Partners is the industry leader in addressing and reducing conditional payment claims. We can assist you in all facets of Medicare conditional payment and Treasury collection actions, including building best practices and training programs.
 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.”