Firm Learns Tough Lesson About Taking Medicare's Right to Reimbursement Seriously

If you're not properly addressing healthcare liens, you're skating on thin ice. 

The importance of addressing Medicare’s right to reimbursement was underscored on Monday, when it was announced by the District of Maryland U.S. Attorney’s Office that a Maryland law firm had agreed to pay $250,000 to settle claims that it had failed to reimburse Medicare for payments made on behalf of a firm client.

The firm represented an injured client in a medical malpractice action that resulted in a $1,150,000 settlement award in December of 2015. According to the release, Medicare demanded repayment of the conditional payments it had made to healthcare providers on behalf of the client. Medicare was not repaid, even after the debt was declared administratively final.

United States Attorney for the District of Maryland Robert K. Hur issued a stern warning to attorneys in the news release.

“Attorneys typically receive settlement proceeds for and disburse settlement proceeds to their clients, so they are often in the best position to ensure that Medicare’s conditional payments are repaid,” he said. “We intend to hold attorneys accountable for failing to make good on their obligations to repay Medicare for its conditional payments.”

In addition to paying the United States $250,000 to resolve the Government’s claims, the firm agreed to change its internal practices when it comes to addressing healthcare liens. Going forward, the firm must:

1. Designate a person at the firm responsible for paying Medicare secondary payer debts;
2. Train the designated employee to ensure that the firm pays these debts on a timely basis; and
3. Review any outstanding debts with the designated employee at least every six months to ensure compliance.

“The settlement reminds attorneys of their obligation to reimburse Medicare for conditional payments after receiving settlement or judgement proceeds for their clients,” stated the release. “This settlement should also remind attorneys not to disburse settlement proceeds until receipt of a final demand from Medicare to pay the outstanding debt.”

This is, unfortunately, another example of the government taking legal action and a firm paying the price for failing to reimburse Medicare, despite the lesson learned in United States v. Harris and other cases. With the dawn of Mandatory Insurer Reporting and its subsequent implementation for liability cases, Medicare is notified of every settlement involving a Medicare beneficiary which, nowadays, exceeds $750. The government establishes a record of every instance and performs a review to determine whether it made conditional payments. If so, it takes action. This case is no different, but serves as a stark reminder to make sure your settlement process is answering these Medicare questions too.

GRG was the first to offer attorneys a solution for addressing healthcare liens in both the mass tort and the single event context. In 2018, we launched LienDesk, the only online solution for resolving healthcare liens from start to finish.

If your firm would like assistance in reviewing its Medicare compliance practices or you’d like to see what LienDesk can do, give us a call at 704-559-4300 or schedule a demo here.