Tuesday, November 17, 2015

Skepticism needed

When reviewing court decisions on Medicare issues, be on the alert for the tendency of the courts to misstate the holdings in earlier cases. Two examples come from important decisions on Medicare Advantage reimbursement claims:

In In re Avandia, 685 F.3d 353 (3rd Cir. 2012) the Third Circuit asserted, at p. 363, that the Sixth Circuit in Bio-Medical Applications v. Central States Southeast and Southwest Areas Health and Welfare Fund, 656 F.3d 277 (6th Cir. 2011) had ruled that a claim for reimbursement against a tortfeasor [or his liability insurer] could only be maintained by CMS, and not by a private party under the private cause of action provisions of the MSP statute. Not true. The court in Bio-Medical said, in dictum, that the "demonstrated responsibility" standard that had been recognized in earlier cases, most prominently Glover v. Liggett Group, Inc., 459 F. 3d 1304 (11th Cir. 2006), would apply only to reimbursement claims against tortfeasors, and only when the reimbursement claim was pursued on behalf of CMS under Medicare. But it did not impose either limit on the claim for reimbursement itself.

In Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653 (E.D.La. 2014), the Federal court in Louisiana claimed that the Sixth Circuit, in Michigan Spine & Brain Surgeons, PLLC v. State Farm, 758 F.3d 787 (6th Cir. 2014) (MSBS), had "allowed a MAO-suit for reimbursement to go forward under the Medicare Secondary Payer statute." The implication was that the Sixth Circuit had retrenched on its ruling in Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003), issued a decade earlier. In truth, the MSBS decision did no such thing. The decision in MSBS involved another issue entirely: whether liability under the private cause of action provision of the MSP statute could be founded upon a decision by a no-fault carrier denying coverage for a reason other than the insured's entitlement to Medicare. The MSBS court did not mention the issue of reimbursement to a Medicare Advantage plan. It did not, as the court in Collins suggested, overrule the decision in Care Choices, implicitly or explicitly. The Care Choices case was not even mentioned by the court in MSBS. The same is true of the other cases on that question; the decision in MSBS is devoid of any reference to Nott v. Aetna U.S. Healthcare, Inc., 303 F.Supp.2d 565, 571 (E.D.Pa.2004), and it makes only a fleeting reference to the 3rd Circuit's Avandia decision.

Friday, October 16, 2015

And another

Another reported case in the U.S. District Court for the Southern District of Florida reveals activity by MSP Recovery, LLC, this time in its own name. A claim for reimbursement for payments made by Florida Healthcare Plus, a Medicare Advantage plan, was first assigned to a company called La Ley Recovery and then to MSP Recovery.

Unfortunately for MSP Recovery, despite amendment of its complaint, it could not figure out how to properly assert a factual claim for reimbursement under Twombly, and the case has been dismissed.

MSP Recovery, LLC v. Allstate Insurance Company
Docket No. 15-20788-CIV
October 6, 2015

Saturday, September 5, 2015

New prospectors looking for gold

The U.S. District Court for the Southern District of Florida has granted a Motion for Dismissal filed under the Medicare statute's private cause of action provision, seeking double recovery damages, arising from a series of treatments for an unnamed insured. The insured was a member of Florida HealthPlan Plus, a Medicare Advantage plan, and the defendant was (it appears) a liability carrier. The nature of the injury and why the defendant was alleged to be responsible to pay were not made clear.

Citing Glover v. Liggett Group, Inc., 459 F.3d 1304, 1308 (11th Cir. 2006), the court noted that the complaint failed to allege that the defendant had an established responsibility to pay under its policy. Absent such an allegation, it found, the complaint did not state a claim on which relief could be granted, and the defendant was entitled to dismissal under Federal Rule 12-b-6.

What is interesting about this lawsuit is the fact that it was filed, not by the Medicare Advantage plan, but by a company called MSPA Claims 1, LLC which asserted that it was an "assignee" of the MA plan's reimbursement claim. A review of the Florida Sunbiz site shows that fifteen separate limited liability companies, the first called "MSPA Claims 1, LLC" and the remainder bearing names "MSPA Claims II" through "MSPA Claims XV," have been registered in that state between February and June 2015. The registered agent for each is Rachel L. Tolley, a Miami lawyer who is nonetheless identified as the Manager of MSP Recovery Services, LLC, in Miami. That company's web site says,
MSP Recovery is an entity that provides recovery services to Health Maintenance Organizations (“HMO”), Management Service Organizations (“MSO”) and Independent Practice Organizations (“IPA”, collectively the “Client”). With its multi-level structure, MSP Recovery, through its proprietary software as well as highly trained staff, which includes IT personnel, accountants, statisticians, physicians, data analysts and attorneys, maximizes the recovery of claims already paid and provides an analysis of which claims the Client was not responsible for pay. MSP Recovery recovers medical services and/or supplies already paid to medical providers and/or shifts claims submitted to the Client to primary payers as required by the Medicare Secondary Payer Act (“MSP”).
MSPA Claims 1, LLC, v. IDS Property Casualty Insurance Company - decided August 28

Sunday, June 7, 2015

New Final Rule on Reimbursement Decisions

CMS released its Final Rule on February 27, 2015, permitting and requiring insurers and others who wish to contest a reimbursement decision made by the Coordination of Benefits and Recovery Contractor (COBRC) to pursue an administrative appeal of that decision rather than having to pursue it in court. 80 Fed Reg 10611

The rule applies to "applicable plans," and a definition has been added, tracking the statutory language, specifying that that phrase means "liability insurance (including self-insurance), no-fault insurance, or a workers’ compensation law or plan." The new rule does not include Medicare beneficiaries or providers; they were already subject to administrative appeal procedures.

It provides that the decision of the COBRC seeking a recovery directly from the debtor will be regarded as an "initial determination as to the amount and the existence of the recovery claim," thus triggering the appeal provisions for a "redetermination" of that decision. Only these issues are subject to appeal. The administrative appeal is not available to challenge a decision by CMS to seek recovery from one party as opposed to another. If CMS decides to pursue a primary payer before the beneficiary, for example, that decision is not subject to administrative appeal and, presumably, the fact that the beneficiary has not been sent a reimbursement demand will not be a valid defense to the claim.

Only the person identified as the "debtor," the entity from which a reimbursement is required, is permitted to participate in the appeal.

The debtor will have the right to name an attorney or other "appointed representative" to handle the appeal on its behalf. The Medicare beneficiary will be provided with notice of the appeal by the debtor, but will not be permitted to participate in the appeal unless he or she has received an initial determination as well.

The following suggested comment and CMS's response are included in the publication:
Comment: Commenters requested we clarify that initial determinations (recovery demands) involving liability insurance (including self-insurance), no- fault insurance, or workers’ compensation benefits are made only after there is a settlement with a beneficiary.

Response: Recovery demands are appropriate once primary payment responsibility has been demonstrated. Primary payment responsibility can be demonstrated based upon a settlement, judgment, award, or other payment. See section 1862(b)(2)(B)(ii) of the Act and 42 CFR 411.22 of the regulations.
CMS declined a suggestion that the accrual of interest on the reimbursement amount be stayed pending the administrative appeal, noting that the debtor can avoid additional interest charges by paying the reimbursement amount, and that such repayment would not jeopardize the right to appeal.

Lastly, and significantly, CMS did not provide for this administrative appeal process to apply to reimbursement notices from Medicare Advantage plans or Part D contractors, and it rejected a suggestion that it be extended to include them. It noted that the SMART Act, which required this new administrative appeal process, expressly refers only to Part A and Part B payments - that is, "traditional Medicare."

The procedure for administrative appeals is provided under 42 CFR 405.900 et seq., entitled "Determinations, Redeterminations, Reconsiderations, and Appeals Under Original Medicare (Part A and Part B)."

Sunday, March 22, 2015

What should a voluntary MSA include?

We occasionally see commentators make recommendations for the use of Medicare set-asides (MSAs) in liability cases. In fact, we have made recommendations regarding this issue from time to time.

As a recap and reminder, a "set-aside" arrangement involves placing a pool of money in an account or trust, with the intent to use that money in the future for medical services or equipment that would be covered by Medicare. The money would usually come from a settlement or payment on a judgment. The typical scenario would involve:
  • Amos settles his personal injury case for $100,000.
  • Medicare had made conditional payments in the amount of $12,000.
  • After notification of the settlement of the case, Amos's attorney receives from the Coordination of Benefits and Recovery Contractor a letter requiring reimbursement in the amount of $9,420, after a reduction to account for the costs of recovery.
  • The attorney sends payment in that amount to the COBRC.
  • The attorney is concerned about the need for future medical care arising from the accident, so he decides to establish a voluntary MSA in the amount of $8,000 to be used, if needed, for payment of those expenses to the extent that they would be Medicare-eligible.
CMS has a system in place to review the sufficiency of the amounts of MSAs when workers' compensation cases are settled. It has adopted regulations and it has personnel who review the claims to ensure that the amount of the MSA will be sufficient. If it approves the MSA, the regulations provide that the claimant must use the MSA funds as the "primary payer" to pay for Medicare-eligible medical needs, and that, once the MSA has been depleted, Medicare will once again step in to pay for related medical expenses as primary.

Although CMS has made comments about doing the same for MSAs in other contexts, most notably liability cases, it remains true today that
  • CMS does not require MSAs in liability cases
  • CMS has no system in place to review or approve MSAs in liability cases
  • Without such approval, CMS is not bound by any decision made by the claimant or his professional advisors
Our standard recommendation to liability insurers has been, for the last several years, that they have no reason to insist upon an MSA when settling a liability case, but that, if the plaintiff's attorney determines, for the protection of his client, that an MSA should be set up on a voluntary basis, there is every reason for the defendant and his insurer to cooperate with that request.

What should be included in a voluntary set-aside? For the answer to that question, we have to consider the substantive law of damages in the state of Michigan. For not every Medicare-eligible medical expense related to the subject accident will be properly payable from the MSA.

The impetus for MSAs comes from the language of the MSP statute which provides that
Payment under this subchapter may not be made, except as provided in subparagraph (B), with respect to any item or service to the extent that. . .
payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.
42 USC 1395y-B-2-a-ii
Thus, if the plaintiff in a liability case has received payment (in the form of a settlement or payment on a judgment entered by a court) for damages resulting from an accident, Medicare will not pay in the future for the medical expenses for which such payment has already been made to the Medicare beneficiary.

But the laws relating to the recovery of damages in a civil action based on tort do not allow for the recovery of each and every item of medical expense that may arise in the future. Specifically, Michigan case law provides that, for "future medicals" - the expenses of medical treatment related to the accident that have not yet occurred - they can be recovered by the plaintiff only if they are proven to be "reasonably likely to be incurred" in the future. If they are only possible, or contingent, or uncertain, they cannot be awarded as damages by a jury, and they would not be included in calculating the reasonable value of a settlement. But such uncertain or contingent damages would still be included in a release in the event of settlement, and would be merged into a judgment in the event of a trial resulting in a verdict in favor of the plaintiff.

Hence it follows that only the items of future medicals that were found to be "reasonably likely to be incurred" in the future as of the time of the trial or settlement should be funded in advance by the use of a voluntary MSA if the plaintiff chooses to establish such an arrangement. Medical expenses that were, at that time, only possible, contingent, or foreseeable would not be included in the bar under 42 USC 1395y-B-2-a-ii and should not be included in the MSA.