The Implications of Medicare Liens on
Personal Injury Recoveries by David J. Wildberger
David J. Wildberger is an associate attorney with the firm of Iliff & Meredith, P.C. and practices primarily in the area of medical malpractice. He received his J.D. from the University of Maryland School of Law. Mr. Wildberger is a member of the MTLA, presently serving on the Legislative Committee’s Medical malpractice Sub-Committee and the Education and Programs Committee.
As America’s population ages, so does our client base. Among the knotty prob- lems presented by an aging client population is the handling of tort claims on behalf of Medicare recipients. In short, Medicare has broad statutory and regula- tory rights to recover those amounts paid on behalf of a Medicare recipient in in- stances in which other sources of recovery are available. There has been substantial debate as to the nature of Medicare’s right of recovery.
termed Medicare’s right of recovery a “su- per lien”1
it is not a true lien at all.2 Whatever its
nature, the prudent attorney must be aware of its existence and wary of its po- tential impact. With a little knowledge and foresight, that impact can be antici- pated, addressed and, sometimes, minimized. Since its inception, the Medicare sys- tem has grown from a supplemental program to a semi-comprehensive na- tional health care system for the elderly and disabled. In effect, Medicare has be- come the primary source of medical insurance for an ever growing segment of our population, currently providing health care benefits for those 65 and over, for persons who are disabled (i.e., those individuals under the age of 65 who have received Social Security disability benefits for more than 24 months), and for per- sons with “end stage renal disease.” Administratively, the Medicare program falls within the auspices of the United States Department of Health and Human Services (HHS). Within HHS, the Health Care Financing Administration (HCFA) is the department responsible for the ad- ministration of the program. HCFA
1
See, Timothy v. Hoffman and George L. Acosta, Beware of the “Super Lien:” Medi- care Payments’ Effect on Personal Injury Cases, 81 Ill. B. J. 82 (1993).
2
See, Sally Hunt, Recovery Powers Under Medicare’s Secondary Payer Program, TRIAL, Sept. 1997; Glenn E. Bradford and Melinda M. Ward, The Medicare “Super Lien” Revis- ited, 56 J. Mo. B 44, Jan./Feb., 2000.
8
Some commentators have , while others have claimed that
directs the administration of the Medi- care claims and recovery process through the use of approximately 80 private con- tractors known as “intermediaries”, “contractors” or “carriers”, most of which are health insurance companies. Although the contractors have a significant degree of autonomy and discretion, they are sub- ject to instruction and guidance by HCFA on applicable statutes, regulations and policies. The private contractors are also bound by the policies and rules of HCFA’s instruction manuals.3 Medicare’s right of recovery stems from its status under 42 U.S.C. 1395y(b)(2) as a “secondary payer” of medical benefits for its recipients. Originally, Medicare was considered a primary payer because, shortly after its inception, the private health insurance industry made its cover- age secondary to Medicare’s as a matter of contract. However, a long series of amendments to the Medicare provisions of the Social Security Act reversed that situation and placed Medicare in a sec- ondary payer position.4
As a secondary
payer, Medicare has a broad right of re- covery that includes not only a subrogation interest, but an independent right of recovery.5 Medicare’s right of recovery is premised upon the statutory edict that, as a second- ary payer, it will not make payment for any item or service for which “payment has been made or can reasonably be ex- pected to be made” by a primary payer, such as a workmen’s compensation plan, an automobile, health or liability insur- ance policy or plan, or an employee health plan (including a self funded plan).6
This
provides Medicare with authority to af- firmatively withhold benefits as a secondary payer in circumstances in which there exist potential primary payers. How- ever, that advantage having been established, Medicare is allowed to make
3
United States, Health Care Financing Admin- istration, Medicare Intermediary Manual. 4 126 A.L.R. Fed. 553. 5 42 U.S.C. 1395y.
6
42 U.S.C. 1395y(b)(2)(A). Trial Reporter
“conditional payments” which must be repaid within the confines of statutory and regulatory law.7 Medicare can pursue repayment of its conditional payments by exercising its right of subrogation or by bringing a di- rect action. Medicare’s right of subrogation is established by 42 U.S.C. 1395y(b)(2)(B)(iii) which provides that “United States shall be subrogated (to the extent of payment made under this Title for such an item or service) to any right under the subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.” However, Medicare possesses rights far in excess of traditional subrogation rights by virtue of an independent right of recovery against any entity that is re- sponsible for payment of or has received payment for Medicare related items or services.8
Medicare’s independent right of
recovery is separate and distinct from its right of subrogation, and is not limited by the equitable principle of apportion- ment stemming from the subrogation right.9 In fact, by regulatory law Medicare is
given an independent right of recovery against any entity, including a beneficiary or beneficiary’s attorney, that has received a third party payment. 42 C.F.R. 411.24(g) states that Medicare “has a right of action to recover its payments from any entity, including a beneficiary, provider, supplier, physician, attorney, state agency or private insurer that has received a third party payment.” If the beneficiary or other entity re- ceives a third party payment, the beneficiary or other party must reimburse Medicare within 60 days of receipt of the third party payment. 10
For the purposes
of personal injury lawyers, it is important to note that settlement or judgment amounts are deemed to be third party
7 8 9
42 U.S.C. 1395y(b)(2)(B). 42 U.S.C. 1395y(b)(2)(B)(ii).
Zinman v. Shalala, 67 F.3rd 841 (9th Cir. 1995).
1042 C.F.R. 411.24(h). Summer 2000
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52