Reimbursing Medicare Does Not Stop A Private Cause of Action Claim Under The Medicare Secondary Paye Reimbursing Medicare Does Not Stop A Private Cause of Action Claim Under The Medicare Secondary Paye

Reimbursing Medicare Does Not Stop A Private Cause of Action Claim Under The Medicare Secondary Payer Act

A recent federal decision in Estate of Clinton McDonald v. Indem. Ins. Co. of N. Am, has set a precedent for the use of the private cause of action provision under the Medicare Secondary Payer Act (MSPA) that a primary payer can be held liable for double damages even after reimbursing Medicare. The MSPA, 42 U.S.C. § 1395y(b)(3)(A), establishes “a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement)” in accordance with the MSPA.

Clinton McDonald was injured in a work related motor vehicle accident on May 10, 2007. McDonald passed away on November 5, 2007, as a result of those injuries. Medicare paid $180,185.75 for injury related medical bills during this timeframe. McDonald’s employer disputed that his death was caused by the work related accident. On December 28, 2009, the Kentucky workers’ compensation board found McDonald’s death was related to the accident and ordered the employer’s insurance carrier, Indemnity Insurance, to pay for McDonald’s medical expenses.

On September 13, 2012, McDonald’s Estate filed a suit under the MSPA’s private cause of action provision seeking double recovery of the medical expenses due to Indemnity’s failure to reimburse Medicare. After the lawsuit was filed, Indemnity received a conditional payment letter from Medicare dated September 19, 2012, indicating Medicare had paid $181,326.38 in conditional payments. A final demand letter was sent on October 25, 2012, seeking reimbursement in the amount of $184,514.24. Indemnity issued a check to Medicare for that full amount on December 11, 2012.

Indemnity and the estate filed cross-motions seeking summary judgment. The Court found the estate was entitled to receive double damages under the MSPA. The Court reasoned the purpose of the private cause of action is to encourage beneficiaries to bring claims even when Medicare has already paid the beneficiary’s medical expenses. Indemnity’s “no harm, no foul” argument was rejected by the Court because it disregarded the two years between the order for payment and the filing of the suit in which Indemnity did not notify or reimburse Medicare.

This case highlights the importance of timely notifying Medicare and addressing conditional payments in connection with workers’ compensation settlements and awards.

To learn more, please contact Jennifer McDaniel or any attorney in Ice Miller’s Workers Compensation Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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