Litigation Management

Medicare’s

SPECIFICALLY SPEAKING | PREMISES LIABILITY

Secondary
Payer Act

By Steven M. Brom and Nancy Collins

Best practices to ensure compliance and minimize exposure

Insurers and attorneys representing defendants in liability claims are well aware of the risks involved with a claimant who is a Medicare beneficiary. Medicare expects to be re- imbursed for any payment it makes for injuries related to the incident creating a liability claim. Medicare will seek recovery from wherever it can get it. This may very well include any party paying for the injuries, even when the defendant or its insurer settles with and pays the claimant in full. Therefore, anyone making payment to a Medicare beneficiary for a related claim better guarantee that Medicare is fully reimbursed.

Check the claimant’s Medicare status upon the origination of the liability claim, during the pendency of the claim and prior to the payment of any settlement or award. While a claimant can easily determine his or her status as a Medicare beneficiary, defendants run a significant risk by relying on the claimant’s representation of his or her Medicare status. To personally determine a claimant’s Medicare status, run a query with Centers for Medicare & Medicaid Services (CMS). The exact procedures for running a query can be found in the MMSEA Section 111 Medicare Secondary Payer Mandatory Reporting: Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Worker’s Compensation User Guide (located at https://www.cms.gov/MandatoryInsRep/ Downloads/NGHPUserGuideV3.1.pdf).

There is no indication that misrepresentations by the claimant or
good faith errors in failing to determine a beneficiary’s Medicare
status will shield a defendant from a claim for recovery by
Medicare. In fact, the User Guide states, “Medicare beneficiaries,
attorneys, insurers, self-insured entities, third party administra-
tors and their agents are always responsible for understanding
when there is coverage primary to Medicare, notifying Medicare
when applicable, and for paying appropriately.”
Upon determining that a claimant is a Medicare beneficiary, the
defendant should take steps to comply with MMSEA Section 111,
which adds mandatory reporting requirements with respect to
Medicare beneficiaries who have coverage under group health plan
arrangements as well as for Medicare beneficiaries who receive settle-
ments, judgments, awards or other payment from liability insurance
(including self-insurance), no-fault insurance, or workers’ compen-
sation. The Section 111 reporting responsibilities are an additional,
more comprehensive method for obtaining information regarding
situations where Medicare is appropriately a secondary payer. They
do not replace or eliminate existing obligations under the Medicare
Secondary Payer provisions for any entity. For example, Medicare
beneficiaries who receive a liability settlement, judgment, award or
other payment have an obligation to refund associated conditional
payments within 60 days of receipt. The Section 111 reporting re-
quirements do not eliminate this obligation.

Resolution of a liability claim involving a Medicare beneficiary should not rely on a settlement agreement stating that the claimant will be solely responsible for resolving Medicare claims. Such agreements are not enforceable. Medicare may seek reimbursement from a third party payer even when the Medicare beneficiary has been paid directly. In fact, Medicare may even be able to seek additional penalties for failure to protect Medicare’s interest. Defendants should seek an agreement with claimants that the settlement proceeds will be withheld until notice is provided of Medicare’s payment demand. Payment should then be made by separate checks to the claimant and Medicare.

Medicare’s reimbursement right is a rapidly developing area of the law in which affected parties may be unaware of their obligations. Medicare’s recent actions make it clear that Medicare intends to aggressively seek reimbursement from wherever it can get it. The penalties for failure to comply with one’s obligations are absolute. At a minimum, practitioners should frequently consult the Centers for Medicare and Medicaid Services website and sign up for updates.