United States Sues Plaintiff Attorney, Medicare Beneficiary, and the Insurer for Conditional Payments in the Middle District of Pennsylvania

On February 26, 2019, the Middle District of Pennsylvania addressed a summary judgment motion brought by the United States against parties to a liability claim that involved a Medicare beneficiary and outstanding conditional payment liens.

The relevant background of the case is that a Medicare beneficiary (Beneficiary) was mistakenly given a medication from a pharmacy which resulted in a sixty-six day hospital stay. During this stay, the Beneficiary incurred nearly $100,000 in treatment bills. As the Beneficiary’s insurer, Medicare paid these bills, of which $84,353 was found to be related to the administration of the mistaken medication. The Beneficiary then filed a lawsuit against the pharmacy and medical care center, represented by Richard Angino of Angino Law Firm (“the Angino Defendants”). During settlement of the claim, the Angino Defendants requested the amount of charges that were paid by Medicare for the associated injury. The Centers for Medicare & Medicaid Services (CMS) reported back that $1,212 was paid. This was the amount that was ultimately relied upon at settlement.
As is the procedure, upon notification of settlement, CMS issued a demand of $84,353.00, but reduced it to $53,295.00, accounting for attorney’s fees. CMS also notified the Angino Defendants and the Beneficiary this amount was due in sixty (60) days. This amount was never paid.

CMS then filed a lawsuit under the Medicare Secondary Payer Act, 42 U.S.C § 1395(b)(2)(B) that as a matter of law it was entitled to $84,35.00 plus interest. A motion for summary judgement was filed by the defense. During this time, the Beneficiary passed away and in a separate action, the Beneficiary’s estate challenged the $84,353.00 and asserted that CMS was only due the $53,295.00. However, the lower court found that it did not have jurisdiction. Thus, the Plaintiff argued that Defendants lost their challenge and therefore owe the full $84,353.00. Defendants rebutted this argument on the grounds that although they cannot appeal the lower amount, they can challenge the $84,353.00. Additionally, Defendants claim questions of fact exist as to who would be responsible for payment of any potential excess owed.

Of note, the Defendants set aside the $53,295.000 and attempted to settle the conditional payments. However, CMS pursued litigation and increased the amount owed. As such, the Court agreed that a question of fact existed as to whether or not the Plaintiff had to pursue litigation to collect the amount due and justify raising the amount due. Plaintiff countered that the law provides that where Medicare “must file suit” to recover on the lien, they need not deduct attorney’s fees from the lien amount. 42 C.F.R. § 411.37(e). The Court responded that “at least with the facts which we are presented with, that whether or not the plaintiff had to pursue litigation is a question of fact.” (United States v. Angino, 2019 U.S. Dist. LEXIS 30499 (February 26, 2019).

As such, the Court found genuine issues of material fact and the summary judgement motion denied.

Practioner’s Note: This case is a reminder of the trouble parties can get into when not properly addressing the conditional payment liens associated with a liability claim. Remembering Shapiro v. Secretary of Department of Health & Human Services, 2017 U.S. Dist. LEXIS 42278 (March 23, 2017), the 2017 case mirrors the fact pattern at hand, in that the Beneficiary cannot rely upon the interim lien amount and Medicare is entitled to the final conditional payment amount issue after settlement of a claim.

Interestingly, this case has yet to determine who ultimately will be responsible for any excess payments over the $53,295.00. Also worth note, the Beneficiary’s estate, the Beneficiary’s attorney, and the Carrier were all parties to this action. This particular question could potentially have been avoided if only proper settlement language would have been included clarifying which party would be responsible for any overage. This is yet another prompt that settlement language continues to be an important piece to the settlement puzzle.

The Gordon & Rees Medicare Compliance Group will continue to monitor this case and bring you updates as they become available. Please contact me at (412) 588-2283 or rmaldonado@grsm.com should you wish to discuss this or any other Medicare Secondary Payer matters.