Melinda Petit, Director of Claims Operations at Chesapeake Employer's Insurance Company (formerly IWIF) presented - “Workers Compensation — Medicare Secondary Payer Issues” at the October 2013 67th Annual F. Addison Fowler Seminar held by The Insurance Roundtable of Baltimore in Hunt Valley, MD

1. Snapshot of MSP
Issues in 2013

2. 2026

3. $574,000,000,000

4. $1.6 BILLON

5. $110 MILLION

6. How Did We Get Here?
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1965-Medicare Passed
Medicare Secondary Payer Act of 1980
Medicare Modernization Act of 2003
MMSEA of 2007
SMART Act of 2013

7. The Three Prongs of MSP Enforcement
MEDICARE
CMS - current
contractor
Conditional Payments
MSAs
MMSEA Reporting

8. Industry Concerns
• Increasing financial and human resources to keep
aware of requirements and to create compliance
solutions
• MSP compliance can create significant delay to claim
resolution
• CMS review process of WCMSA involves questionable
guidelines and no appeal process
• Uncertainty is creating drain on judicial resources
• Many self-interests in the MSA/MSP realm

9. Past Legislative Efforts
to Remedy
• Trying to legislate something that doesn’t exist in law
• Many efforts are contrary to the intent of MSP
• It is complicated

10. Current Legislation
• SMART Act - HR 1845 Signed into law 1/10/2013
– Develop web portal to allow solicitation of demand before settlement
– Establish a 3 year SOL for any claim settled after 7/10/13 as long as CMS has
received notice of settlement
– Develop alternative method to use of SSN for MIR within 18 months
– Establish a right of appeal for payers, previously only available to beneficiary
– Mandatory Section 111 penalties are now discretionary prior to regulatory
process to develop official rules
– Establish annual minimum thresholds for MSP where the cost to pursue is
greater than the recovery.
• CMS-6047-ANPRM: CMS Advanced Notice of Proposed Rule Making: Medicare
Secondary Payer and “Future Medical” (2012 and 2013)
• HR 1982 - Medicare Secondary Payer & Workers' Compensation Settlement
Agreements Act (2013)

11. Recent Legal Developments
• Loss of Consortium is reportable
IN RE: ASBESTOS PRODUCTS LIABILITY LITIGATION (No. VI); MICHELLE
TAYLOR, Administrator c/t/a of the Estate of Ronald Taylor and Marie Taylor,
(Plaintiff) v. GENERAL ELECTRIC COMPANY, et al., (Defendants)
CIVIL ACTION NO.: 12-cv-60048
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
2013 U.S. Dist. LEXIS 76346
May 8, 2013, Decided May 9, 2013, Filed
• Divorce settlements on WC settlement proceeds
Blanchard v. Blanchard (2012 La. App. LEXIS, LA Ct. App. 1st Cir. 12/31/12)
Compare with In re Washkowiak (2012 Ill.App.3d 110174, 3/7/12)
• Use and Disclose MSAs thoughtfully
ESTATE OF BRANCH EHRHARDT VERSUS JEFFERSON PARISH FIRE DEPARTMENT, CITY OF NEW ORLEANS FIRE
DEPARTMENT, WILLIAM HAWKINS
NO. 12-CA-319 C/W 12-CA-452
COURT OF APPEAL OF LOUISIANA, FIFTH CIRCUIT
12-319 (La.App. 5 Cir. 01/30/13); 2013 La. App. LEXIS 143
January 30, 2013, Decided
• Medicare Advantage Plans

12. Medicare Advantage Plans
• Medicare pays a capitated amount to a private MA plan
to provide Part A and B coverages
• Private insurer then provides benefits to the enrollee,
usually charging a premium
• Approximately 27% of beneficiaries are enrolled in MA
plans
• Does statute support COB, conditional payments and
private causes of action from MA insurers?

13. Why are MA Plans Increasing
Recovery Litigation?
• Several cases say MSA plans have no private right of
action in Federal Court for double damages…state
court contract right prevails
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Care Choices HMO v. Engstrom, 330 F.3d 786 (6 Cir. 2003)
Nott v. Aetna U.S. Healthcare, 303 F.Supp.2d (E.D. Pa. 2004)
Parra v. Pacificare, 2011 WL 1119736 (D. Ariz. 2011)
Humana v. Reale, 2011 WL 335341 (S.D. Fla. 2011)
In re Avandia Products Liability
th

14. CMS’ 12/5/2011 Memo
“The purpose of this memorandum is to summarize and convey
our support for our regulations giving Medicare Advantage
Organizations (MAOs) . . . The right, under existing Federal law,
to collect for services for which Medicare is not the primary
payer …Specifically, several MAOs have not been able to take
private action to collect Medicare Secondary Payer services
under Federal law because they have been limited to seeking
remedy in State court. “Specifically, §422.108(f) stipulates that
MAOs will exercise the same rights of recovery that the
Secretary exercises under Original Medicare MSP regulations in
subparts B through D of part 411 of 42 CFR and the rules
established in this section supersede any State laws.”

15. More Recently…????
• Third Circuit Court of Appeals said MA plans do have a
private right of action in Federal Court In re Avandia Marketing,
Sales Practices and Product Liability Litigation, 685 F.3d 353 (3d Cir. 2012)
• Ninth Circuit Court of Appeals affirmed Parra decision
• Humana has filed four suits against Farmer’s Insurance
seeking reimbursement and double damages against
no-fault and med pay policies in four other jurisdictions
• Supreme Court has denied cert In re Avandia

16. Conclusions
• Risk management decisions based upon assessment
of risk and risk tolerance
• Stay aware
• Question your MSP compliance team for strategy that
matches your risk tolerance