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.

CMS Announces Webinars for Upcoming Enhancements to the Medicare Secondary Payment Recovery Portal (MSPRP) and Commercial Repayment Center Portal (CRCP)

CMS  announced two webinars for Upcoming Enhancements to the Medicare Secondary Payment Recovery Portal (MSPRP) and Commercial Repayment Center Portal (CRCP).

More to the point, the webinars will be addressing the fact that that effective April 1, 2019, electronic payment functionality will be added to both the MSPRP and the CRCP.  Taking place on March 13, 2019 for MSPRP users and March 14, 2019 for CRCP users, the webinars will provide more information on this new feature.

Practitioner’s Note: This enhancement could make paying outstanding Medicare conditional payments so much easier for debtors. Instead of sending a check and ensuring it’s applied to the proper claim, this function will hopefully give payers assurance that payment has been received and applied in a prompt manner and cut down on error when applying payments to claims that are not in final demand status. Additionally, it may be interesting to see how this may impact refunds as well.

The Gordon & Rees Medicare Compliance team will continue to follow these trends and update you as new developments arise.

Medicare Coverage App Launches eMedicare

Yesterday CMS announced a new app to display what Medicare Part A & B covers. Per the announcement, “The new ‘What’s Covered’ app lets people with Original Medicare, caregivers and others quickly see whether Medicare covers a specific medical item or service. Consumers can now use their mobile device to more easily get accurate, consistent Original Medicare coverage information in the doctor’s office, the hospital, or anywhere else they use their mobile device.” Unsurprisingly, CMS discussed the need for this app as questions about what Medicare covers are some of the most frequent inquiries that CMS receives.

Interestingly, this app also is reported to enable beneficiaries to connect their claims data to applications and tools developed by innovative private-sector companies to help them understand, use, and share their health data.

As discussed previously, this innovation is in line with the directive from the current administration to move toward more electronic access in regards to healthcare. Specifically, this program is called eMedicare, and some of the purported goals are to allow beneficiaries to examine all available plans and see how different coverage choices will affect out-of-pocket costs.

Practitioner’s Note: This app could be extremely beneficial to beneficiaries who have had a MSA approved and are attempting to appropriately spend down their funds. Additionally, it will be interesting to see if the next version of this new app will include the option to compare Part C plans. Considering the narrative, ease of comparing different Part C plans appears to be an important part of the eMedicare program. However, this does beg the question what exactly is the “health data” they aim to share? 

The Gordon & Rees Medicare Compliance team will continue to follow these trends and update you as new developments arise.

The Ghost of Cases Past – MSPA Claims LLC, v. Scottsdale Insurance Co.

For those familiar with the slew of MSP Recovery cases that have been ruled upon in the past six (6) months, it will come as no surprise that another court, specifically the United States District Court for the Southern District of Florida, found that MSPA Claims LLC lacked standing when bringing suit against the Defendant.

Echoing the recently decided cases brought by MSP Recovery and its subsidiaries, the Court again in MSPA Claims v. Scottsdale Insurance found that Plaintiff lacked standing as proof of assignment of rights was not present and as such, granted Defendant’s motion for dismissal. Facts that are almost identical to MSPA Claims 1, LLC v. Ocean Harbor and MSPA Claims 1, LLC. v United Auto. Ins. Co., 204  F. Supp. 3d 1342, 1345 (S.D. Fla. 2016), Plaintiff asserted rights were assigned from Florida Healthcare Plus to La Ley Recovery which then assigned rights of recovery to MSP Recovery. The Court disagreed and specifically noted that although Plaintiff argued Florida Healthcare Plus approved assignment to La Ley to MSPA Claims, prior to receivership, the assignment did not predate the receivership. More pointedly, the Court stated it “is unclear how Florida Healthcare Plus could have approved the assignment…valid if MSP Claims was not yet formed as a company in 2014 when the receiver took over Florida Healthcare Plus[1].”

As such, the Court granted Defendant’s motion for dismissal without prejudice.

With yet another ruling dismissing a claim brought by MSP Recovery, the Floridian courts appear to sharpen their scrutiny regarding cases brought by assignees of rights by Medicare Advantage Plans. The pressing question however, is will other jurisdictions look to these cases as persuasive case law in their own courts? The Gordon Rees Medicare Group will continue to monitor these cases and bring you updates as they become available.


[1] MSPA Claims 1. LLC v. Scottsdale Ins. Co., 2018 U.S. Dist. LEXIS 218675

CMS Finishes New Medicare Card Distribution Initiative

The Centers for Medicare & Medicaid Services (CMS) has recently published a press release stating that it has completed its initiative of issuing new Medicare cards to all beneficiaries with new Medicare identification numbers as of January 16, 2019. The purpose of this initiative was to replace all Social Security number based HICNs with the new Medicare ID number, the Medicare Beneficiary Identifier (MBI) which is a randomly generated series of letters and numbers, as opposed to being based on an individual’s Social Security number, in turn adding a layer of security against identity theft and fraud and abuse. Specifically, the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 requires CMS to remove Social Security Numbers (SSNs) from all Medicare cards and to reissue new non-Social Security number based Medicare identification numbers by April 2019. The issuing of this bulletin indicates that CMS has completed this project of replacing all existing Medicare cards three months ahead of schedule. The full press release can be found here.

CMS states that the current administration is “committed to modernizing Medicare and has expedited this process to ensure the protection of Medicare beneficiaries and taxpayer dollars from the potential for fraud and abuse due to personal information that existed on the old cards.” CMS further asserts that more than half of the healthcare claims that it is now processing now contain an MBI.

CMS has previously outlined that it has exempted all Medicare Secondary Payer (MSP) Processes from exclusive use of MBI for the time being. That is, for Section 111 reporting Responsible Reporting Entities (RREs) may continue to perform Section 111 reporting processes using an individual’s full SSN, HICN, or MBI. The Section 111 User Guide states that if a HICN is reported, and the individual has been assigned an MBI, the MBI will be returned on the response file. Further, CMS has also previously stated that all Benefits Coordination and Recovery Center (BCRC) and Commercial Repayment Center (CRC) issued correspondence will use the most recent Medicare identifier that the RRE has provided when creating or updating a Medicare Secondary Payer record. In short, while the use of the HICN will continue to decrease until only the MBI is in use, CMS will not yet have any issue processing claims using an individual’s HICN (if one was previously issued to the individual).

As increasing personal security was the purpose of replacing the previous Medicare cards, CMS recommends that all beneficiaries destroy their old Medicare cards, begin using the new Medicare card immediately, and to protect your Medicare card just like a credit card. Further, in the event that a Medicare beneficiary has not received his or her new Medicare card, CMS recommends contacting 1-800-Medicare or logging in to the beneficiary’s mymedicare.gov account to ensure that their contact and mailing information is accurate.

Gordon & Rees remains committed to bringing you the most up to date information regarding all things Medicare Secondary Payer. Accordingly, we will continue to provide any updates regarding the use of MBIs as they are released. 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.

CMS Issues updated Section 111 NGHP User Guide

As of January 4, 2019, CMS has issued an updated version of the MMSEA Section 111 NGHP User Guide. While version 5.5 of the User Guide has few changes, there are some noteworthy additions. The changes made to the latest version of the User Guide are as follows:

– Ch. III of the User Guide now clarifies that beginning January 1, 2019, the threshold for liability insurance settlements, judgments, awards, or other payments will remain at $750. CMS will also maintain the $750 threshold for no-fault insurance and workers’ compensation settlements, where the no-fault insurer or workers’ compensation entity does not otherwise have ongoing responsibly for medicals. This is outlined in Section 6.4 of Ch. III and in short, simply restates the fact that the TPOC dollar thresholds remain at $750 for liability, no-fault, and workers’ compensation insurance.

– The definition of the ‘Funding Delayed Beyond TPOC Start Date 1’ data field has been updated. This definition can be found in line 82 of Table A-3 and states “If funding is determined after the settlement date (TPOC Date), provide actual or estimated date of funding determination.” The previous definition simply stated “If funding for the TPOC Amount is delayed, provide actual or estimated date of funding.” The same verbiage has been added to lines 95, 98, 101, and 104 of Table A-5 Auxiliary Record, updating the definition of this field for all possible additional TPOCs (TPOCs 2 – 5).

– Ch. IV of the User Guide also provides updated versions of the excluded ICD-9 and ICD-10 tables in order to match the excluded lists that are available through the Section 111 MRA application (https://www.cob.cms.hhs.gov/Section111). These tables can be found in Appendices I and J.

– Lastly, version 5.5 of the User Guide has been updated to only include information from the last four User Guide releases in order to reduce the number of version and revision history pages.

Each chapter of the Section 111 NGHP User Guide, version 5.5 can be downloaded here.

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.

New Year, New Changes to the Workers’ Compensation Medicare Set-Aside Reference Guide

Today CMS issued an announcement that they have released Version 2.9 of the Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide (Reference Guide), which can be found here. Per the new version, the changes included in this version of the guide are as follows:

  • To eliminate issues around Development Letter and Alert templates auto populating with individual Regional Office (RO) reviewer names and direct phone numbers, these will now display the generic “Workers’ Compensation Review Contractor (WCRC)” and the WCRC customer service number “(833) 295-3773” (Appendix 5).
  • Per CMS’ request, certain references to memoranda on cms.gov have been removed.
  • The CDC Life Table has been updated for 2015 (Section 10.3).
  • Updates have been provided for spinal cord stimulators and Lyrica (Sections 9.4.5 and 9.4.6.2)

The most noteworthy changes are those in regards to the spinal cord stimulators and Lyrica. In regards to the spinal cord stimulators, CMS specifically included in this version that “Routine replacement of the neurostimulator pulse generator includes the lead implantation up to the number of leads related to the associated code. Revision surgeries should only be used where a historical pattern of a need to relocate leads exist” …and “Surgery pricing may include physician, facility, and anesthesia fees. SCS pricing is based on identification of: 1.) Rechargeable vs. Non-rechargeable and 2.) Single vs. Multiple Arrays (leads). If unknown, CMS will default to non-rechargeable single array.” These pricing clarifications appear to be in line with the approved MSAs that CMS has approved over the last few months.

Lyrica has been a hotly discussed topic over the last few months. Those who are active in the industry have noted that Lyrica has been included more and more in many MSAs for conditions that are not related to a spinal cord injury, when this has been historically argued as an off-label usage. However, CMS seems to have quashed this debate with the release of the updated language regarding this prescription. Per the new update, “Lyrica (Pregabalin) is cited in MicroMedEx for an off-label medication use related to neuropathic pain from spinal cord injury, and a number of scientific studies indicate that Pregabalin shows statistically significant positive results for the treatment of radicular pain (a type of neuropathic pain). Spinal cord neuropathy includes injuries directly to the spinal cord or its supporting structures causing nerve impingement that results in neuropathic pain. Lyrica is considered acceptable for pricing as a treatment for WCMSAs that include diagnoses related to radiculopathy because radiculopathy is a type of neuropathy related to peripheral nerve impingement caused by injury to the supporting structures of the spinal cord.” In other words, a diagnosis of radicular/neuropathic pain would now support the inclusion of Lyrica in a MSA. Again, this has been in line with the recent approvals issued by CMS wherein this prescription medication has been included for radicular pain, such as radicular pain noted into the upper and/or lower extremity pain. However, in its attempts to clarify Lyrica’s accepted usage CMS has muddied the waters in the language when indicating “injury to the supporting structures of the spinal cord”. This could open the door to inclusion for conditions that are arguably unrelated to the spine simply because other areas of the body touch the spine. I.e. If prescribed for pain that originates not at the spine (ex. radicular pain from a shoulder injury).

The Gordon and Rees Medicare group will continue to follow this issue closely and will update you as soon as additional information is available.

Proposed Rule Regarding Section 111 Penalties Issued by Office of Management and Budget

Another notice relevant to the world of MSP compliance has been issued by the Office of Management and Budget. The notice, which was issued following the notice regarding Liability Medicare Set-Asides we previously reported on earlier this week, is titled “Civil Money Penalties and Medicare Secondary Payer Reporting Requirements” ,which can be found here. Per the abstract:

“Section 516 of the Medicare Access and CHIP Reauthorization Act of 2015 amended the Social Security Act (the Act) by repealing certain duplicative Medicare Secondary Payer reporting requirements. This rule would propose to remove obsolete Civil Money Penalty (CMP) regulations associated with this repeal. The rule would also propose to replace those obsolete regulations by soliciting public comment on proposed criteria and practices for which CMPs would and would not be imposed under the Act, as amended by Section 203 of the Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act).”

Although this is only a Notice of Proposed Rulemaking (NPRM), this issue is expected to be decided upon in September 2019, corresponding with the Notice of Proposed Rulemaking for Liability Medicare Set-Asides as well.  Of note, the actual rule was not available for review.

The Gordon and Rees Medicare group will continue to follow this issue closely and will update you as soon as additional information is available.

Updated Life Table To Be Used Starting January 2019

CMS recently issued a notification regarding the use of Life Tables in Workers’ Compensation Medicare Set Asides. Per the notice found here, CMS advised that beginning January 5, 2019 CMS will convert to the CDC’s “Table 1: Life Table for the total population: United States, 2015” for the Workers’ Compensation Medicare Set Aside life expectancy calculations. They then provided the link to said table here. Interestingly, comparing to the 2014 Life Table, the life expectancy in the updated table have decreased slightly. Ex.: An individual who is sixty-one (61) had a life expectancy in 2014 of 22.5 while the updated 2015 table shows a life expectancy of 22.4, which would be a whole year difference for MSA allocation purposes.

The Gordon and Rees Medicare group will continue to follow this issue closely and will update you as soon as additional information is available.

LMSA Rules by September?

Once again the possibility of regulations from the Department of Health and Human Services regarding Liability Medicare Set-Asides (LMSA) and No-Fault Medicare Set-Asides (NFMSA) has been brought into the spotlight.  In recent days, the Office of Information and Regulatory Affairs’ Office of Management and Budget published a notice of proposed rulemaking to provide guidance to Medicare beneficiaries and to protect the Medicare Trust Fund.  The full notice can be found here.  Per the abstract:

“This proposed rule would ensure that beneficiaries are making the best health care choices possible by providing them and their representatives with the opportunity to select an option for meeting future medical obligations that fits their individual circumstances, while also protecting the Medicare Trust Fund. Currently, Medicare does not provide its beneficiaries with guidance to help them make choices regarding their future medical care expenses when they receive automobile and liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or payments, and need to satisfy their Medicare Secondary Payer (MSP) obligations.”

Interestingly, this proposed rule in regards to Liability Medicare Set-Asides (LMSAs) is noted to have “economically significant” priority. According to the Office of Management and Budgets, “significant” regulatory actions are defined in an executive order as those that: ‘Significant regulatory actions are defined in the Executive Order as those that have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order.”[1] Furthermore, a Notice of Proposed Rulemaking (NPRM) is expected to be decided upon in September 2019. Although the actual proposed rule was unavailable for review, to those of us that are familiar with the industry, rules for LMSA and NFMSA have been anticipated for some time.  However, this is the first indication of movement outside the Department of Health and Human Services.

This posting by the Office of Management and Budget is the first step to development of regulation and is not yet a proposed rule. This publication is simply notification that CMS is currently in the process of putting together a proposed rule.  Once the draft is prepared it will be published in the Federal Register and after publication any interested parties in the rule will be provided 60 days to comment.  Once the period for comment closes, CMS will decide whether to proceed with development of the regulation.

It is unclear as to whether CMS will seek ongoing feedback from interested stakeholders. As of this date, no Town Hall has been scheduled.

Gordon & Rees has previously written official comments for prior notices of proposed rulemaking and is equipped to do so on behalf of interested stakeholders. If you are interested in this service, please contact us. As this process develops Gordon & Rees will continue to keep you apprised of the progress.

[1] Department of Management and Budget FAQs. https://www.reginfo.gov/public/jsp/Utilities/faq.myjsp