Section 111 Reporting Reminder for Asbestos Exposure Claims

On January 10, 2023, in Henni v. Standard Fuel Eng'g Co., No. 22-11608, 2023 U.S. Dist. LEXIS 4256 (E.D. Mich. Jan. 10, 2023),the United States District Court for the Eastern District of Michigan was requested to determine whether, pursuant to the Medicare Secondary Payer Act (42 U.S.C. § 1395y), the defendants of a personal injury action were required to report a settlement to the Centers for Medicare & Medicaid Services (CMS) where the plaintiffs’ complaint alleged pre-and post-1980 asbestos exposure but pre-litigation discovery only revealed pre-1980 asbestos exposure. Ultimately, the court ruled that it lacked the requisite jurisdiction to provide a decision on the question presented; however, it is important to note that Medicare’s policy guidance suggests that these post-1980 personal injury claims are, in fact, required to be reported to CMS.    

Factual Overview

In the instant action, Plaintiffs filed multiple personal injury lawsuits in Wayne County Circuit Court, alleging that they or their decedents developed mesothelioma, lung cancer, or asbestosis as a result of exposure to asbestos contained in the products of over 100 defendants. Notably, Plaintiffs' complaints alleged exposure to asbestos both before and after December 5, 1980. By contrast, pre-litigation discovery did not reveal any post-December 5, 1980 exposure. Plaintiffs later learned that Defendants' insurer intended to report the settlements to the Centers for Medicare & Medicaid Services (CMS) as involving post-1980 asbestos exposures.

The plaintiffs filed a motion for injunctive relief in Wayne County, arguing that Defendants were bound by their settlement agreements establishing that there were no post-1980 exposures. The motion sought to enjoin Defendants from reporting the settlements to CMS, arguing that the Defendants had no duty to report pre-1980 exposure. The Defendants filed a response arguing that because Plaintiffs' most recent complaints alleged that asbestos exposure occurred both pre-and post-1980, Defendants had a duty to report the settlements to CMS.

Ruling and Sanderson Firm Commentary

The United States District Court for the Eastern District of Michigan, Southern Division determined that Defendants did not meet their burden of establishing that the District Court had jurisdiction and remanded the case to state court. Based upon the Medicare Secondary Payer Act (MSP) and Medicare’s written policy guidance regarding mandatory insurer reporting requirements, we anticipate that the state court will find that the insurer has an affirmative duty to report these claims to Medicare.

The MSP requires that insurers report any settlement involving Medicare Beneficiaries arising out of asbestos exposure to CMS, 42 U.S.C. § 1395y(b)(8). An insurer who fails to comply with the reporting requirements "may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant." § 1395y(b)(8)(E)(i). As authorized by 42 U.S.C. § 1395y(b)(8)(H), CMS allows for an exception to this reporting obligation when all of multiple criteria are satisfied, including that "[e]xposure, ingestion, or an implant on or after December 5, 1980, has not been claimed in the most recently amended operative complaint (or comparable supplemental pleading) and/or specifically released . . . ." (emphasis added). Section 6.5.1.5 (Cases Involving Exposure, Ingestion, or Implantation) of the NGHP User Guide – Chapter III, further provides:

In the following situations, Medicare will assert a recovery claim against settlements, judgments, awards, or other payments, and MMSEA Section 111 MSP mandatory reporting rules must be followed:

• Exposure, ingestion, or the alleged effects of an implant on or after 12/5/1980 is claimed, released, or effectively released in the most recently amended operative complaint or comparable supplemental pleading

In this instant case, there is no dispute that Plaintiffs’ most recent operative complaint alleged pre- and post-1980 exposure. Accordingly, the defendant insurer does not meet the reporting exemption under 42 U.S.C. § 1395y(b)(8)(H) noted above. Furthermore, Medicare’s written policy guidance confirms that reporting is appropriate when there is alleged exposure post-1980. For these reasons, we anticipate that the state court will find that reporting to CMS is required.

Sanderson Firm provides Section 111 reporting services, which includes counseling our clients on the appropriateness of whether reporting any particular claim must be reported to Medicare. If you have any questions regarding this case or Sanderson Firm’s reporting services, please contact us.