Medicare lien resolution (and settlement of Medicare beneficiary cases) grinds to a halt

Given that over 45 million Americans are enrolled in Medicare, it is not surprising that many of our personally injury clients have some of their medical expenses paid by Medicare.  When our clients’ cases are resolved either through settlement or jury trial, Medicare is entitled to be reimbursed the amount Medicare paid for our client’s medical treatment.  The rules regarding reimbursement have changed significantly over the years and can be a pitfall for the uninformed.  In fact, it has become so specialized that there are firms that specialize in dealing with Medicare lien resolution.

Here is how it works in a typical personal injury case.  First, the plaintiff’s attorney gathers information about the injured client and sends it to the Medicare Coordination of Benefits Contractor.  This initiates a claim with the Medicare Secondary Payer Recovery Contractor.

Next, we send a request for conditional payments along with an executed consent to release information and proof of representation.  Then we wait….and wait for the conditional payment letter (CPL).  The CPL tells us how much Medicare has supposedly paid for treatment related to the injury.  Sometimes it is correct and other times it isn’t.  We can dispute the amounts if needed.

With CPL in hand, we can attempt to settle the case.  If successful in reaching a settlement, we move ahead with Medicare by requesting a final demand letter and send details of the settlement (including the amount of settlement, a copy of our legal services contract, an itemized list of case expenses and date of settlement).  Then we wait…..and wait some more. 

At some point, Medicare sends us a final demand letter which says words to the effect of “pay $XXX amount of money within 60 days or we will hold you personally liable and charge interest.  Oh yea, we can also cut some government benefits from your client if you fail to pay us.”  Payment was required even if we disputed the amount claimed or had a request for waiver pending.

Everyone pretty much understood the procedure.  Lots of letters, phone calls, faxes and waiting.  Pay Medicare as soon as they make demand or else!  That all changed with the recent case Haro v. Sebelius from the US District Court of Arizona.   Judge Bury found that Medicare exceeded its authority in threatening collection while an appeal or request for waiver was pending.  Likewise, Judge Bury found  that Medicare exceeded its authority in demanding that attorneys withhold liability proceeds from their clients pending payment of disputed MSP reimbursement claims.

So what is the result for our clients? Only one thing is for certain at this point.  Medicare stopped issuing final demand letters which has in turn, brought the settlement of cases for Medical beneficiaries to a halt.  Not a good result, but it is out of our hands at this moment until Medicare decides on a course of action. 

For more technical details of Haro, take a look at this whitepaper from the Garretson Firm.


About randywallace
I am a husband, father, attorney, outdoorsman and cook.

4 Responses to Medicare lien resolution (and settlement of Medicare beneficiary cases) grinds to a halt

  1. Anderson says:

    The whole procedure mystifies us on the defense side too, perhaps even more. IIRC, the reporting requirement for insurers doesn’t kick in until October — unless that too is on hold now.

    Meanwhile, all I know to do is to write in scary language on my form release — “I understand that my Medicare benefits in future could be withheld,” etc.

  2. Pingback: Medicare resumes rights and responsibilities letters « randywallace

  3. Anonymous says:

    I still do not understand why there is a responsibility in paying medicare back when there was a death in a lawsuit. Do other people without medicare have to pay back their insurance also when there is a death?

    • randywallace says:

      Medicare must be repaid in certain instances due to a law known as the Medicare Secondary Payer Act.

      The theory behind it is that Medicare should not pay for medical treatment that is the result of some other party’s negligence. In those situations the party that injures someone should be paying. However, Medicare will make conditional payments for the medical treatment provided Medicare is reimbursed when the case is ultimately resolved.

      There are other instances where third parties must be repaid from a lawsuit. Typically, the reason the third party must be repaid is either based on contract (such as a subrogation agreement in health insurance) or by statute (such as situations where workers compensation insurance or Medicaid are involved).

      There are instances where third parties are not entitled to reimbursement or subrogation. The rules applicable to when a third party is entitled to repayment and how much they are entitled to be repaid, if any, vary by state so please consult with an attorney licensed in your area to determine if any recovery must be repaid and if so, how much.

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