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US Department of Justice Settles Outstanding Medicare Conditional Payments with Plaintiff Counsel and Corporate Defendant

Monday, September 14, 2020 | 121 | 0

US Department of Justice Settles Outstanding Medicare Conditional Payments with Plaintiff Counsel and Corporate Defendant

Rafael Gonzalez, Esq., Partner, Cattie & Gonzalez, PLLC

Introduction

Yes, you read that right. The US Department of Justice just settled a Medicare conditional payments case, not only with plaintiff counsel, which we are now used to reading about, but also with the corporate defendant, the original primary payer, the responsible entity. Yep, that day is here. My warnings about the federal government suing primary payer corporate entities and insurers despite settlement agreements and protective language have come to fruition.

As the Medicare Secondary Payer (MSP) law makes clear, when any primary payer, including a corporate defendant, or an attorney, fails to reimburse Medicare, the United States (US) can recover from such a primary payer, including the attorney--even if the primary payer already provided payment, and even if the attorney already provided settlement proceeds to the client. 42 U.S.C. § 1395y(b)(2); 42 C.F.R. § 411.24. Congress and the Department of Health and Human Services (HHS) enacted these rules to ensure repayment from all responsible parties. As we have seen over the last several years, the federal government intends to hold all primary payers, including attorneys representing Medicare beneficiaries, accountable for failing to make good on their obligation to reimburse Medicare when it has made payments related to an underlying auto, liability, no-fault, or work comp claim.

Prior USDJ Settlements with Claimant Counsel

As I have been indicating for some time now, it isn't just Medicare chasing after reimbursement of these conditional payments. The United States Department of Treasury (USDT) is also collecting these debts on behalf of Medicare, and so is the United States Department of Justice (USDJ). Case in point, the following five (5) recent settlements between USDJ and personal injury lawyers/law firms, and now with a primary payer, or corporate defendant:

-On June 18, 2018, US Attorney William M. McSwain announced that Philadelphia personal injury attorney Jeffrey Rosenbaum, and his law firm, Rosenbaum & Associates, entered into a settlement agreement with the United States to reimburse $28,000 to the United States for certain Medicare payments the government had previously made to medical providers on behalf of firm clients. 

-On March 18, 2019, US Attorney Robert K. Hur announced that Meyers, Rodbell & Rosenbaum, P.A., a Maryland law firm, entered into a settlement agreement with the United States to reimburse $250,000 to the United States for certain Medicare payments made to medical providers on behalf of a firm client. 

-On November 4, 2019, US Attorney Robert K. Hur announced that Saiontz & Kirk, P.A., a Baltimore-based law firm, entered into a settlement with the United States to reimburse $91,406 to the United States for conditional payments that had been made to medical providers on behalf of firm clients. 

-On January 8, 2020, US Attorney William M. McSwain announced that Simon & Simon, P.C., a Philadelphia-based personal injury law firm, entered into a settlement agreement with the United States to reimburse $6,604 to the United States for certain Medicare payments. 

The Latest Case

In July 2011, a medical care center telephoned a pharmacy with a prescription for a Medicare beneficiary. The pharmacy did not dispense the prescription that had been called in, but instead dispensed an incorrect prescription. The incorrect medicine caused the Medicare beneficiary to become ill. As a result, the Medicare beneficiary was hospitalized for sixty-six (66) days from July 15, 2011 through mid-September 2011. 

During this time period, the Medicare beneficiary accumulated nearly $100,000 in health care bills. Medicare paid $84,353.00 of the medical bills related to the ingesting the wrong medicine.

The Medicare beneficiary filed a lawsuit against the pharmacy and the medical care center. He was represented by attorney Richard C. Angino, of the Angino Law Firm, P.C. As attorney of record, Angino asked Medicare for the amount of such charges. The Centers for Medicare & Medicaid Services (CMS) reported initially that it had paid only $725.00. After asking again, CMS indicated that this amount had increased to $1,212.

Incorrectly relying on the interim notice of $1,212.00 as being the full and final amount due to Medicare, the parties reached a settlement agreement in July 2014.

After being notified of the settlement, Medicare reviewed its records and then determined that $84,353.00 in medical charges had been paid relating to the injuries. Medicare reduced this amount by its share of the attorneys' fees and costs, as required by law, and determined that Medicare was owed $53,295.00 from the settlement proceeds. It notified Angino that $53,295.00 was due from the settlement proceeds and payable within sixty (60) days from August 14, 2014. Neither the Medicare beneficiary or Angino ever paid.

Resulting Litigation and Settlement

Because no one reimbursed Medicare, the United States filed suit against the Angino Law Firm and Bio-Medical Applications of Pennsylvania to recover the money owed to Medicare in July 2017. After extensive litigation in the United States District Court, the parties agreed to amicably resolve the matter. Under the terms of the settlement, the Angino Law Firm paid the United States $19,545.15 and Bio-Medical Applications of Pennsylvania paid the Federal Government $33,750, which had been set aside in escrow from the state medical malpractice settlement. 

According to US Attorney David J. Freed, 'this matter was litigated by the Affirmative Civil Enforcement (ACE) Unit within the US Attorney's Office and was assigned to Assistant US Attorney D. Brian Simpson. The Office of General Counsel, US Department of Health and Human Services, also assisted in this case. The case is docketed as US v. Richard C. Angino, et al., Civ. No. 3:17-1193 (M.D. Pa.)."

Conclusion

Enacted in 1980, the Medicare Secondary Payer Statute (MSPS) requires self-insureds and insurers to make the primary payment for services rendered to Medicare beneficiaries resulting from auto, liability, no-fault, or work comp claims, leaving the Medicare program to provide benefits as a secondary payer. Under the MSPS, Medicare may make conditional payments for a beneficiary's care, then seek reimbursement from a primary source such as a corporate defendant or primary insurance company. The MSPS permits Medicare to seek reimbursement directly from a primary self-insured or insurance company or another person, such as the Medicare beneficiary or the beneficiary's attorney, who received payment from the primary entity or insurer but for whatever reason does not remit the payment to Medicare. 

Since 2018, the US Department of Justice has stepped up its efforts in prosecuting MSPS reimbursement claims, especially against claimants' counsel who may have refused or otherwise failed to reimburse Medicare despite being asked by the Medicare program for such repayment. This case continues that trend, but furthers its involvement by filing a lawsuit and ultimately settling with the corporate defendant, the primary payer.

So, just as I have been warning, writing and speaking about for several years, even if the corporate defendant or its insurer settles the claim with the Medicare beneficiary plaintiff and his/her attorney, and the settlement agreement transfers all responsibility for reimbursement of Medicare conditional payments to the plaintiff and his/her counsel, should such conditional payments remain unreimbursed, Medicare retains the right to seek repayment not only from the Medicare beneficiary and his/her counsel, but also from the primary payer corporate entity or its insurer. And that right means Medicare may seek reimbursement by referring the debt to the US Department of Treasury, or as shown here, by referring the debt to the US Department of Justice.

About Rafael Gonzalez, Esq.
Rafael is a partner in Cattie & Gonzalez, PLLC, the first national law firm focusing its entire law practice on Medicare and Medicaid compliance issues in the liability, no-fault, and work comp industries. He is an attorney with extensive expertise in auto, medical malpractice, products liability, nursing home, med-pay, and workers compensation claims, as well as social security, medicare, medicaid, and affordable care compliance. He is active on LinkedIn, Twitter, Facebook, Instagram, and YouTube.