Injured Maritime Workers – Workers’ Compensation or Liability?
Written by: Brendon De Souza
The Centers for Medicare & Medicaid Services (CMS) does not process all injured maritime worker claims equally — at least, not when it comes to Medicare Secondary Payer (MSP) compliance.
Injured maritime workers may be covered under a number of federal statutes, including the Jones Act (also known as the Merchant Marine Act of 1920) and the Longshore and Harbor Workers’ Compensation Act (Longshore). Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 requires Responsible Reporting Entities (RREs) to accurately report these insurance claims to CMS, and a key and often overlooked component to accurate reporting in maritime worker claims is first identifying the correct “Plan Insurance Type.”
Under the current Section 111 reporting structure, RREs must enter a value of “E” (workers’ compensation insurance), “L” (liability insurance), or “D” (no-fault insurance) into Field 51 (Plan Insurance Type) when reporting insurance claims involving Medicare beneficiaries. Often times, RREs will incorrectly assume that all maritime worker claims should be reported as workers’ compensation claims (Plan Type “E”) simply because the individual was injured during the course and scope of their employment. However, the state or federal statute under which the injured maritime worker’s claim is brought determines the appropriate plan insurance type.
For example, Longshore is a federal statute which provides medical care, disability payments, and other benefits for maritime workers who are injured on the navigable waters of the United States. Workers protected under Longshore include cargo handlers, shipbuilders, ship repairmen, ship breakers, and stevedores, and Longshore claims are classified (as the Longshore and Harbor Workers’ Compensation Act title implies) as workers’ compensation benefits.
By contrast, the Jones Act is a federal statute which provides medical expenses, lost wages, loss of future earning capacity, pain and suffering, and other intangible damages for certain seamen and offshore workers. The Jones Act allows workers injured by the vessel owner or operator’s negligence to seek damages, and CMS classifies these claims as liability claims rather than workers’ compensation claims. In fact, Chapter 1 – Section 10.4 of the Medicare Secondary Payer Manual confirms that Jones Act (merchant seaman) claims are not deemed to be workers’ compensation plans and are instead designated as liability insurance under the Medicare Secondary Payer Act.
As a result of these technical legal nuances, it is imperative for RREs to report Jones Act claims through Section 111 reporting as liability insurance (Plan Type “L”) and Longshore claims as workers’ compensation insurance (Plan Type “E”) even though these claims appear incredibly similar.
Proper plan type reporting is important because CMS processes liability and workers’ compensation claims differently. From a conditional payment lien recovery standpoint, liability debts are processed by the Benefits Coordination & Recovery Center (BCRC) and debt recovery is generally asserted against the individual Medicare beneficiary. By contrast, workers’ compensation conditional payment debts are processed by both the BCRC and the Commercial Repayment Center (CRC), and debt recovery is generally asserted against the RRE rather than the individual Medicare beneficiary. Of course, RREs should keep in mind that CMS retains legal authority to seek recovery against the RRE (regardless of which individual / entity CMS first pursues for recovery) if Medicare is not reimbursed for its conditional payment lien amount.
Plan type also, of course, affects the Medicare Set-Aside analysis. CMS has established a framework to review and issue determinations for workers’ compensation claims, but no such framework exists for liability claims. Therefore, if a Medicare Set-Aside is prepared on a Jones Act claim (deemed to be liability insurance by CMS), the resulting Medicare Set-Aside would be ineligible for CMS review even if desired by the settling parties.
As you can see, Jones Act and Longshore claims are handled differently across all three areas of MSP compliance (Section 111 reporting, conditional payments, and Medicare Set-Asides), and CMS expects RREs to be aware of these nuances. Failure to correctly report the claim could result in unnecessary exposure to the RRE:
Example 1: An RRE incorrectly reports a Jones Act claim as workers’ compensation insurance (Plan Type “E”) and also reports Ongoing Responsibility for Medicals (ORM) as “Y” / ”Yes”. Because the claim is reported as Plan Type “E” with open ORM, the CRC issues continuous lien recovery letters (which would have otherwise not arisen), creating unnecessary conditional payment lien exposure. If, at the time of settlement, the plaintiff attorney reports the claim to CMS as a liability insurance settlement for purposes of obtaining the conditional payment lien amount (*note – this would take place outside of the RRE’s Section 111 reporting as only RREs are capable of reporting via Section 111), CMS may inadvertently open multiple conditional payment recovery files assuming that there is both a workers’ compensation claim and a liability claim with the same date of injury for the same Medicare beneficiary. Unbundling these claims with Medicare will result in significant lost time and expense to the RRE (e.g., resolving multiple final Medicare lien demands, referrals to the U.S. Department of the Treasury, and/or offsets), and may ultimately jeopardize settlement. If the erroneous workers’ compensation record is not addressed (both plan type reporting and ORM reporting), ongoing conditional payment exposure and benefits coordination issues for the beneficiary will remain.
Example 2: An RRE incorrectly reports a Longshore claim as liability insurance (Plan Type “L”). The RRE declines to prepare and fund a Medicare Set-Aside knowing that CMS will not review liability Medicare Set-Asides. Medicare asserts a conditional payment lien amount for medical treatment related to the insurance claim, but the RRE has a valid Longshore defense. The RRE asserts the Longshore defense to erase the conditional payment lien, but CMS is now aware that the claim should have been reported as workers’ compensation insurance (Plan Type “E”). Medicare may deny or recover benefits for up to the total settlement amount given that Medicare’s future interests were ignored / a Medicare Set-Aside was not funded. Medicare may also pursue False Claims Act litigation for treble damages if the RRE “knowingly” reported the incorrect Plan Type to CMS. “Knowingly” broadly encompasses actual knowledge, deliberate ignorance, or recklessness. So, even if an RRE is not actually aware of how to properly report Jones Act or Longshore claims, CMS may argue that the RRE should have known.
RREs should take great care to ensure that their Medicare beneficiary claims are reported correctly. If you or your organization have questions regarding Longshore or Jones Act claims, Section 111 reporting generally, or are interested in our Section 111 reporting solution (SandersonComply), please contact us.
