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Medical Malpractice


Myth #1: The $1,000 a day penalty may be applied to Defendants for infractions beyond the failure to provide notification to Medicare


While defense counsel and insurers may object to these MAKE FILING YOUR BRIEFS EASY!


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new obligations, we should take a step back, breathe deeply, and realize that things have not changed so drastically. Medicare must be notified of a settlement if the recipient is entitled to benefits. Plaintiffs’ attorneys have been providing this notification for years. Each time we have had a claim where our client has received Medicare benefits we have endured the agonizing correspondence battle with Medicare, in the hopes of getting a letter with a number that will allow us to begin to determine the settlement value of a case. Now, defendants must share some of our burden, and join us in the notification process. Tis dreaded $1,000 a day penalty (per beneficiary) only applies to defendants if they fail to notify Medicare of a settlement. 42 U.S.C. §1395y (b)(8)(E)(i) Any construction or interpretation that this penalty can be exacted on a defendant for anything other than its failure to notify Medicare is simply false. While you are urged not to fall victim to scare tactics, or


79 West Street / Annapolis, MD 21401 / 410-269-1484 / 800-754-7029 While defendants vocalize their upset over the additional


paperwork, the truly big news among RREs is the Act’s provision for a $1,000 a day penalty should an insurance company fail to notify Medicare of a settlement, and a double damages plus interest penalty should the Medicare lien be entirely ignored. 42 U.S.C. §1395y(b)(2)(B)(iii) For years many of us have struggled through mediations and settlement discussions as defendant’s counsel and insurer have minimized or disregarded our concerns pertaining to looming Medicare liens. Now that they are on the hook monetarily, their analysis has changed. Plaintiffs’ attorneys are advised to assist defense counsel and insurers in accurately understanding and satisfying the reporting requirement. As is always the case, our client’s settlements are heavily


influenced by the mood and perceptions of the defendant’s insurer. In response to this new legislation, there are several myths which have begun to circulate among ill-informed individuals. Some of these myths stem from ignorance, while others seem to be somewhat self-serving in their propagation. Te following article will provide you with the tools you need to begin to combat these myths which, if not dispelled, have the potential for adversely affecting our client’s settlements.


14 Trial Reporter / Summer 2010


irrational demands, employed under the guise of the avoidance of $1,000 a day penalty, this is not to say that we should not provide the basic information defendants need to meet this requirement. Legitimate requests to which plaintiffs’ counsel should reply include: injured party data (name, date of birth, social security number, Medicare ID number), primary plan data, policy holder data, plaintiffs’ attorneys’ contact information, incident data (date of incident, nature, cause, location), and resolution data (amount of settlement, date of settlement.) However, any demands made by defendants relating to the terms of the settlement, the settlement method of payment, or the time for the issuing the settlement payment, are separate issues and cannot be related to this penalty. For example, the new trend among Defendants is to demand at settlement that two separate checks be issued: one made out directly to Medicare for the exact lien amount, and the other made out to the Plaintiff for the remainder. Te issuing of a separate check to Medicare is not a requirement under the reporting statute. Furthermore, the $1,000 a day fine which could be levied on a Defendant can only be exacted due to its failure to report the settlement, not for the Plaintiffs failure to satisfy the lien. Tis fine has no connection to the method by which the lien settlement payment is rendered, or the timing of the lien settlement payment. In short, the $1,000 a day fine has a very narrow application which cannot be stretched by the whim of a Defendant who wishes to hold on to settlement monies for as long as possible.


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