Negotiating and Resolving Claims Maximizing Settlement Awards by - - PowerPoint PPT Presentation

ERISA Liens and Reimbursement Claims Against Personal Injury Settlements: Negotiating and Resolving Claims

Maximizing Settlement Awards by Narrowing the Claim and Challenging Unreasonable Charges

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THURSDAY, JUNE 11, 2015

Presenting a live 90-minute webinar with interactive Q&A Andrew D. Myers, Attorney, Law Offices of Andrew D. Myers, North Andover , Mass. & Derry, N.H. Brett Newman, Managing Partner, The Lien Resolution Group, West Nyack, N.Y . Franklin P . Solomon, Founding Partner, Solomon Law Firm, Cherry Hill, N.J.

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“LIENS” AND THE LAW IN PERSONAL INJURY PRACTICE

ISSUES IN LITIGATION & SETTLEMENT

Franklin P. Solomon, Esquire Brett Newman SOLOMON LAW FIRM, LLC LIEN RESOLUTION GROUP Cherry Hill, NJ Bnewman@helpwithliens.com

MEDICARE

6

Medicare Secondary Payer Act

 42 U.S.C. § 1395y(b)(2) - (8)  Effective 12-5-1980

 Date significant for exposure/ingestion claims

 Substantially modified by the Prescription Drug and

Medicare Improvement Act of 2003

 Now includes Section 111of the Medicare,

Medicaid, and SCHIP Extension Act of 2007 (MMSEA)

 Reporting requirements for Responsible Reporting

Entities (“RREs”)

7

MSP Liability

Repayment required

 A primary plan, and an entity that receives

payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.

42 USC § 1395y(b)(2)(B)(ii)

8

MSP Liability

Action by United States

 The United States may bring an action against any entities

required or responsible to make payment with respect to the item or service under a primary plan.

 Includes insurer, self-insurer, TPA, employer sponsor of a group

health plan, large group health plan, or otherwise

 The United States may collect double damages against any

such entity and may recover from any entity that has received payment from a primary plan or from the proceeds of a primary plan’s payment to any entity.

42 USC § 1395y(b)(2)(B)(iii)

9

MSP Liability

Private cause of action

 There is established a private cause of action for

damages (in an amount double the amount

• therwise provided) in the case of a primary plan

which fails to provide for primary payment (or appropriate reimbursement).

42 USC § 1395y(b)(3)(A)

10

Claim Reduction

 MSP claims are automatically reduced by a

proportionate share of attorney fees and litigation costs.

 Provide documentation with Final Settlement Detail.  Once Settlement Detail is submitted, Medicare will issue

its initial determination and demand.

42 CFR § 411.37

11

Recent Case Law

 Bradley v. Sebelius,

621 F.3d 1330 (11th Cir. 2010)

 Hadden v. United States,

661 F.3d 298 (6th Cir. 2012)

 Taransky v. Secty, U.S. Dept. of Health & Human Svcs.,

760 F.3d 307 (3d Cir. 2014)

12

MEDICARE SET-ASIDES

Considering Medicare’s Interest

 Workers Compensation  Third-Party Liability

 ANPRM 6047 Withdrawn 10-8-2014

13

MEDICARE SUBSTITUTE PLANS

14

MEDICARE SUBSTITUTE PLANS (Medicare Advantage)

 Medicare Advantage (formerly Medicare+Choice)

is privately issued insurance subsidized by the government, offered in lieu of “traditional” Medicare.

 MA plans typically offer additional benefits, such as

expanded medical expense and prescription drug coverage.

 MA plans are specifically governed by Part C of

the Medicare statute

15

MAO as Secondary Payer

 Where payment would be secondary under the

Medicare Secondary Payer Act, a Medicare Advantage

• rganization may charge, in accordance with the

charges allowed under a law, plan, or policy described in such section—

 (A) the insurance carrier, employer, or other entity which

under such law, plan, or policy is to pay for the provision of such services, or

 (B) such individual to the extent that the individual has

been paid under such law, plan, or policy for such services.

42 USC § 1395w-22(a)(4)

16

Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003)

 Part C statute does not create a private cause of

action to enforce reimbursement claims.

 Part C statute does not confer any affirmative right

to reimbursement; any reimbursement claim must be based on contract provision.

 See also Nott v. Aetna, 303 F.Supp.2d 565 (EDPA 2004)

 Comment: To the extent MA plan contract may require

reimbursement, it is limited by the Part C Secondary Payer provision.

17

Parra v. Pacificare of Arizona, Inc., 715 F.3d 1146 (9th Cir. 2013)

 Reiterates holdings of Engstrom and Nott.  Neither statutory reference to MSPA nor 42 CFR

§422.108(f), granting MAOs “the same rights to recover … that the Secretary exercises,” create any substantive right to a private cause of action.

 Medicare Act does not authorize creation of a

common law of subrogation for plan claims.

18

In Re Avandia, 685 F.3d 353 (3d Cir. 2012)

 Cert. denied, 133 S.Ct. 1800, sub nom

GlaxoSmithKline, LLC v. Humana Medical Plans, Inc. (2013).

 Allows MAOs to access “private cause of action”

provision under MSPA, 42 U.S.C. § 1395y(b)(3)(A).

 By its terms, private cause of action is exercisable

• nly against a “primary plan” that has failed to

make payment.

 But see Collins v. Wellcare, 2014 WL 7239426 (E.D. La.)

19

Employee Retirement Income Security Act of 1974

ERISA

20

ERISA Liens?

THERE IS NO SUCH THING AS AN “ERISA LIEN”

• ERISA is silent on liens and creates no

reimbursement rights for employee benefits plans

• Almost every health plan issued as an employee

benefit is subject to ERISA – but some are not.

21

ERISA Exclusions

ERISA specifically excludes from coverage:

 any employee benefit plan if--

(1) such plan is a governmental plan .... (2) such plan is a church plan .... (3) such plan is maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws; (4) such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; or (5) such plan is an excess benefit plan and is unfunded.

29 USC Sec. 1003(b)

22

“Governmental Plan”

 Federal government (e.g., FEHBA, Tri-Care)  State & municipal government  Railroad Retirement Act  Indian tribal government  where substantially all work is in essential governmental

functions, not in commercial activities

29 USC Sec. 1002 (32)

23

“Church Plan”

 “Church plan” is a plan maintained by an organization

to provide employee benefits if such organization is controlled by or associated with a church.

 “Employee of a church” includes an employee of an

• rganization which is exempt from tax under section

501 of the IRC and which is controlled by or associated with a church. 29 USC Sec. 1002 (33) May include hospitals, nursing homes, schools, colleges

24

Express Preemption: ERISA § 514

FMC Corp. v. Holliday, 498 U.S. 52 (1990)

 Insured plans indirectly regulated by state law

regulating the plans’ insurers

 Self-funded plans exempt from state insurance

regulation; not altered by state law What’s a self-funded plan?

 Look at each plan component  Stop-loss insurance?

25

Complete Preemption: ERISA § 502

Civil enforcement

A civil action may be brought by:

 502(a)(1)(B): a participant or beneficiary to recover benefits due

under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify rights to future benefits under the terms of the plan;

 502(a)(3): by a participant, beneficiary, or fiduciary (A) to enjoin

any act or practice which violates any provision of this subchapter

• r the terms of the plan, or (B) to obtain other appropriate

equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan

26

PLAN SUBROGATION & REIMBURSEMENT RIGHTS

27

The Insured Plan

 Most states have adopted anti-subrogation rules or

doctrines precluding reimbursement

 Extent of prohibitions varies state to state

 MT constitutional protection  NJ prohibited as a function of collateral source statute  NY statute prohibits claims by insurers  PA presumes settlement is full recovery  Many states allow for contracting out of anti-subro doctrines

 A few states have not adopted made-whole or other

anti-subrogation law

28

The Self-Funded Plan

 Form 5500 and Schedule A  Plan Document v. SPD

 Cigna v. Amara, 563 U.S. ___, 131 S.Ct. 1866 (2011)

 Subrogation v. Reimbursement  Interpreting the contract clause

 Plan year and date of injury  Conditional language  Abrogating the made-whole doctrine

 6th, 9th & 11th Circuits require explicit language

29

Actions Under ERISA 502(a)(3)

 Federal jurisdiction is exclusive  Allows only “appropriate equitable relief” to

enforce plan terms

 US Airways v. McCutchen, 133 S.Ct. 1537 (2013)

 Unjust enrichment not a defense to plan contract term  “Background equitable rules” apply if not expressly

contradicted by contract term

 Made-whole doctrine  Common-fund doctrine

30

Requesting Plan Documents

 Request must be to Plan Administrator/Sponsor

 Statutory responsibility to provide within 30 days  $110/day civil penalty available for non-compliance

29 U.S.C. § 1024(b)(4); 29 CFR § 2575.502c-3

31

What to request?



Plan Document (written instrument pursuant to 29 U.S.C. § 1102) in effect on date of injury;

 Any document amending, supplementing, or otherwise modifying the Plan Document;



Summary Plan Description and employee benefits booklet in effect at the time of injury

 All documents issued subsequently during any year in which benefits were paid



SPD Wrap Documents



Bargaining Agreement, Trust Agreement, Contract etc. under which Health Plan is established



Trust Agreement or other document establishing funding for the Plan



Annual Return/Report (IRS/DOL Form 5500), including all attached Financial Schedules



Administrative Services Agreement with any Third-Party Administrator for the Plan



An affidavit from the Plan Administrator attesting to self-funded status of the Plan



Complete statement of benefits paid to or on behalf of claimant/beneficiary



Specific plan component(s) paying benefits (e.g., health, dental, vision, AD&D, disability, etc.)



“Stop-loss” or excess/re-insurance coverage (insurer, policy numbers and attachment points)

32

SPD as Plan Document?

 Named fiduciary/ies with authority to control and

manage operation and administration of the plan

 Procedure for establishing and carrying out a funding

policy and method

 Procedure for allocation of responsibilities for the

• peration and administration of the plan

 Procedure for amending the plan, and for identifying

persons who have authority to amend

 Basis on which payments are made to and from the

plan

29 USC § 1102 - ERISA § 402

33

Issues

 Can SPD function as a § 402 Plan Document?  Can a Plan Document delegate authority to claims

administrator or SPD?

 Do later amendments affect a plan’s subrogation/

reimbursement rights?

34

Third-Party Recovery Clause

 subrogation right  reimbursement right  first-priority claim  first-dollar recovery  lien  constructive trust  identified fund/amount  abrogate made-whole  abrogate common fund  conditional language

35

Medicaid Federal Employees Health Benefits Act (FEHBA) Federal Medical Care Recovery Act (FMCRA)

(Military Personnel, Veterans, dependents/survivors)

OTHER HEALTH PLANS

36

Negotiating Liens and Claims for

Reimbursement with Private Health Insurers

Attorney Andrew D. Myers

Law Offices of Andrew D. Myers 89 Main St., North Andover, MA 4 Birch St., Derry, NH andrew@attorney-myers.com

 No One Gets Paid Until Health Plan

Gets Paid

 Health Plan First

First Dollar Recovery

38

 Some States prohibit

Subrogation

• By state statute, some states

prohibit insurance companies from placing subrogation clauses into health insurance policies.

 Look to statute and case law

• Example: Massachusetts statute

and case law held to enforce full recovery to health care plan, rejecting payment of attorney fees or costs.

 Pierce v. Christmas Tree Shops,

• Inc. , 706 N.E.2d 633 (1999)

State Law

39

 ISSUE: 

Whether Health Care Plan, a lienholder under the medical lien statute [MGL c. 111, § 70a-70b] may be ordered to contribute to the attorney fees and costs incurred by the plaintiff in pursuing a tortfeasor.

 FACTS: 

Donna Pierce was injured on the premises of the Christmas Tree Shops store. The HPHC plan paid medical expenses of $10,165. Pierce brought suit in Superior Court. Settled before trial. Pierce brought motion in court to determine her obligations to HPHC seeking a compromise to the lien amount and an order requiring the plan to share attorney fees and costs.

 HELD: 

The statute does not require the lienholder to pay any portion of the plaintiff’s fees and costs.

Pierce v. Christmas Tree Shops

40

1. INTAKE INTERVIEW

 All health insurance cards

[Medicare-Medicaid-private-other?]

 Summary Plan Description  If no SPD:  Signed authorization for copy  Alternative: client obtains  Copy of coverage selections page

all other insurance

 Auto Insurance  Umbrella insurance?  Homeowners?

Practice Strategies

41

• 2. EXHAUST ALL OTHER

MEDICAL INS. BENEFITS

 Car Insurance:

 No-Fault Benefits [“PIP”]  Med-Pay Benefits

 Premises Liability:

 Med pay  Get med pay info ASAP – often

early submission deadlines



Use these to “pay down” Health Ins Lien

Practice Strategies

42

• 3. OBTAINING THE LIEN
• Letter of representation and request
• Briefly describe type of injury & date of loss
• HIPAA compliant authorization

Practice Strategies

43

1.

• 4. PARSING THE LIEN

2.

After receipt:

3.

Mail/email otherwise provide copy to client

4.

Read lien itemization with client

5.

Review line by line in person or at least on telephone

6.

Is each item on lien solely related to injuries caused by accident or other medical issues.

7.

Send query/challenge to Health Ins.

PRACTICE STRATEGIES

44

 5. NEGOTIATING LIEN

 Contest unrelated items : Insist unrelated

items deleted

 Challenge questionable items, multiple

reasons for visits

 Dispute excessive costs [3,000 for x-ray?]  Speak to decision makers  Use cool calm professional approach –

belligerence never helps

 Account for comparative fault – likelihood

• f success at trial

 Tell “war stories” about losses. (Only time

in career to discuss cases lost)

PRACTICE STRATEGIES

45

 6. PRELITIGATION AGREEMENT

• Based on uncertainty of trial
• Attorney fee
• Costs
• Experts required
• Delay
• Signed writing acknowledging

agreement by Health Plan

PRACTICE STRATEGIES

46

 FIRST OFFER

 Duty to communicate with client  Show lienholder actual 3D party analysis

 STATUS OF NEGOTIATION

 Notify lienholder with incremental offer increases

 NEGOTIATE FINAL LIEN RESOLUTION BEFORE

THIRD PARTY SETTLEMENT

 After client signs release – no leverage against lienholder  Before settlement everything is contingent: leverage rests

with client and attorney over whether or not they should accept onerous demands of lienholder

RESOLVE LIEN BEFORE SETTLEMENT

47

48

 Right of subrogation  Right of reimbursement  Enforcement of statutory lien  “Letter of Protection”  Other contractual right

What is It

49

• “By signing a letter of protection the lawyer is taking a position that is

potentially in conflict with the client’s stated interest.”

 Another Look at Letters of Protection, Minnesota Lawyer, Aug 5. 2002.

• For thorough treatment of “ethical and legal pitfalls when asked to assist

clients in dealing with their difficult economic and medical issues in personal injury cases” see:

 A Florida Bar Board of Governors, Opinion 02-4, April 2, 2004.  Massachusetts case Gordon Chiropractic v. Pena, Salem District Court

Docket No. 9536-CV-0076

Letters of Protection

50

 Follow “Practice Strategies” in previous materials.  Notify health insurer of key events including trial ,

pretrial, mediation or other ADR. Invite to participate.

 Alternative Dispute Resolution.  Interpleader of Health Ins. or Motion but only if case is

clear.

NEGOTIATION POINTS

51

 Notify client of existence of language in

health insurance contracts giving right of reimbursement if they are injured by a defendant and if they recover money from that defendant.

 Make sure client understands up front –

early in case. Bad surprises blamed on the attorney.

 Paint insurer or plan as entity wearing

“black hat”. Attorney is only explaining client‘s obligation to insurer.

 Point out refusal to satisfy valid lien

endangers client’s future health benefits and risks litigation by lienholder

CLIENT INVOLVEMENT

52

 Keep client informed as to possible outcomes. Encourage realistic

• expectations. If lien is adequately sizeable to endanger most or all of

settlement/judgment, client should know. May effect incentive to pursue case. Lienholder should be notified.

 Provide literature regarding legal obligation underlying liens / rights of

• recovery. Provides third party authority for counterintuitive idea they

have to pay an insurance company back.

 Here’s mine, feel free to print and use: [next page]

CLIENT INVOLVEMENT

53

LIENS ON PERSONAL INJURY CASES Like locks on a gate, liens prevent final settlement of personal injury cases until they are addressed. http://www.attorney- myers.com/2013/01/lie ns-on-personal- injury-cases/

CLIENT INVOLVEMENT

54