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Medical Malpractice

of the penalty before this sanction can even be sought. First, 60 days from the date of the correspondence on Medicare’s final demand letter must lapse. Ten there is a 180-day period during which the MSPC permits payment to be rendered in full. After the passing of these first 240 days, an “intent to refer” letter (to the Treasury for collections) will be sent by the MSPC to the beneficiary. Tis letter permits 60 days for the recipient to produce a response. When the Treasury receives this collection from Medicare, it then sends a letter to the beneficiary requesting the satisfaction of the debt. If unsuccessful, it then seeks a remedy though the Tax Refund Offset Program, whereby the Treasury seeks payment by offsetting government benefits and/or refunds. Counsel for the defendant or the plaintiff, or the defendant himself, is not usually a target until this final step is fully explored. Tis is not to say that these penalties cannot be exacted, however, it is highly unlikely given that a conglomeration of neglectful acts by numerous irresponsible parties must first take place. As mentioned in the preceding section, the new party line

by defense counsel and insurers (that many of us have heard in our recent settlement discussions) is that they have to hold on to all funds until they receive a conditional payment letter from Medicare. Tey then offer to either wait on disbursement

until plaintiff ’s counsel has negotiated the lien, or they offer to cut two checks, one to Medicare for the full amount of the lien and one to the plaintiff for the remainder. Should the plaintiff choose the latter, they can then seek reimbursement for overpayment of the lien from Medicare after the lien is further negotiated. For some reason, despite the fact that we have always faced this liability, this knowledge in it of itself is insufficient for defendants. Defendants continue to insist on holding on to their funds (all the while accruing interest), in order to protect themselves from this unlikely penalty. Tere is no compelling reason for a defendant to withhold

settlement proceeds from a plaintiff. If the defendant is truly “afraid” of this unlikely penalty, then the implementation of the following language in the settlement release should alleviate these anxieties:

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Plaintiff understands that the Medicare Secondary Payer Act (42 U.S.C. §1395y(b))(the “Act’) applies to any personal injury settlement involving a Medicare beneficiary. As part of the Act, Plaintiff has an obligation to verify entitlement and resolve conditional payment, and [Defendant] has an obligation to report. Accordingly, a tort recovery record may need to be established by Plaintiff and a reporting event may be triggered, which would be the responsibility of the [Defendant], by and through its insurance carrier. In the case of a reportable event, [Defendant] will comply with the Act and all applicable reporting guidance provided by the Centers for Medicare and Medicaid Services (CMS). [Defendant] will determine whether the claim is reportable under the Act. If there is an obligation to establish a record with CMS, Plaintiff shall provide [Defendant] information validating that a tort recovery record has been established with CMS, and/or its recovery contractor. Te parties expressly agree that payment of settlement proceeds is not conditioned upon Plaintiff providing proof that all Medicare reimbursement claims and obligations have been satisfied. Rather, [Defendant] agrees to forward the settlement proceeds within the time frame agreed between the parties at the time of settlement once an executed release has been tendered by Plaintiff. Following Plaintiff ’s opening of a tort recovery record, Plaintiff's attorney agrees to: (1) hold all settlement proceeds in a client trust account (or similar account should needs-based government benefits require preserving) until Plaintiff obtains claims satisfaction documents from CMS and/or its recovery contractor; and (2) provide [Defendant] with written proof of the satisfaction of any claim asserted by Medicare pursuant to the Act prior to disbursing to Plaintiff any proceeds

16 Trial Reporter / Summer 2010

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