New Conditional Payment Portal Functionality Expected in January

Long awaited improvements to the Medicare conditional payment reimbursement process may be available at the start of the new year, according to a November 19 alert from The Centers for Medicare and Medicaid Services (CMS). Back in August, CMS announced the Medicare Secondary Payment Recovery Portal (MSPRP) would offer enhanced functionality in 2019, including the ability for authorized Non-Group Health Plan (NCHP) users to self-report leads on liability, auto, no-fault or workers’ compensation cases. According to the alert, this functionality will be effective on January 7, 2019.  CMS is hosting a webinar regarding this enhancement on December 18th, 2018 at 1:00PM EST. A link to register for this webinar can be found here>>CMS 12.18.18 Webinar Registration

The ability to self-report leads will generate Medicare Conditional Payment information that authorized parties can review and/or dispute in accord with their reimbursement obligations under the Medicare Secondary Payer laws. Such enhanced portal functionality should eliminate several weeks of wait time per claim in obtaining Medicare conditional payment information.

This enhancement was initially introduced as a possible improvement for 2019 during a webinar CMS conducted on August 16. A second enhancement allowing online payment of Medicare conditional payments to the MSPRP was also referenced at that time as a possible improvement for 2019. The November 19 CMS alert makes reference to online payment.

Stay tuned to the Gordon & Rees MSPulse for a summary of the December webinar. In the meantime, please contact us should you have any questions.

CMS Low Dollar Recovery Threshold Remains $750 for 2019

There will be no change in the low dollar threshold for Medicare conditional payment reimbursement in 2019. The SMART (Strengthening Medicare And Repaying Taxpayers) Act of 2012 serves to avoid governmental waste by setting an annual amount in which the costs associated with reimbursement outweigh the benefits. The SMART Act provides that the Secretary must calculate and publish not later than November 15th a low dollar threshold amount applicable in the following year for settlements, judgments, awards or other payments in which Medicare Conditional Payment reimbursement need not be reimbursed given the costs associated with recovery. This threshold corresponds also to the $750 threshold for Medicare Mandatory Insurer Section 111 reporting requirement.

On Friday, November 15th, The Centers for Medicare and Medicaid Services released their updated Computation of Annual Recovery Thresholds for Non-Group Health Plans.  Below are the Agency’s findings:

  • The 2019 reporting threshold remains $750 for no-fault, workers’ compensation and liability cases.
  • The estimated cost to process any individual case is $297
  • The average Medicare conditional payment demand amount for settlements of $500 is $368 (74%)
  • The average Medicare conditional payment demand amount for settlements around $750 is $518 (69%)

These metrics once again demonstrate exceedingly high percentages of cost versus recovery for low dollar settlements. The SMART Act applies a common sense approach to recovery efforts, given such costs associated with reimbursement and the interest of avoiding wasteful spending of government money,. The complete notice can be found in the link here>> CMS Computation-of-Annual-Recovery-Thresholds-for-NGHP–2019.pd

Should you have any questions regarding the above or need any Medicare compliance assistance, please do not hesitate to contact Gordon & Rees Medicare Compliance Group at mstockdale@grsm.com or 412-588-2277

Ocean Harbor Class Certification Reversed, Remanded

Another blow was just dealt to MSP Recovery. On September 26, 2018, the Third District Court of Appeal for the State of Florida reversed and remanded the class action certification that had gained so much attention when it was granted last year.

This case has its genesis with MSPA Claims 1, LLC, a subsidiary of MSP Recovery acting on behalf of Florida Healthcare Plus, Inc., a now defunct Medicare Advantage Organization (MAO), and other similarly situated entities. MSPA filed a class action against Ocean Harbor Casualty Insurance Company for failure to reimburse medical bills. MSPA sought double damages via the Medicare Secondary Payer Act’s private cause of action, 42 U.S.C. § 1395Y(b)(3)(A). MSPA contended that class action was appropriate as some or all of the thirty-seven (37) MAOs in Florida might be in a similar situation. The trial court determined that common issues existed because the Plaintiffs’ right to reimbursement was “automatic,” given that a payment was made on behalf of a Medicare enrollee who was also insured by the Defendant and that such payment was not reimbursed.

In order to understand the Appeal Court’s ruling, the underlying class certification must be first examined. According to Fla. R. Civ. P. 1.220(a), the prerequisites to class certification are numerosity, commonalty, typicality and adequate representation, in additional to the satisfaction of other requirements under Fla. R. Civ. P. 1.220(b). Under 1.220(b), one of three subsections must be satisfied. The subsections are: (b)(1) prosecution of individual actions for members of the class creates a risk of inconsistent adjudications and incompatible standards of conduct; (b)(2) relief sought by the class is injunctive or declaratory in nature, rather than predominantly monetary damages, or (b)(3) that common issues of law or fact predominate over issues affecting only individual class members, and thus the class action is superior to other methods of adjudication.  The trial court certified this class based on subsection (b)(3), referencing Porsche Cars N. Am., Inc. v. Diamond, “In a (b)(3) class action, not all issues of fact and law are common, but common issues predominate over individual issues.” 140 So. 3d 1095-96 (Fla. 3d DVA 2014) (citing Fla. R.Civ. P. 1.220(b)(3)).

The Appeal Court reconsidered predominance under Fla. R. Civ. P. 1.220(b)(3), stating “the appropriateness of the class certification turns largely on whether issues common to the class will predominate.” The Appeal Court noted that this matter was an “intersection” of Florida class action law, Medicare Secondary Payer law and Florida no-fault insurance law. In exploring the obligation to reimburse Medicare under the MSP Act and also Florida no-fault insurance law, the Court aptly examined not only that a payment was made by Medicare, but also whether Ocean Harbor was required to make the payment in the first place. Through this exercise, the Appeal Court questioned the “automatic” requirement to reimburse Medicare simply due to a demonstrated responsibility to make a payment, as the MSP does not eliminate the terms and conditions of the state no-fault law. Specifically, the Court referenced 42 C.F.R Section 411.51, stating “Medicare does not pay until the Beneficiary has exhausted his or her remedies under no-fault insurance” (emphasis added). In blending the federal Medicare law with the state no-fault law, the Court first observed that the MSP’s private cause of action does not arise until a payment could reasonably be expected to be made under no-fault insurance. In turn, the Court stated that MSPA must prove that not only was a proper conditional payment made, but that Ocean Harbor was required to make the payment in the first place under the state no-fault law.

MSPA relied upon the holdings in In re: Avandia Marketing[1], and Humana Medical Plan v. Western Heritage Ins[2], two predominant circuit court cases conferring the private cause of action on the Plaintiff(s). In each of these two cases, the responsibility to make a payment was in reference to the primary plan’s pre-existing settlement of a claim relating to the tort from which the medical bills arose. The Appeal Court distinguished the facts of Ocean Harbor from these two landmark cases, in that no pre-existing settlement was being referenced as creating a responsibility for payment. Rather, the demonstrated responsibility was to be established “by other means,” thereby cancelling these cases out as precedent, bringing this matter within the MSP Recovery LLC v. Allstate[3] tutelage. In Allstate, the 11th Circuit held that even without a settlement, a demonstrated responsibility for payment could be established through proof of the primary plan’s contractual obligation to make a payment. The burden of proving this is on the Plaintiff.

According to Florida no-fault law, there are exclusions from the obligation to make payments, and also necessary procedures that if not followed, are grounds to decline payment. The Appeal Court observed that “payment under Florida no-fault law proceeds on a factually intensive bill-by-bill and case-by-case basis,” and that MSPA would be required to prove the Defendant was required to pay each particular bill. Ocean Harbor would likewise be permitted to raise defenses regarding each particular bill, thus resulting in a series of mini-trials to determine whether payment is required under Florida no-fault law. The Appeal Court stated in its conclusion “Proof that certain medical bills paid by MSPA’s alleged assignor should have been paid by Ocean Harbor as a primary payer will not establish that other medical bills paid by a different MAO should also have been paid by Ocean Harbor as a primary payer.” Accordingly, a finding of predominance was precluded, rendering the case inappropriate for class action certification. As such, the class certification was reversed and the case remanded.

Practitioner’s Note: This Court delves into interesting territory in its determination that common issues of law or fact do not predominate over issues affecting only individual class members if there is a question about whether payment of each individual bill was ever required to begin with. A similar analysis can be applied as to whether it is appropriate to file suit for Medicare conditional payment reimbursement when each individual Medicare conditional payment may not be “ripe” for reimbursement. Like Florida no-fault law, there are processes and procedures in obtaining Medicare conditional payment information, as well as for making timely reimbursement. There are defenses. There is a statute of limitations. There are reasons why payments made by Medicare may be proper payments rather than conditional payments. This decision touches on the concept of exhaustion of administrative remedies, and references the SMART Act (Strengthening Medicare and Repaying Taxpayers Act of 2012), which provides primary payers an appeal process for Medicare conditional payment matters.  Many of the various court rulings in MAO litigation focus on demonstrated responsibility for reimbursement without considering whether it is actually timely or appropriate to reimburse Medicare. If MAOs wish to assert the same rights of reimbursements as traditional Medicare Parts A and B under the MSP laws, it would stand to reason that the same processes and procedures would apply. In day-to-day practice, the mere existence of Medicare conditional payments does not necessarily trigger the obligation to reimburse.

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[1] In re: Avandia Marketing, 685 F.3d 353, (3rd Cir. 2012)

[2] Humana Medical Plan v. Western Heritage Ins, 832 F.3d 1229, (11th Cir. 2016)

[3] MSP Recovery, LLC v. Allstate Insurance Company, 853 F. 3d 1351 (11th Cir. 2016)

What’s in a Name? MSP Recovery LLC Sanctioned in Latest MAO Litigation

MSP Recovery LLC, welcome to the Illinois federal courts. This may not be the jurisdiction for you. In a recent decision from the United States District Court for the Central District of Illinois, Peoria Division, not only did the legal group from Miami, now infamous for bringing hundreds of complaints against various insurance carriers under Medicare Secondary Payer reimbursement theories, fail to prevail in yet another effort to collect big money, but it ended up costing them and their attorneys $5,000 each in sanctions.

There are several written decisions about MSP Recovery LLC, many sounding familiar. Assignments, amended complaints, failure to state a claim – it all begins to run together. But when a court states: “This is when things got hairy” halfway through its written decision, something is going down.

The case of Recovery v. State Farm Mut. Auto. Ins. Co 2018 U.S. Dist. LEXIS 95789, U.S. District Court for the Central Dist. Of Ill. (June 7, 2018), began back in March of 2017 when the Plaintiffs filed their original complaint alleging that they were assigned the right to seek reimbursement from the Defendant for Medicare conditional payments made on behalf of a Medicare Advantage Organization. The Defendant filed a successful Motion to Dismiss on the grounds that there was no standing because no injury-in-fact had been alleged. The complaint alleged the Plaintiff had received assignments from the MAO to seek recovery under the MSP, however, the Plaintiffs failed to name the MAO.

On June 2, 2017, the Plaintiffs filed the first Amended Complaint, apparently adding nothing more of consequence to the original complaint than the names of a representative Beneficiary (R.F.) and a representative MAO called Health First Administrative Plans (HFAP). Without furnishing additional details to support an injury-in-fact, the Plaintiffs’ Amended Complaint did not establish standing and was subsequently dismissed.

Undaunted, a Second Amended Complaint was filed on January 30, 2018, substituting the previous representative Beneficiary R.F. with the more representative R.Y. The allegation was that R.Y. was an enrollee in HFAP and Defendant, as a primary payer under the MSP, failed to reimburse HFAP for medical items and services in a timely manner. Illustrating the relationship between MSP Recovery and HFAP, the Plaintiffs attached documentation including a Recovery Agreement and an Assignment document, in which Plaintiff MSP Recovery LLC assigned the rights of HFAP to MSP Recovery Claims Series, LLC. On March 6, 2018, the Defendant filed a Motion to Dismiss the Second Amended Complaint due to lack of standing.

Elsewhere, a court in the Southern District of Florida was busy working on another similar lawsuit filed by MSP Recovery LLC against Auto-Owners Insurance Group. In the course of this litigation it was determined by the testimony of HFAP’s Chief Operating Officer that HFAP was a company that performed administrative duties for a Medicare Advantage Organization called Health First Health Plans.

This distinction was news to the U.S. District Court for the Central District of Illinois, Peoria Division. And they were none too happy that while the Plaintiff had known about it since April 12th, it took a call from the Defendant on April 26th to notify the Court of the mistaken identity. The next day the Court ordered the Plaintiffs to file a response as to why the case should not be dismissed.

That’s when things got hairy.

Apparently the Plaintiffs did not think it was significant to know details like exactly which company assigned to them its rights of recovery. In their May 11, 2018 response to the Court, the Plaintiffs admitted that it was HFHP, not HFAP that had made conditional payments on behalf of R.Y., but had they had an opportunity to make a “minor clarifying” amendment to the Second Amended Complaint, they may have been more precise. Next that they stated that said potential clarification “would not change the substantive validity of the Health First assignments or R.Y.’s adequacy as an exemplar beneficiary,” a position the Court referred to as “palpably absurd and clearly wrong under the law.” The Court was further perturbed that MSP Recovery had not brought the identity of their intended Defendant to their attention until there was a threat of sanctions, rather than when they learned of the distinction weeks earlier.

When a lawsuit is filed, there are obligations that exist to ensure that the facts alleged are truthful and well-researched. The Federal Rules of Civil Procedure provide for sanctions against frivolous lawsuits, and case law indicates that the imposition of sanctions is allowable if the litigating parties should have known their position was groundless. By bringing a lawsuit against a company that does not make any medical payments, much less Medicare conditional payments on behalf of R.Y., a question exists as to whether MSP Recovery’s position was groundless. The law recognizes that corporations are separate and distinct legal entities and cause must be shown to ignore the corporate form.

The MSP Recovery LLC attorneys attempted to show they were not personally involved in the Auto-Owners matter, presumably to suggest they weren’t aware of the testimony, because they had not entered appearances in that case. The Court did not buy it, nor did they buy the Plaintiff’s explanation that the two separate companies are all part of the Health First “corporate family,” complicating their ability to identify the correct entity. And while this case is certainly not the longest legal battle in MSP history, it went on long enough for the Court to acknowledge the Plaintiff had wasted time and resources with its groundless claim.

Upon issuing the sanctions, the Court stated its purpose to “deter repetition of the conduct or comparable conduct by others similarly situated.” Given the prolific manner in which MSP Recovery LLC has been filing complaints that other courts have also determined to be less than adequate, it will be interesting to see whether this case results in a true deterrent or merely a slap on the wrist.