The following were the key dates:
- The final decision by the workers compensation agency was issued on 12-28-09
- On 9-13-12, a year and nine months later, the current lawsuit was filed. The defendant had not reimbursed CMS in that time.
- Defendant received the conditional payments letter on 9-18-12 and a reimbursement demand letter on 10-25-12. The amount was $184,514.24.
- That amount was paid by the defendant to the Medicare reimbursement contractor on 12-11-12.
The imposition of double damages on the defendant which has already paid the reimbursement amount to the Medicare reimbursement contractor, at first glance in compliance with the applicable statutory and regulatory requirements, appears to be an unfair result. But there is more under the surface.
There is no information in this opinion as to what happened between December 2009 and September 2012. Certainly, during that time Indemnity knew that it had the obligation to pay the medical expenses, and it knew that Medicare had paid those expenses. That payment by Medicare would be regarded as a conditional payment, with a reimbursement obligation. It is beyond question that Indemnity knew that it had a reimbursement obligation.
One possibility would be that Indemnity was pursuing an appeal of the decision of the state workers compensation agency during that time, but if that were the case, we would expect that that would be one of the arguments that Indemnity would have made against the imposition of the double recovery penalty. It made no such argument, it would appear.
It seems likely that Indemnity simply decided to wait until it received the conditional payments letter and the final reimbursement demand letter before paying the amount it owed. While that may be a technical compliance with the law, it was not enough in this case.
The court commented:
Indemnity's "no harm; no foul" argument disregards the two years between the order for payment by O'Reilly or its carrier from the Worker's Compensation Board and the filing of this suit during which Indemnity did nothing to notify or reimburse Medicare. As the Estate's filing of the suit prompted payment in the amount of $184,514.24, the Estate is entitled to the double damage in that amount to reward the Estate for its efforts.When the payment of workers compensation benefits was made to the estate, in compliance with the December 2012 ruling, is unknown. Whether and when this payment was reported to CMS under the MMSEA requirements is unknown. Whether it was that reporting that triggered the issuance of the conditional payments letter is unknown.
The court does not mention it directly, but there is an affirmative reporting obligation by the defendant, one which predates the now well-known reporting under MMSEA after money has been paid. The rule, 42 CFR 411.25, provides:
§ 411.25 Primary payer's notice of primary payment responsibility.It is likely that Indemnity never made any report to CMS under this rule. While that report would not be required as long as it continued to assert that the expenses were not related to the accident - if that indeed was its position - once the workers compensation agency had made its ruling in December 2009, assuming no appeals were pursued after that point, that report was required under that regulation.
(a) If it is demonstrated to a primary payer that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment, it must provide notice about primary payment responsibility and information about the underlying MSP situation to the entity or entities designated by CMS to receive and process that information.
(b) The notice must describe the specific situation and the circumstances (including the particular type of insurance coverage as specified in §411.20(a)) and, if appropriate, the time period during which the insurer is primary to Medicare.
(c) The primary payer must provide additional information to the designated entity or entities as the designated entity or entities may require this information to update CMS' system of records.
What is the takeaway lesson? This case still does not establish that a defendant which contests a claim does so at the risk of an adverse ruling under the double indemnity provision, although there will probably be plaintiffs' attorneys who will argue that it does. What it does suggest is that, once the defendant's position on the merits of the claim is rejected by the court or agency, the defendant should take affirmative steps to deal with the known Medicare reimbursement obligation within a reasonable time rather than waiting for the reimbursement contractor to send its notice. The required notice under section 411.25 should be made, in writing, and if there is no response, the defendant should follow it up with additional notices in writing. It is very unlikely that a defendant which makes such efforts would suffer the imposition of double damages under the MSP statute.
* (We discussed the first ruling in the McDonald case here in October 2013, just a year ago. Thanks to Franco Signor for alerting us to the followup ruling.)