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Avoid Unexpected, Duplicate Medicare Files Created by Section 111 Insurer Reporting in Medical Malpractice Cases

Avoid Unexpected, Duplicate Medicare Files Created by Section 111 Insurer Reporting in Medical Malpractice Cases

By: Yeganeh Gibson, Esq., CMSP  | Lead Lien Attorney, Precision Resolution, LLC  |  Click to Email Yeganeh

At Precision Resolution, we often see medical malpractice cases come our way where Plaintiff’s counsel has already reported a settlement to Medicare and received a closure letter, only to be surprised to learn that a new Medicare file has been opened upon the insurer’s mandatory Section 111 reporting, with a significant increase in the Medicare payments.

In one such case, Plaintiff, who had been suffering from hypertension and kidney disease for years, had an MRI of the kidneys in 2010. While a small mass was identified in his right kidney, it was dismissed as benign. Plaintiff continued to treat his kidney disease. Several years later, in 2015, it was discovered that the mass had actually been cancerous. Plaintiff asserted a medical malpractice action against the defendant-doctor for failure to timely diagnose and treat the kidney cancer in 2010.

Plaintiff’s attorney proceeded to open a file with Medicare using the date of the cancer diagnosis–2015. No conditional payments were identified by Medicare and the file was closed. However, a few months later, Medicare issued a new letter with a new date of injury: plaintiff’s first encounter with the defendant-doctor in 2010. The insurance carrier had reported this case under Section 111. Medicare was seeking over $145,000 in conditional payments for the kidney under this new file, including treatment for end-stage renal disease and kidney transplant surgery.

After a thorough analysis of the medical records, expert reports, and review of the individual conditional payments, Precision’s attorneys developed substantial arguments that demonstrated the conditional payments were unrelated. Medicare agreed and reduced the file to zero.

Best Practices Tip: This scenario may be prevented by providing Medicare with the proper date of incident. At Precision Resolution, we ensure that your case has the proper Medicare date of incident. We monitor and remove all unrelated charges, so that the risk-of-loss is not borne by the Plaintiff and counsel after settlement – and we take care of any duplicate files opened under Section 111 reporting.


Avoid Unexpected, Duplicate Medicare Files Created by Section 111 Insurer Reporting in Medical Malpractice Cases2021-04-05T20:57:02+00:00

FEHB Plan Liens Reduction & Securing Continuation of Coverage for the Plaintiff

FEHB Plan Lien Reduction of Nearly $200,000 & Securing Continuation of Coverage for the Plaintiff

By: Yeganeh Gibson, Esq., CMSP  | Lead Lien Attorney, Precision Resolution, LLC  |  Click to Email Yeganeh

In this case, the available policy limit was only $1,000,000. There were three claims asserted under a Federal Employee Health Benefit (“FEHB”) Plan, which totaled approximately $240,000. The plaintiff required future coverage under the Plan, including several future surgeries and ongoing therapy.

Although the plaintiff had no issue securing the full policy limit, the large purported FEHB lien overshadowed the case and prevented settlement.

The plaintiff’s personal injury attorney reached out to Precision Resolution for assistance in resolving the FEHB claim. We carefully reviewed the FEHB Plan language and developed factual and legal arguments, while stressing the severity of the plaintiff’s injury and his age.

The plaintiff was only 15 years old on the date of injury. He had a severe injury involving a crushed hand and forearm. The plaintiff’s arm got caught in construction equipment while he was helping the defendant on his farm. For the challenge, we scrutinized the plan language that seemed to be in our favor and applied our interpretation of the language to our argument.  We also relied on input from Precision’s nurse paralegal team who added context regarding the severity of the injuries and the future treatment that would be needed.

Precision Resolution was successful in the end, reducing the liens by nearly $200,000.00.

Another interesting aspect of this case was the fact that there were three FEHB plans involved. It turned out that initially the plaintiff was admitted to the hospital near his residence. However, because the facility didn’t have the means to treat him properly, they flew him out to another facility in a neighboring state. He then came back to his state of permanent residence once he got better.

Since FEHB has contracts in different territories, different plans administered the benefits in each territory, hence the three separate plans that were involved.

Further, we secured agreements with the Plan that coverage would continue for the plaintiff uninterrupted, and that the Plan would not seek reimbursement for any future incident-related medical bills.

FEHB Plan Liens Reduction & Securing Continuation of Coverage for the Plaintiff2020-11-20T17:59:29+00:00

100% of Proceeds – Including Attorney’s Fee Earned – Paid to Self-Funded ERISA Plan

100% of Proceeds – Including Attorney’s Fee Earned – Paid to Self-Funded ERISA Plan

By: Paul K. Isaac, Esq., ChSNC  | Managing Partner, Precision Resolution, LLC  |  Click to Email Paul

“Defendants are directed to turn over the entire amount of the settlement recoveries, up to $38,262.19, to the plaintiff immediately upon receipt of this order or as soon as such funds become available.”

Trs. of the 1199SEIU Nat’l Ben. Fund for Health & Human Serv. Emples. v. Cotto, 2020 U.S. Dist. LEXIS 178207, *17, 2020 WL 5763942, *6 (E.D.N.Y. Sept. 28, 2020) (click to download the decision).

(Hereinafter, the use of the term “Plaintiff’ in my text refers to the injury victim in the state court action, even though the “Plaintiff” in the Federal court reimbursement action was the 1199SEIU Health Fund.)


  • The court grants 100% recovery of a $25,000 (limits of coverage) automobile settlement to 1199SEIU Health Fund, on a case where shoulder surgery was performed, and a number of other serious injuries were inflicted on the Plaintiff.
  • Even though the injuries arose out of a New York automobile crash, and, where it appears that the large expenses associated with the shoulder surgery occurred two months after the accident, no-fault insurance coverage apparently was never extended. It appears that the vehicle which the plaintiff was operating was registered in Pennsylvania and may not have had NY coverage. In the Federal court case, Plaintiff’s counsel, who was also named as a defendant in the enforcement action, alleged in his Memorandum in opposition to the motion for summary judgment that no-fault coverage existed, and, therefore, the 1199SEIU Health Fund should not have paid these bills and did so improperly. Unfortunately, there does not appear to have been any resolution of the no-fault issues spelled out in the court documents.
  • In spite of the Plaintiff’s attorney’s relentless advocacy in the state court action in his 3-year pursuit of an exception to the Graves Amendment (49 U.S.C. § 30106), no doubt seeking to get more coverage for his client, the Federal Court decision denies recovery of attorney fees to plaintiff’s counsel altogether on the $25,000 settlement. Plaintiff’s counsel in his submission to Federal court, seeking at least a reduction in the lien to equate to his fees so that some proceeds would flow to the client, argued for the application of the “Common Fund Doctrine.” The Court rejected that argument stating:

“In other words, the plan expressly limits the common-fund doctrine by providing that the Fund’s recovery takes priority over the payment of the defendants’ attorneys’ fees. “Neither general principles of unjust enrichment nor specific doctrines reflecting those principles—such as the double-recovery or common-fund rules—can override the applicable contract.” McCutchen, 569 U.S. at 106. Therefore, the defendants are not entitled [*17] to recover their attorneys’ fees until the Fund is paid in full.” Cotto, 2020 U.S. Dist. LEXIS 178207 at *16-17.

  • Fourth, even though the case arose out of a 2015 auto accident, at the time of the decision granting summary judgment by United State District Court for the Eastern District of NY on September 28, 2020, over five years after the accident, the court still did not have a copy of the Plan Document. The court acknowledged that it had not reviewed the actual plan document. Ultimately, the court had no choice but to decide the case based on the Summary Plan Description (SPD), which, of course, purported to waive the Common Fund Doctrine.

“However, the parties have not put forth the actual ERISA plan in question here. Nor have they suggested that the terms of the SPD differ materially from those in the official plan. Thus, I analyze this dispute according to the language in the SPD.” Id. At *2, f.n. 2.

  • The court also took a swipe at the Plaintiff’s failure to exhaust administrative remedies but did not decide directly on that issue. “The Plan sets forth a procedure for disputing the amount of a lien, including bringing an ERISA action against the Fund once a party has exhausted his administrative remedies. Id. At *6.
  • Plaintiff and his attorney each get $0.00!


Best Practices:

Best Practices for Plan DocumentsWhen dealing with an ERISA plan, we recommend that you request a full set of plan documents from the plan administrator, including the plan document, SPD, trust agreement, amendments to the plan, and Forms 5500. Many times, the SPD will contain subrogation and reimbursement provisions that are different and stronger than the plan document; or, the SPD may contain provisions that the plan document is completely silent on. The purpose of the SPD is to provide plan beneficiaries with an explanation of their benefits and rights. It does not constitute the terms of the plan. It has been consistently held that the plan document contains the terms of the plan, especially when there is a conflict between the two documents. See, e.g., CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1878 (2011); US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013). Aside from ensuring that an ERISA plan is “self-funded,” the more documents you have that are related to the plan, the more opportunities there may be to attack deficiencies in any of the documents. 
Best Practices for ResolutionNever settle your case without a strategy for resolving an ERISA lien! ERISA plan provisions regarding reimbursement and attachment of a lien generally become effective upon settlement. Once the settlement is agreed to, the attorney can potentially become a named defendant in a constructive trust application or any application for an injunction. Our office deals with these cases on a daily basis, and it is our experience that, barring old and sloppy plan documents, we have far better leverage prior to settlement.

100% of Proceeds – Including Attorney’s Fee Earned – Paid to Self-Funded ERISA Plan2020-10-11T11:53:02+00:00

Medicare Secondary Payer Issues Persist Years After Plaintiff Signs Release: Medicare “Surprise Demand” Threatens Receipt of Proceeds Seven Years Later

Medicare Beneficiary Plaintiff’s Lawsuit vs. Liability Carrier for Failure to Reimburse Medicare Survives Motion to Dismiss

By: Paul R. Loudenslager, Esq., MSCC  | Senior Lien Counsel, Precision Resolution, LLC  |  Click to Email Paul

On June 30, 2020, the United States District Court for the District of New Jersey denied a liability carrier’s motion to dismiss a Medicare beneficiary’s case under the Private Cause of Action provision of the Medicare Secondary Payer Statute, 42 U.S.C. Section 1395y(b)(3)(A). Osterbye v. United States, 2020 U.S. Dist. LEXIS 116591, 2020 WL 3546869 (D. N.J. June 30, 2020). Please note that not all details noted below are included in the court’s decision; but such details were extracted from the parties’ motion papers and other submissions to the court.

In 2009, Anna May Osterbye was injured in a fire at her home. Ms. Osterbye alleged that the fire was caused by the negligence of a plumbing contractor. The contractor’s liability insurance carrier was Selective Insurance Company (hereinafter referred to as “Selective” or “liability carrier”). The claim against the contractor was settled at mediation for a lump sum of $740,000. The settlement amount was “based on known damages, including $13,562.90 that Medicare estimated it would seek for reimbursement of conditional payments.” Osterbye, 2020 U.S. Dist. LEXIS at *2.

On April 29, 2013, Plaintiff executed a release which released any and all claims and rights which Plaintiffs had or may have against the plumbing contractor. In the release, Plaintiff also agreed to “satisfy all [Medicare] liens . . . and hereby agrees to indemnify all the above named Releasees and their respective insurance carriers against any further liability for the satisfaction of any such liens.”

After the agreement was executed, Plaintiff’s counsel submitted notice of settlement to Medicare. On June 4, 2013, the Medicare contractor (the BCRC) issued a final demand letter for an amount of $118,071.28; obviously, much higher than the $13,562.90 quoted on the conditional payment letter obtained prior to settlement.

Plaintiff appealed Medicare’s right of reimbursement through the administrative appeals process. The last level of administrative appeal—an unfavorable decision by the Medicare Appeals Council—took four years from the date of the Administrative Law Judge decision.   

After exhausting the administrative remedies available, on August 28, 2019, Plaintiff brought an action in federal court versus the United States (Medicare); but, also against Selective as a “primary plan” under the Medicare Secondary Payer Act’s private cause of action provision at 42 U.S.C. Section 1395y(b)(3)(A).

At some point during the proceedings, Plaintiff and the United States stipulated to the dismissal of the action against the United States with prejudice, leaving Selective, the defendant’s liability carrier on the underlying injury settlement, as the only remaining defendant.

Selective filed a motion to dismiss based upon a statute of limitations defense, and that the release in the underlying injury litigation precluded the carrier’s responsibility for any Medicare lien.

The motion failed on both issues. The court reasoned that the statute of limitations had not expired, because Plaintiff’s claims arose under the Medicare Act, thus requiring exhaustion of administrative remedies before filing suit.

Likewise, the court here left open the possibility that the underlying release could be nullified based upon a theory of mutual mistake of fact.  The mistake of fact would be Medicare’s reimbursement amount.

As of July 2020, the case is noted as having been voluntarily dismissed.

While the case did not last long after the court’s decision on June 30, it is instructive nonetheless. It raises several unanswered questions and provides some important points to consider regarding the obligations of plaintiffs, attorneys, and carriers with respect to Medicare.

While the private cause of action was ruled timely with respect to a statute of limitations defense, the substantive question of whether the plaintiff could have proceeded with this case against the defendant’s liability carrier remains unanswered. The United States had been dismissed from the action, leaving the plaintiff and the carrier to battle over the responsibility to reimburse Medicare.

Moreover, there is a substantial question as to whether the plaintiff could continue this action after agreeing in the release to satisfy all Medicare liens and indemnify the defendant and the defendant’s carrier from any liability to satisfy the lien.

Finally, can the release itself survive? The possibility is noted by the court in this case that the release itself could potentially be undone based on the parties’ mutual mistake. If that is the case, the Medicare reimbursement obligation would likely disappear. The obligation to reimburse Medicare exists only when there is a settlement. The original parties would be left to negotiate once more based on the proper Medicare reimbursement amount.

Important Points to Consider

The opinion states that Medicare was paid the original amount of $13,562.90. There is no mention of the unpaid balance in excess of $100,000. It is important to remember that interest begins to accrue on any unpaid portion of a demand 60 days after the issuance of the final demand letter, even if it is in the administrative appeals process. Here, six years after the date of the original demand, at a rate of approximately 10%, significant interest charges would have accrued on the unpaid balance.

It is unfortunate that this situation continues to occur. But it is still the case that Medicare, for whatever reason, will exclude related medical treatment costs on a conditional payment letter, only to have those claims appear for the first time on a final demand letter, after the case has settled.

We call this situation the “Surprise Demand.” While unfortunate, it is avoidable. Our attorneys at Precision Resolution make it a point to mention this issue at every liens seminar or CLE at which we are invited to speak. If the conditional payment amount seems low in light of the actual medical treatment that a plaintiff has received, and if you see that there is related medical treatment that is missing from the Payment Summary Form, more investigation is required.

It is likely that any “missing” charges will suddenly appear for the first time on a final demand letter. In order to avoid the Surprise Demand, it is sometimes necessary to “dispute” Medicare’s conditional payments so that those missing charges will actually appear on the conditional payment letter. It seems counterintuitive, but sometimes the goal is to increase the Medicare payment amount in an effort to get a real and accurate number, so that you can properly negotiate a settlement.

The worst-case scenario is the Osterbye case from 2020, taking six years after a settlement to get in front of a federal court judge to argue as to who is responsible for Medicare’s reimbursement.

Medicare Secondary Payer Issues Persist Years After Plaintiff Signs Release: Medicare “Surprise Demand” Threatens Receipt of Proceeds Seven Years Later2020-08-18T18:07:53+00:00

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