Medicare Section 111 Reporting Responsibilities Debated in Two Recent Case Decisions; Last Chance to Register for Sanderson Firm’s Webinar on this Topic!
MMSEA Section 111 Reporting is fresh on settling parties’ minds now. Whether an insurer has a reporting obligation is top of mind in Medicare beneficiary settlements, and this is not surprising given that the Centers for Medicare and Medicaid Services (CMS) recently sent the text of a Final Rule on Section 111 Civil Monetary Penalties (CMPs) to the White House OIRA for approval. Once the Final Rule is effective 60 days after publishing, CMS will then issue CMPs against noncompliant workers’ compensation, general liability, and no-fault primary plans/insurers of up to $1000 per day/per claim. It is anticipated that the Final Rule will be released within the coming weeks or months.
Two recently issued Federal decisions delved into the applicability of an insurer’s need to report to comply with MMSEA Section 111 Reporting obligations. Let’s dive into both cases and extract some practical application as to how the Courts view MMSEA Section 111 reporting obligations.
In Bone v. Univ. of N.C. Health Care Sys., 2022 U.S. Dist. LEXIS 82148 (U.S. District Court for Middle District of N.C., published May 6 ,2022), an American with Disabilities Act (ADA) case was filed by various plaintiffs, John Bone, Timothy Miles, the National Federation of the Blind, and Disability Rights North Carolina (hereinafter referred to as “Plaintiffs”) against University of North Carolina Health Care System (hereinafter referred to as “Defendant”) alleging that the Defendant denied blind people equal access to their health care information.
During the settlement negotiations, Defendant sought various pieces of information from the Plaintiffs such as whether the individual plaintiffs had been enrolled in the Medicare program or if Medicare had made conditional payments. Defendant sought this information to enable Defendant to report the settlement to Medicare as required by law. The Plaintiffs refused to provide this information noting that the claim and the settlement was for “garden-variety emotional distress” and that there were no claimed medical damages. Further, because medicals were not being claimed and/or released, the Medicare Secondary Payer Act (MSP) and MMSEA section 111 obligations were not implicated.
Defendant did not bring up the Medicare issue/questions again until after the settlement agreement was signed. Post settlement execution, Defendant sought to include additional language in the settlement agreement around the Plaintiffs reimbursing Medicare for any known conditional payments. The Plaintiffs then filed a Motion to Enforce Settlement on the ground that the parties had an enforceable settlement agreement that did not include such provisions, and that these additional provisions would be considered “material changes” to the settlement agreement.
Defendant contended that it would not cause any prejudice to the Plaintiffs for them to provide this information to Defendant, particularly Medicare had in fact not made any conditional payments. Further, Defendant contended that the hospital’s insurer was requiring it to report the settlement via MMSEA Section 111 reporting. The court ultimately sided with the Plaintiffs, finding that if the Defendant wanted to add these terms to the settlement agreement they should’ve done so earlier, prior to finalizing the settlement. Further, per the NGHP User Guide, the MSP Act was not implicated because no specific medical damages were claimed or released. Thus, the Plaintiffs need not provide this information to Defendant and the settlement remained final.
The other decision on MMSEA Section 111 Reporting, which was also published on May 6th is Illinois Ins. Guar. Fund v. Becerra, 2022 U.S. App. LEXIS 12320 (U.S. Court of Appeal for the Seventh Circuit). Just a year ago, Sanderson Firm blogged about this case. Our April 27, 2021 blog on this case can be found here which includes a more detailed description of the underlying facts of the case.
In summary, in the most recent appeal to the Circuit Court, Illinois Insurance Guaranty Fund (hereinafter referred to as “IIGF”) sought a Declaratory judgment that it is not subject to MMSEA Section 111 reporting requirements. IIGF is a payer of last resort in Illinois that covers claims for insolvent workers’ compensation insurers. In CIGA v. Burwell, which was published in 2017, the Ninth Circuit determined that CIGA, which is also a workers’ compensation guaranty fund, was not subject to the MSP and MMSEA Section 111 reporting requirements. Thus, IIGF sought a similar declaratory judgment that it similarly should not be required to report.
However, the Circuit Court agreed with the lower court’s finding that there was no subject matter jurisdiction as the Plaintiff had not exhausted administrative remedies prior to bringing this declaratory judgment. At the time CIGA was published, the four-level administrative appeals process for primary plans was not yet established. However, as the appeals process is now established, IIGF needs to be presented with a demand for conditional payments from CMS, and then at that time, IIGF can challenge its status as a “primary plan/applicable plan.” The Circuit Court noted that it respected IIGF’s desire to avoid the risk of breaking the law and incurring penalties, but the ongoing burden of complying with Section 111’s requirements does not entitle IIGF to evade the Medicare Act’s channeling requirements/appeals process.
Commentary: Regarding the Bone case, without reading the settlement agreement, which was not provided with the opinion, it is difficult to ascertain whether there was in fact a release of medical in the settlement agreement or if the settlement agreement had the “effect of releasing medicals.” It is interesting that the claim was for emotional distress; thus, there might be some need for medical expenses as it pertains to prescription drugs for the alleged emotional distress. Either way, this case is a great example of why and how parties should be on the same page about any Medicare or Medicare secondary payer obligations early on in settlement negotiations. Medicare should never be an afterthought at the time of settlement.
Regarding the Illinois Insurance Guaranty Fund case, this decision is a good reminder that Medicare’s administrative appeals process must be exhausted before parties can obtain judicial review. Governmental entities, guaranty funds, and similar entities still have MMSEA Section 111 Reporting requirements just like other insurance plans. In the interim, with CMPs of up to $1000 per day/per claim looming, parties would be best advised to play it safe and report timely and accurately as possible.
Last chance to Register for Sanderson Firm’s Webinar on MMSEA Section 111 Reporting! Tomorrow, on May 10, 2022, at 1:30 PM EST, Heather Sanderson will be joined by Stacy Piazza, CMSP to discuss what you need to know about Section 111 Reporting, to get in front of Section 111 CMPs. The link to register for free is here: https://us06web.zoom.us/webinar/register/WN_FZcgxNUCQau4HgJ4fevZFA
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