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Philadelphia law firm reaches settlement with U.S. Department of Justice regarding alleged failure to resolve Medicare conditional payments

By Mark Popolizio  |  January 10, 2020

The United States Department of Justice (DOJ), United States Attorney’s Office for the Eastern District of Pennsylvania has issued a news release reporting that a Philadelphia personal injury law firm has entered into a settlement for $6,604.59 with the United States to resolve allegations that it failed to reimburse certain Medicare payments made to medical providers on behalf of the firm’s clients. The firm has also agreed to other terms, including to start an internal compliance program to ensure timely repayment of conditional payments going forward.

The news release reflects that the government alleged that at various points between 2014 and 2019, Medicare made conditional payments to medical providers to satisfy medical bills of eight of the firm’s clients and that the firm allegedly failed to reimburse Medicare for these payments.

According to the news release, as part of this settlement, the firm agreed to pay the United States $6,604.59 to resolve the government’s claims. The firm also agreed to (1) name a person responsible for paying Medicare secondary payer debts; (2) train the employee to ensure that the firm pays these debts on a timely basis; (3) review any additional outstanding debts to ensure compliance; and (4) provide written certifications of compliance.  In addition, the firm acknowledged that any failure to submit timely repayment of Medicare secondary payer debt may result in liability for the wrongful retention of a government overpayment under the False Claims Act. The news release further reflects that there has been no determination of civil liability and that the settled civil claims are allegations only.

In connection with this matter, U.S. Attorney William M. McSwain stated that “[t]his settlement agreement should remind personal injury lawyers and others of their obligation to reimburse Medicare when they receive settlement or judgment proceeds for their clients … Lawyers need to set a good example and follow the rules of the road for Medicare reimbursement. If they don’t, we will move aggressively to recover the money for taxpayers.”

Avoiding liability: make sure Medicare conditional payment claims are addressed

This is the third recent DOJ action against a plaintiff law firm regarding allegations of unpaid Medicare conditional payments. In this regard, the agreement reached in this case is similar to settlements reached with another Philadelphia personal injury law firm in 2018 and a Baltimore personal injury firm in 2019, each for $250,000. In comparison, the settlement in this latest case was for a far smaller sum ($6,604.59) than DOJ’s two previously reported matters. While the news release does not give details into what prompted investigation in this latest case, on the surface DOJ’s decision to pursue this matter could suggest that (at least this particular) U.S. Attorney’s office is willing to take action even on smaller claimed amounts.

In the bigger picture, it is important to keep in mind that under the MSP Medicare can pursue the claimant and/or their attorneys for recovery.[1] The DOJ’s efforts against the law firm in this matter, and the two previous DOJ settlements referenced above, 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. From the claimant side, the recent case of Smith v. United States (Department of Health), 2020 WL 30354 (W.D. Washington, January 2, 2020) highlights that Medicare may attempt to withhold monies from a claimant’s tax refund to recover its conditional payments.[2]

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.[3] The government can also sue the payer for “double damages” if its interests are not properly addressed. [4] 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[5] 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.[6]

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. In, 2018 we saved our clients $43 million in conditional payment disputes. We offer a wide array of services to address Medicare conditional payments, Treasury collection actions, and Medicare Advantage lien claims


[1] 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.

[2] In this case, Medicare issued a demand for repayment of its conditional payments from a claimant’s medical negligence claim under the Federal Tort Claims Act (FTCA).  After the claimant allegedly failed to tender reimbursement, Medicare referred the matter over to the United States Department of Treasury which then notified the claimant that it was withholding $9,505 from his joint tax refund in partial satisfaction of his debt to Medicare.  Smith v. United States (Department of Health), 2020 WL 30354, at *2. This case remains in active litigation as the claimant is challenging Medicare’s recovery action on several grounds, including that repayment is not owed since he had already settled his claim with the United States as part of his FTCA claim for a lower amount to account for and eliminate his debt to Medicare. Id.  The court recently ordered the parties to undergo mediation.  Id. at *5.

[3] See, 42 U.S.C. 1395y(b)(2)(B)(ii), (iii) and (iv), and 42 C.F.R. 411.24(c)(2).

[4] See, 42 U.S.C. 1395y(b)(2)(B)(iii).

[5] See, 42 U.S.C. 1395y(b)(3)(A).

[6] 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.”


Mark Popolizio is vice president of MSP compliance and policy at ISO Claims Partners, a Verisk business. You can contact Mark at mpopolizio@verisk.com.