Advanced Strategies for Trial Attorneys: Resolve Liens, Ensure Medicare Compliance, & Preserve Government Benefits

Advanced Strategies for TrialAttorneys: Resolve Liens,
Ensure Medicare Compliance and Preserve
Government Benefits

A d v a n c e d S t r a t e g i e s
f o r L i e n R e s o l u t i o n

Teresa S. Kenyon, Esq.
Director of Lien Resolution
Services
TERESA S. KENYON, ESQ.
Teresa Kenyon is the Director of Lien Resolution
Services for Synergy Settlement Services. She is a
California and Kentucky licensed attorney. Prior to
joining Synergy, Teresa worked at The Rawlings
Company on behalf of health insurance companies
seeking reimbursement.
Teresa and her team provide invaluable assistance to
plaintiff attorneys by handling all types of health liens.
Her growing team has over 150 years of experience
in battling liens and passionately fighting for the
injured party.

Today’s Agenda
 Lien Resolution
 Early Preparation
 Issues with Lien Statements
 Main Recovery Vendors
 ERISA Liens
 Assessment of Plan Rights
 Self-funded versus fully-insured
 US Supreme Court - Montanile
 Military Liens
 Tricare / VA
 Reductions

Lien Resolution - The Case After The Case
What Does it Take to Resolve?
1. Identify the interested parties
 ERISA, Medicare, Medicaid, Military, Private Insurance
 Ask your client who covered medical bills
 Copies of insurance cards
 Review medical records and bills for payments
2. Know the applicable law
 Statutory
 Contractual
 State or Federal
3. Know what equitable arguments might carry weight
 Build your case with that in mind; written documentation helps
4. Hire an Expert
 It’s what we do all day, every day

Early Lien Preparation During Your Case
 Documenting Difficulties in the Case
 Letter from carrier/defense, email communications during negotiations
 IME
 Medical records showing pre-existing conditions
 Deposition testimony
 Mediation briefs
 Economic Report
 Life Care Plan

Early Lien Preparation
 Issues to Document to Impact Lien Negotiations
 Date range of accepted medical treatment, cut off date
 Liability issues, percentage of acceptance
 Pre-existing conditions specifically not considered

Reviewing the Lien Claim Statement
 Treatment Dates
 Should not be a lump sum claim for multiple days
 Demand the breakdown
 Billing codes
 Not just a generic ICD but a specific procedure (this allows you to see whether it is related or not)
 Provider Name
 Should not be missing
 Ensure it matches your records
 Billed Amount
 Confirm against your own records
 Paid Amount
 Should not be more than the billed amount

Rawlings - $0 Billed Amount, Large Paid

Carefirst – Inadequate Billing Codes

Conduent – Multiple Family Members

Recovery Vendors
 The Big Recovery Players
 Optum
 Equian
 Conduent
 Rawlings
 BCBS, Humana (internal)
 Various defense firms
 Highly trained
 Narrow arguments
 Form Letters
 Limited Authority to Reduce
 Incentivized by Bonus, Reprimand
 Various Lien Types
 ERISA, Medicare Advantage, Supplement,
FEHBA, Medicaid MCO/HMO

ERISA Plans – Assessment of the Plan’s Right
• What do you need?
• Plan Documents – SPD, MPD
• Form 5500
• Audit the Lien Claim Summary
• Must have ICD, CPT billing codes
• Provider listed
• Dates (ranges?)
• Bundled charges / lump sum payments
• Understanding of the applicable law
• Which law applies? State or Federal.

Self-Funded or Fully-Insured
Self-Funded ERISA preempts state law
 Employers collect premiums on
employee's paycheck.
 Funds are held in separate account.
 The insurance carrier is involved only as a
claim administrator (responsible for
administering and making physical
payment of the claims) but not providing
financial means for paying claims.
 Providers submit bills to the insurance
carrier.
 The employer suffers the financial burden
of paying the claims as the funds come
from premiums contributed by the
employer and employee – a self-funded
pool.
Fully-Insured ERISA subject to state law
 Employers collect premiums on
employees' paychecks.
 Funds are then used to pay premiums to
purchase insurance coverage through
insurance carriers.
 Providers submit bills to the insurance
carrier.
 The carrier suffers the financial burden of
paying claims.

US Supreme Court - Montanile
Montanile v. Board of Trustees of the National
Elevator Industry Health Benefit Plan, 136 S Ct.
651 (2016).
 Holding that a Plan can only seek equitable
relief against a particular thing (an identifiable
fund) and not from the party’s general assets.
 Specifically stating that once the identifiable
fund has been spent on nontraceable items (like
food or travel) then the equitable lien is
destroyed.
 The Plan could not enforce its lien in this case.
 Key Considerations
 Lack of participation by Plan, no response
 Attorney efforts documented
 Time deadline given to Plan to respond

Tricare or VA Facility
 TRICARE describes itself as “the health care program serving
Uniformed Service members, retirees and their families worldwide.”
 If a service member, or a family member of a service member, and are
injured due to the fault of a negligent party, the chances are that they
will either receive:
 Medical treatment directly from a Veterans’ Administration hospital
or
 The bills for private health providers will be paid for by TRICARE.

Reductions
Will Tricare reduction the lien?
 There are only two statutory reasons for reduction of claims: (see 28 CFR 43.3 and/or 42 USC 2652).
 (1) Convenience of the government; and
 (2) Hardship to the beneficiary
 Amount of settlement funds available to recover
 Reasonable value of the injured party’s claim
 Government benefits accruing to the injured party
 Probability and amount of future medical expenses
 Present and prospective assets
 Debtor’s financial condition
 Contributory negligence
 The percentage of attorney’s fees that the attorney is willing to reduce.
 There is no deduction permitted for attorney’s fees, and there is no cap on the amount of the lien.
 By law, a Claims Recovery Officer has limited initial authority to compromise or waive the lien.
 Whether a Tricare lien will be compromised will ultimately depend on how much the beneficiary will receive.
 The government does take into account if an injured beneficiary will require future medical treatment during
negotiations and this is treatment the US Government will provide without the ability to collect.

ATTORNEY FEE DEFERRAL HEALTHCARE LIEN RESOLUTION MEDICARE SET-ASIDES
POOLED TRUST SOLUTIONS SETTLEMENT PLANNING & CONSULTING

ERISA
Employment Retirement Income Security Act
Original intention in its 1974 creation was focused on pension plans, not health benefits.
According to the US Department of Labor, ERISA protects the interest of employee benefit plan participants
and their beneficiaries.
 It requires plan sponsors to provide adequate plan information to participants.
 It establishes standards of conduct for plan managers and other fiduciaries requiring that they meet certain
standards of conduct, derived from the common law of trusts and appliable to all fiduciaries.
 It contains detailed provisions for reporting to the government and disclosure to participants.
 And it establishes enforcement provisions to ensure that plan funds are protected and that qualifying
participants receive their benefits.

ERISA
Who Does It Protect?
ERISA covers retirement plans and welfare benefit plans.
In FY 2013, ERISA encompassed roughly 684,000 retirement plans, 2.4 million health plans and 2.4
million additional welfare benefit plans.
These plans cover about 141 million workers and beneficiaries and include more than $7.6 trillion in
assets.
About 59 percent of America’s workers earn health benefits.

Is it Self-Funded?
Self-Funded ERISA preempts state law
 Claims are paid with funds contributed by the
employer and employee – a self-funded pool.
 The insurance carrier involved is only a claims
administrator (responsible for physical payment
of the claims) but not providing financial means
for paying claims.
 The payment comes from the self funded pool
held by the employer.
Fully-Insured ERISA is subject to state law
 Employers collect premiums and use those
premiums to purchase coverage through
insurance carriers.
 The carrier suffers the financial burden of
paying claims.

W i n n i n g R e d u c t i o n
T e c h n i q u e s

15 years of “Reasonable Value” Experience
Michael Walrath, Esq.
Director of Hospital & Provider
Lien Resolution
Michael Walrath
I have negotiated and litigated the reasonable value of
healthcare my entire career.
 Former National Dir. Of Litigation – Fairness Foundation
 Former In-House Counsel – Olympus Managed
Healthcare, Inc. (directed contracting and litigation,
nationally)
 Founder of Medical Bill Clinic, P.A. – a litigation law firm
exclusively litigating hospital billing issues in FL and NY
 I now bring that experience to you, through Synergy.

Hospital Liens, Nationally
State Statute, County Ordinance, or Contractual?
Most states have statutes, but some hospital liens are created by county ordinance
while still others are created contractually (by written agreement with the patient).
 Forty (40) states and the District of Columbia have enacted state hospital lien statutes.
 Ala. Code § 35-11-370; Alaska Stat. § 34.35.450; Ariz. Rev. Stat. Ann. § 33-931; Ark. Code Ann. § 18-46-101; Cal. Civ. Code § 3045.1; Colo. Rev.
Stat. Ann. § 38-27-101; Conn. Gen. Stat. Ann. § 49-73; Del. Code Ann. tit. 25, § 4301; D.C. Code § 40-201; Ga. Code Ann. § 44-14-470; Haw. Rev.
Stat. § 507-4; Idaho Code Ann. § 45-701; 770 Ill. Comp. Stat. Ann. 23/1; Ind. Code Ann. § 32-33-4-1; Iowa Code Ann. § 582; Kan. Stat. Ann. § 65-
406; La. Rev. Stat. Ann. § 9:4751; Me. Rev. Stat. tit. 10, § 3411; Md. Code Ann., Com. Law § 16-601; Mass. Gen. Laws Ann. Ch. 111, § 70a; Minn.
Stat. § 514.68; Mo. Ann. Stat. § 430.230; Neb. Rev. Stat. Ann. §§52-401 & 52-402; Nev. Rev. Stat. Ann. § 108.590; N.H. Rev. Stat. Ann. § 448-A:1;
N.J. Stat. Ann § 2a:44-35; N.M. Stat. Ann. § 48-8-1; N.Y. Lien Law § 189; N.C. Gen. Stat. Ann. § 44-49; N.D. Cent. Code Ann. § 35-18-01; Okla.
Stat. Ann. tit. 42 §§43 & 44; Or. Rev. Stat. Ann. § 87.555; R.I. Gen. Laws Ann.§§9-3-4 to 9-3-8; S.D. Codified Laws § 44-12-1; Tenn. Code Ann. §
29-22-101; Tex. Prop. Code Ann. § 55.001; Utah Code Ann. § 38-7-1; Vt. Stat. Ann. tit. 18, § 2253; Va. Code Ann. § 8.01-66.2; Wash. Rev. Code
Ann. § 60.44.010; Wis. Stat. Ann. § 779.80
 Florida hospital liens are valid by ordinance in nine (9) of its sixty-seven (67) counties.
 Nine (9) states have no hospital lien statutes.
 Many hospitals create contractual liens on admission.

All States, and even Hospitals, are Different…
F o l l o w t h e L a w & F a c t s
F O R E X A M P L E :

From Statewide Liens to no Liens at All…
CALIFORNIA
 CA hospitals enjoy
liens by statute,
statewide (§3045)
 Limited to “reasonable
charges” or 50% of
proceeds
 Burden of proof on
hospital to prove
reasonableness.
ILLINOIS
 Also has statewide
hospital lien statute
 But, limited to lesser of
reasonable charges or
40% of the proceeds
 Lien rights cut off on
date of settlement
(payment)
OHIO
 One of only 9 states
with no statewide lien
statute.
 Also, no hospital liens
by county ordinance
which I am aware of
 Hospitals, like anyone
else, can create a lien
by contract with the
patient/plaintiff

County-by-county Patchwork, to no Liens
FLORIDA
 SCOFL deemed most
counties’ liens
unconstitutional
(Shands v Mercury)
 9 of 67 counties have
valid lien ordinances
(all are different)
 All ordinances limit
liens to “reasonable
charges” but no
equitable percentage.
TEXAS
 Liens limited to
“reasonable” charges.
 Does not attach to WC or
UM/UIM
 Services must be
rendered within 72 hours
of accident
 Supreme Court has
confirmed
reasonableness
requirements (Haygood,
461 F Supp 2d at 1272)
PENNSYLVANIA
 Again, no statute or
ordinances
 Check for contractual
liens (did hospital
include lien language
in admission
contracts?)
 Good case law in PA
on “reasonable value”
of hospital
charges/debt

From an “All-Payer” State, to Dueling Statutes
MARYLAND
 Last “all-payer” state in
the US (hospitals charge
similar rates to all
patients, charges
approved by
Commission)
 “Reasonable Value” very
challenging to argue
 Statewide statute limits
liens to WC rates (which
are limited to
Commission rates – i.e.,
FBC)
WISCONSIN
 State statute limits liens
to “reasonable charges”
after fees and costs
 Only applies to
“Charitable Hospitals”
 Liens to do attach to
Workers Comp or to
Wrongful Death
recoveries
VIRGINIA
 Dueling Statues –
“Private Hospitals”
versus “Commonwealth”
hospitals.
 Private hospital liens are
limited to $2,500 (!) –
debt balance of course
remains
 Commonwealth are
arguably limited to
“reasonable charges,”
but AG’s Office does not
see it that way, and has
the final say (unless
litigated)

REDUCTION STRATEGIES
H o w d o I g e t t h e r e
f r o m h e r e ?

How do you resolve hospital liens now?
Most firms/attorneys engage in simple (blind)
negotiation from full billed charges (FBC).
 Usually framed (by both parties) as a “discount”
from FBC, as if FBC is owed – pro tip, it isn’t!
 Often willing to accept “best discount you can get”
(20% to 30% is common).

What is YOUR firm’s “average reduction?”
I start most of my law firm presentations asking lawyers
what hospital discounts they’re getting. I typically hear…
 “I won’t accept less than 20% off.”
 “30% off is about average, not bad, not great.”
 “40% off is a home run.”
Sound Familiar?
(Not that there’s anything wrong with that!)

HOWEVER – There IS a better approach
SIMPLE: Negotiate “up” from reasonable value (RV), instead of
“down” from full billed charges (FBC).
I call this “Inverting the Argument”
 Define RV as the “cost of care” plus a reasonable profit;
determine RV and negotiate from there
 “Cost of Care” can be derived from the facility’s “Hospital Cost
Report” which is submitted to Medicare annually under oath.
 Experts testify that hospital profits of 40% - 50% above costs,
are “reasonable.”
 Expect reasonable value to be between 20% and 35% of FBC
on most hospital bills. But it can be more, or less.

“INVERTING THE ARGUMENT”
H o w d o t h e r e s u l t s
c o m p a r e ?

Consider this actual case, ultimately handled by Synergy:
Full Billed Charges (FBC) = $95,457.12
If traditional blind negotiations are used (i.e., negotiating “down” from FBC), the “typical”
results would be as follows:
 20% discount = $76,365.70
(cost plus 641% profit!)
 30% discount = $66,819.98
 40% discount = $57,274.27

Now the same case, with the argument “inverted”:
Full Billed Charges (FBC) = $95,457.12
“Reasonable Value” estimated to be approximately $20,000.00
If you argue “up” from reasonable value:
 25% above RV = $25,000
(a 74% discount from FBC!)
 50% above RV = $30,000
 100% above RV = $40,000

What were the actual net results, through Synergy?
Remember, Full Billed Charges (FBC) were $95,457.12…
 Hospital offered a 30% discount before Synergy was engaged (i.e., $66,819.98)
 Synergy settled for 50% above RV (i.e., $30,000)
 Synergy Fee was 15% of the $36,819.98 in additional savings we obtained
 NET additional savings to client was $31,296.98.
“Synergy is Never a Cost, Always a Savings”

What does Synergy argue?
We have all the ammo we need…
 Identification and removal of billing errors and non-billable
charges, then…
 Calculation of the hospital’s “cost of care” for your client’s specific
Itemized Bill
 Addition of a “reasonable profit” of 50% above cost of care.
 Comprehensive LAW LIBRARY of applicable lien statutes,
Ordinances and case law
 Opinion of the “reasonable value” of care rendered, based on
hospital’s own sworn cost data.
SYNERGY LEVELS THE PLAYING FIELD. STOP RELYING ON
THE HOSPITAL’S ILLUSORY “FULL BILLED CHARGES” AS THE
ONLY RELEVANT DATA!
“Never a cost, always a Savings”

What is the “Lien/Debt Dichotomy?”
The “Lien / Debt Dichotomy” connotes the critical
difference between a lien and a debt, which dictates
best practices as well as legal and ethical exposure.
Liens can only be created by statute, or by contract…
they don’t just “exist” by virtue of an injury victim
receiving accident-related medical care.
 Determine whether a lien exists BEFORE engaging
in negotiations, and if so, whether it’s contractual or
statutory.

If there IS a valid lien against the settlement:
 Review language of statute or contract
Estimate Reasonable Value and Calculate “Equitable
Distribution” amount
Negotiate for better/lower of “Equitable Reduction” or
“Reasonable Value.”
(NOTE: Many lien statutes obviate or codify “equitable
distribution” formula – follow the law in your state)

If NO lien (i.e., if the medicals are mere DEBTS):
 Obtain written conformation that provider is NOT
pursuing a “lien” against the settlement.
 Determine if client wants to resolve the “debt” from the
settlement proceeds.
If no, disburse upon demand but get signed
acknowledgment of debt, from client.
If yes, negotiate for reasonable value or equitable
reduction.

Conclusion
Using Synergy’s Hospital Lien Resolution Services,
clients always see a NET pre-suit savings, or there’s no
fee.
Fees are usually passed along to clients as agreed
costs; Lawyers pay nothing for this valuable service.
 PLEASE call or email me with any questions you
might have, anytime! Happy to discuss your issue
and help you determine whether Synergy can add
value.
michaelw@synergysettlements.com
Direct: (786) 332-6855
“Never a cost, always a Savings”

Medicare Secondary Payer Compliance: Addressing Futures, CPs
& MAO Liens
Presented by: Rasa Fumagalli JD,
MSCC, CMSP-F
Director of MSP Compliance

Overview of Medicare Secondary Payer Act
Medicare is a secondary payer when:
“Payment has been made or can reasonably be expected to be
made” under a workmen’s compensation law or plan of the United States or
a State or under an automobile or liability insurance policy or plan
(including a self-insured plan) or under no fault insurance.”(42 U.S.C.§ 1395
y(b)2(a))

Overview of Medicare Secondary Payer Act
Exception to this occurs when:
Payment is not reasonably expected to be made “promptly” or within
120 days of receipt of the claim by the primary payer.
If Medicare makes payment in this situation, the payment is a “conditional
payment” which must be reimbursed to the Medicare Trust Fund.

MSP Act Continued
42 CFR Part 411 Exclusions from Medicare and Limitations on Medicare
Payment
Section 411.20 (a)(2) “ Section 1862 (b)(2)(A)(ii) of the Act precludes
Medicare payment for services to the extent that payment has been made or
can reasonably be expected to be made under any of the following: (i)
Workers’ compensation, (ii) Liability insurance, (iii) No-fault insurance.”

MSP Act Continued
A primary payer’s reimbursement obligation to Medicare may be
demonstrated by:
A judgment,
A payment conditioned upon the recipient’s compromise, waiver or
release (whether or not there is a determination or admission of
liability) of payment for items included in a claim against the primary
payer
or
By other means (42 C.F.R §411.22)

NPRM for LMSAs in Holding Pattern
 NPRM for LMSAs- 12/2018 continued to 3/2021
“This proposed rule would clarify existing Medicare Secondary Payer (MSP)
obligations associated with future medical items, services related to liability insurance
(including self-insurance), no fault insurance, and worker’s compensation settlements,
judgments, awards, or other payments. Specifically, this rule would clarify that an
individual or Medicare beneficiary must satisfy Medicare’s interest with respect to
future medical items and services related to such settlements, judgments, awards, or
other payments. This proposed rule would also remove obsolete regulation.”

Behind the Scenes/ Baltimore Fall 2019
 CMS decision makers in attendance
 Top MSP compliance professionals in attendance
 CMS is ready to go perhaps:
 Voluntary review program
 LMSA/NFMSA used to protect entitlements
 MSA review after settlement reached
 May apply to Beneficiaries and those with a reasonable expectation

LMSA Outlook Predictions
 CMS Guidance from private meetings
 LMSA is a Plaintiff issue
 Defendants and insurance carriers not a target
 CMS has indicated that their enforcement mechanism is the denial of services
 CMS will publish a LMSA Reference Guide
 Minimum workload threshold $250,000-$750,000 for formulaic review
 Settlements exceeding $750,000 would be full commutation with more traditional
evaluation
 Plaintiff’s responsibility

Look Back at CMS Actions
 CMS Guidance Memos mention liability when discussing global
settlements with WC case ( 4/22/2003, 7/11/2005)
 8/24/2009 Section 111 Reporting requirement roll out begins
 5/25/2011 CMS Stalcup Memo
“Medicare’s interests must be protected; however, CMS does not mandate
a specific mechanism to protect those interests. The law does not require a
“set-aside” in any situation. The law requires that the Medicare Trust
Funds be protected from payment for future services whether it is a
Workers’ Compensation or liability case. There is no distinction in the
law.
Set-aside is our method of choice and the agency feels it provides the best
protection for the program and the Medicare beneficiary.”

 9/30/11 CMS Guidance Memo regarding impact of beneficiary’s treating physician’s
certification in liability settlement and need for LMSA
 2013 to 2014 CMS issues and withdraws Notice of Proposed Rulemaking (NPRM)
regarding LMSAs and settlement of future medicals in general liability settlements.
 Section 111 TPOC reporting thresholds for liability settlements continue to decrease
 10/01/2011-03/31/2012 TPOCs >$100,000
 04/01/2012-06/30/2012 TPOCs >$50,000
 07/01/2012-09/30/2012 TPOCs >$25,000
 10/01/2012-09/30/2013 TPOCs>$5,000
 10/01/2013-09/30/2014 TPOCs>$2,000
 10/01/2014-12/31/2016 TPOCs>$1,000
 01/01/2017 to present TPOCs> $750 ( physical trauma, report all others regardless)

July 2016
CMS is considering expanding its voluntary review process to include
Liability MSAs.
December 2016
Request for new Workers’ Comp Review Contractor
February 2017 / June 2017
MM9893: Medicare to reject claims in October 2017
September 2017
WCRC selected by CMS / $60 million contract
December 2018: OIRA’s OMB publishes NPR

Review of Court Actions
 Sterrett v Klebart, 2013 Conn.Super.LEXIS 245 (2013) (CT state case)
 State court approval of a settlement and example of options for addressing
Medicare’s potential interest in future medicals
 No MSA because settlement agreement did not include funds representing compensation
for future medical benefits
 Benoit v Neustrom, 2013 U.S.Dist.LEXIS 55971 (2013)
 Court applied equitable apportionment of funds for future medical in compromise
settlement
 Aranki v Burwell, 151 F.Supp.3d 1038 (2015)
 “ No federal law or CMS regulation requires creation of an MSA in personal injury
settlements to cover potential future medical expenses…. There may be a day when
CMS requires the creation of MSAs in personal injury cases, but that day has not
arrived.”

Addressing Future Medicals in Settlements
Factors to consider:
 Is the Plaintiff a current Medicare beneficiary?
 Does the Plaintiff have a reasonable likelihood of Medicare
entitlement within 30 months of settlement?
 Is the injury one that will require ongoing lifetime injury related
care?
 Does the settlement fund future medical?
 What is the Plaintiff and firms risk tolerance?

Medicare Eligible Plaintiffs
Turning Age 65 SSDI Benefits for 24
months
End stage renal
disease (kidney
replacement)
Lou Gehrig’s Disease
(ALS)
Child is disabled with
a deceased parent or
disabled parent
Social Security Form
= find out what they
have

Plaintiff Attorney Risk
Case Study
 $80K settlement
 Shoulder injury
 Medicare denied care
 Threatened legal malpractice case

Plaintiff Attorney Risk
 “ Your claim has been denied by
Medicare because you may have
funds set aside from your
settlement to pay for your future
medical expenses and
prescription drug treatment
related to your injury.”

Default Options by Defendants
1. Fully-funded Medicare Set-Aside
2. Letter from the treating doctor = no future care
3. Sign a release saying they are not going to bill Medicare

What Are They Missing?
WRONG APPROACH – NO ONE SIZE FITS ALL APPROACH
- Caps on damages
- Procurement costs
- Policy limits
- Liability issues
- Pre-existing conditions

End Goal: MSP Compliance
No MSA
or
Lowest MSA

Alternatives to MSA
1. Plaintiff can use other health insurance to pay for accident related care.
2. Plaintiff can pay out of pocket as they go for treatment.
3. Plaintiff can set up a Medical Savings Account if they qualify.
4. Plaintiff can set up a settlement preservation trust to earmark funds for requisite
healthcare.
5. Plaintiff can purchase a structured settlement to designate for any and all future
medical care.

Protect Plaintiff’s interests
1. Plaintiff eligible for Medicare benefits?
2. Is future accident related care a possibility?
3. Does the case fund future medicals?
C: Consult with experts
A: Advise the client of MSP implications
D: Document the file

Common Disagreements
• LMSA or not?
• How much?
• Demand language
• Release language
• ICD Codes
Solution = MECE

MSP Compliance Program
 Medicare Expert Case Evaluation (MECE): Simplifying Medicare
compliance
 Start early
 Outcome
 MSA waiver
 No MSA Letter
 MSA analysis

Conditional Payment Reimbursement
42 C.F.R. §411.24 Recovery of conditional payments
CMS has a right of action to recover its payments from:
 A primary payer
 A beneficiary
 A provider
 A supplier
 A physician
 An attorney
 A state agency
 A private insurer that has received a primary payment

Conditional Payments
Traditional Medicare Parts A and B CP Process
 Report Case to BCRC
 BCRC Issues Rights & Responsibilities Ltr
 BCRC Identifies Medicare’s interim recovery amount and issues CPL
 Dispute unrelated charges
 Settlement Notice -> BCRC Issues Demand
 Interest starts from date of demand
 Referral to Treasury for collection on day 90 ( after demand letter)

Conditional Payments
 You must pay this demand amount within 60 days or the lien will accrue
interest.
 Request for Appeal or Waiver does not toll interest.
 Interest is due and payable for each full 30-day period the debt remains
unresolved.
 After receiving payment, Medicare will send a letter stating the lien has
been reduced to zero and the case is closed.

Medicare Advantage Plans
 Medicare Part C and D
 Includes all of Part A and B coverage plus more
 Administered by private insurance companies that are paid a fixed
amount each month by Medicare
 Use the MSP Act as their recovery vehicle

The Medicare Secondary Payer Act (MSP) provides for a private cause of
action for DOUBLE DAMAGES when a primary plan fails to reimburse a
secondary plan for conditional payments it has made.
 42 C.F.R. §422.108(f) extends the private cause of action to
Medicare Advantage Plans:
 “MAOs will exercise the same rights to recover from a primary
plan, entity, or individual that the Secretary exercises under the
MSP regulations in subparts B through D of part 411 of this chapter.”

 CMS Memorandum (12/2011) Indicated MAOs have same rights
to recover as Medicare itself.
 In Re Avandia (3rd Cir. 2012)
 Humana Medical Plan v. Western Heritage (11th Cir.
2016): Humanaentitled to double their lien amount against Western
Heritage, damages“SHALL” be double
 But see, 9th (Parra) and 6th (Engstrom) disagree with 11th and 3rd

Failure to Address Conditional Payments
Increase in Department of Justice actions pursuing firms for unpaid
Medicare debts
 June 2018 Philadelphia firm, Rosenbaum & Associates settled with
DOJ
 March 2019 Baltimore firm, Meyers, Rodbell & Rosenbaum settled with
DOJ
 November 2019 Baltimore firm, Saiontz & Kirk settled with DOJ
 January 2020 Philadelphia firm, Simon & Simon settled with DOJ
 August 2020 Harrisburg firm, Angino Law Firm settled with DOJ

Best Practices for Conditional Payments
 Request copies of the Medicare beneficiary’s health insurance cards at
time of case intake
 Request updated information during life of claim
 Review billing statements in medical records
 Review billing statements in pharmacy records
 Begin investigation early
 Confirm beneficiary’s enrollment through MyMedicare.gov.

Tips and Techniques
S – Start early in identifying Medicare beneficiaries
Y – You control the MSP process
N – Never rely on the opposing side’s experts
E – Educate your clients on the potential risks
R – Retain your own MSP experts to protect you and your clients
G – Go on the offensive for any Medicare/Part C liens and potential MSA
issues
Y – You must document your file

Rasa Fumagalli, JD, MSCC, CMSP-F
Rasa Fumagalli, JD,
MSCC, CMSP-F
Director of MSP Compliance
 Rasa Fumagalli, JD, MSCC, CMSP-F is an Illinois-
licensed attorney and the Director of MSP
Compliance Services for Synergy Settlement
Services. Rasa and her team provide plaintiff
attorneys with initial consultations to address any
Medicare Secondary Payer compliance issues that
may arise in connection with their clients’ personal
injury or workers’ compensation cases.
 RasaF@synergysettlements.com
 407-853-3194

Presented by: Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
Regulatory Compliance when Settling Catastrophic claims

ROADMAP
 Ethical Issues at Settlement
 Settlement Planning Options
 Government Benefits: Overview & Planning
 Needs based benefits: SSI/Medicaid
 Qualified Settlement Funds (QSFs)

Failure to
Advise
E t h i c a l I s s u e s @
S e t t l e m e n t

Ethics & Settlement
An obligation to advise the client regarding public assistance preservation?
An obligation to advise client regarding financial settlement options?
ABA Model Rules of Professional Conduct – 1.0(e) “Informed Consent”: “communicated
adequate information and explanation about the material risks of and reasonably available
alternatives to the proposed course of conduct.”
42 U.S.C. Section 1396p (d)(4)
104(a)(2) IRC
Constructive Receipt
MSP - CFR Title 42, Part 411, Subpart B, Section 411.20 (2)
Grillo, French & Saunders Cases
ABA Model Rules of Professional Conduct – 2.1: “Where consultation with a professional
in another field is itself something a competent lawyer would recommend, the lawyer
should make such a recommendation.”

Duties at Settlement:
Laws that impact settlement must be explained
Silence = no informed decision & no opportunity to exercise options
available under the law & damages
Grillo’s message is to employ or consult competent experts in
taxation, trusts and structured settlements prior to settlement
If the lawyer does not address these issues, who will given they
are legal issues?
Threshold?

Settlement Planning
T h e F i n a n c i a l O p t i o n s

Settlement Planning Options
Options: Lump Sum / Structured Settlement / Trust / Combo
Structured Settlements present malpractice traps for a personal
injury attorney:
1. Rated Ages & Annuity Rates-Cost
2. Reducing Default Risk
3. Life Company Ratings
4. Liquidity at death = Commutation
5. Constructive Receipt

Government
Benefits
O V E R V I E W

Those receiving government assistance need special planning to avoid disruption of benefits.
The chart immediately below describes in summary fashion the different types of benefits and
generally their asset sensitivity:
PUBLIC BENEFIT PROGRAM CRITERIA ASSET/INCOME SENSITIVE PLANNING SOLUTION LIEN
NEEDS BASED - INCOME & ASSEST SENSITIVE
SSI (Supplemental Security Income) Disabled, blind or over age 65 AND meet income/asset
test
YES SNT or PSNT NO
Medicaid - Adult
Disabled or over aged AND meet income/asset test
YES SNT or PSNT
YES
(Disability Based) VARIES BY STATE
Medicaid - Child Unique financial criteria per program MAYBE but
N/A
YES
(Family Related-Non Disability) Settlement may not be countable GENERALLY NO CAN BE HMO
ENTITLEMENTS - NOT INCOME OR ASSET SENSITIVE
SSDI (Social Security Disability)
Disabled with sufficient quarters* of work history to be
fully insured
NO N/A NO
Medicare
Disabled or Over Age 65 with sufficient quarters* of
work history to be fully insured
NO MSA should be considered
YES
BCRC or MAO
* Required work quarters is dependent upon when a person becomes disabled. Refer to: https://www.ssa.gov/pubs/EN-05-10029.pdf

Disability Planning: Why plan?
 Preserve public benefits;
 Supplemental lifetime financial support;
 Provide team to protect rights of disabled;
 Put in place a knowledgeable and long-term
management team.

Which clients may need disability planning?
a) Those who are so severely disabled that they
meet the definition of disability for public benefit
programs require planning
b) Even if disabled and receiving public benefits
only certain public benefit programs require
planning:
1) SSI/Medicaid recipients
2) Medicare Beneficiary (MSAs)
3) Dual Eligible

When it comes to disability, R.E.A.D.!
 Review your client’s benefits at intake and throughout the
case.
 Enlist experts early-on to educate you and your client.
 Award letters—Get them!
 Document your file regarding your client’s decision and what
you did to educate them.
 Especially important if they don’t want to keep their benefits!

Medicaid &
SSI
N e e d s B a s e d B e n e f i t s
& P l a n n i n g

SSI/Medicaid
Income and asset sensitive
SSI: Cash Assistance for 65 or Older,
Blind or Disabled
$794/mo. if single
$1,191/mo. if married
No quarters requirement unlike SSDI
Asset cap (2k/3k) & income cap
Medicaid:Basic healthcare coverage for the indigent
One Dollar of SSI = Medicaid (most states)

Why special planning is needed
Client is on Medicaid/SSI + Disabled = Consider SNT
• If assets are in the name of a person with a
disability, then would eliminate eligibility for SSI and
Medicaid
–Counted as income in month of receipt
–Counted as resource first day of next month
• Loss of SSI generally acceptable, however loss of
Medicaid can be devastating

Special Needs Trusts: A Closer Look
Primary Types of SNTs for PI Settlements
– 42 USC 1396p(d)(4)(a) (stand alone SNT) – Disabled under 65
– 42 USC 1396p(d)(4)(c) (Pooled Trust) - Disabled any age
– 3rd Party (fundraiser, insur. proceeds, testamentary, etc.)
Advantages:
– Retains SSI/Medicaid benefits
– Professional trustee
– Can avoid guardianship and annual reports
– Trust pays for everything except “food & shelter”
Disadvantages:
– No unrestricted use
– Sole Benefit
– At death Medicaid must be paid back (except 3rd party)
– Extra layer of complexity
– Trust is irrevocable
Be aware of Deeming and Exempt Assets!

“Pooled Trusts”: Great Solution for SX
A Low-Cost Solution for Any Size Settlement
How are pooled trusts different from “stand alone” SNTs?
 No minimum deposit
 There is no age restriction (stand alone SNT must be under 65)
 Trust beneficiary joins an already established master trust
 Created by completing a “joinder” (major advantage over stand alone SNT)
Advantages of Using a Pooled Trust
Managed by 501(c)(3) Trustee pursuant to federal law
Low annual fee
Accepts “small” trusts
What to look for in evaluating a pooled trust solution:
1. Non-profit trustee that understands PI settlements
2. Services available to beneficiary (True Link / TEAM)
3. Economical fee structure
4. Retained funds policy

Able Accounts
Disabled prior to 26
Can contribute up to 15k yearly max in any state
plan
Can’t put more than 100k if on SSI
May be used to pay for food/shelter
Medicaid Payback
Pooled SNT can fund ABLE acct.
Structured settlement can also fund ABLE acct.

Dual Eligible: Medicare & Medicaid
Eligible for Part A and/or Part B as well as Medicaid (Medicare Primary)
Medicaid Programs - Pay Medicare co-pays, deductibles & Part D costs
Qualified Medicare Beneficiary (QMB) / Special Low-Income Medicare
Beneficiary (SLMB) / Qualified Individual (QI or QWDI)
An MSA is an available resource for Medicaid/SSI
MSA must be in an SNT if “dual eligible”
What is an MSA/SNT? Just an SNT with MSA language included

Creating
Time & Space
C o m p l e x P l a n n i n g @
S e t t l e m e n t & Q S F s

QSFs – Why/When Implement One
Multiple claimants (allocation issues)
Multiple layers of coverage/aggregate settlement
Lien Resolution Issues
Public Benefit Planning Issues
Structured Settlements (client or atty) contemplated
All of the above . . . .

Qualified Settlement Funds (QSF)
 Trust Created Pursuant to Treas. Reg. § 1.468B-1
 “Holding Tank” / “Cash Settlement”
 Mass Tort/Single Plaintiff (one or more claims)
 Time to Plan (Structure/SNT/MSA “out of” QSF)
 Avoids “CR”
Drawback: Requires court approval + additional costs

Setting Up & Administration of a QSF
Settle between plaintiff and defendant for Cash
Execute a cash release
Settlement check will be made out to the QSF
Petition the Court and obtain order creating QSF
Funds remain in Qualified Settlement Fund, without violating constructive receipt
doctrine, until:
Allocation decisions are made
Liens Satisfied
Special Needs Trust or MSA is created
Amount to be structured and the plan is decided upon
QSF Terminates when all funds have been disbursed

Presenter Contact Information
Jason D. Lazarus
Founder | Chief Executive Officer
Jason D. Lazarus, J.D., LL.M., MSCC, CSSC
E-mail: jason@synergysettlements.com
Direct: (407) 279-4801
Toll Free: (877) 242-0022

Learn more today Call us at (877) 242-0222
Or visit synergysettlements.com

Advanced Strategies for Trial Attorneys: Resolve Liens, Ensure Medicare Compliance, & Preserve Government Benefits

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