January 17, 2020
In Publix Super Markets, Inc. v. Figareau et. al., Case No. 8:19-cv-545, 2019 WL 6311160 (M.D. Fla. Nov. 25, 2019), the Court permitted an ERISA self-funded health plan’s equitable lien claim to attach to the plaintiff attorney. This case is further evidence that using Synergy Settlement’s Lien Resolution service can be essential to fully resolve asserted liens and ensure that you, your client and your firm are protected.
Publix provides a health benefit plan that is ERISA self-funded (“The Plan”). Figareau and Paul are the parents of a child who sustained a birth injury. The Plan paid $88,846.39 in related medical expenses. The case settled and the “funds are housed in a designated structured settlement account established by [Paul and Figareau].”
Publix initiated an action against Figareau and Paul, as well as their attorney and the attorney’s firm (“Attorney Defendants”) seeking to obtain appropriate equitable relief to enforce the Plan’s reimbursement provisions. Specifically, Publix sought reimbursement of the settlement funds and equitable relief in the form of a constructive trust or equitable lien on the amounts held or controlled by the defendants as a result of the settlement of the underlying case.
Defendants argued numerous points including the fact that the attorney and law firm are not parties to the Plan and therefore the claims against them are not cognizable. The Court found that the claim against the Attorney Defendants are cognizable because they hold the settlement proceeds in trust or otherwise possess the funds. Specifically, a lien or constructive trust on funds in possession of the Attorney Defendants is imposed by the express terms of the Plan. The Court reiterated earlier decisions where it was stated that “the most important consideration is not the identity of the defendant, but rather that the settlement proceeds are still intact, and thus constitute an identifiable res that can be restored to its rightful recipient.”
Another point argued by the defendants is that this action “creates an impermissible conflict of interest between [the Attorney Defendants], the minor child, and Publix,” and that “[i]t would be unethical . . . for [the Attorney Defendants] to represent Publix in a contingency fee contract and protect the interest of Publix over the minor.” The Court found that “the funds held in trust by the Attorney Defendants are, as alleged, subject to a lien by agreement under the Plan. Their possession of the funds does not create a conflict of interest.”
It’s always best for lien resolution to not reach this level. Synergy is your partner to bring these matters to conclusion, limiting your liability and giving you peace of mind.
As 2019 comes to an end, we are providing a complimentary recap of the important topics we have covered including Medicare Compliance, Lien Resolution, Settlement Consulting and Government Benefit Preservation, Structured Settlements, Trust Services, and Tax Deferral of Fees. To learn more about any of these topics, use the links that correspond to the topics under “Thought Leadership Topics”. In addition, you can view webinars on each subject on demand by using the “watch webinar” link.
Thought Leadership Topics:
Liability Medicare Set-Aside (MSA) Case Studies: Eliminate, Reduce & Comply
Do You Want to Retire With a Six-Figure Pension?
As 2018 comes to an end, we are providing a complimentary recap of the important topics we have covered including Medicare Compliance, Lien Resolution, Settlement Consulting and Government Benefit Preservation, Structured Settlements, Trust Services, and Tax Deferral of Fees. To learn more about any of these topics, use the links that correspond to the topics under “Thought Leadership Topics”. In addition, you can view webinars on each subject on demand by using the “watch webinar” link.
Thought Leadership Topics:
Top 50 Most Unreasonable Hospital Liens
By B. Josh Pettingill
Last week, the Centers for Medicare and Medicaid Services (CMS) released a “CMS Manual System” “One-Time Notification” regarding Liability Medicare Set Asides and enforcement of the Medicare Secondary Payer statute (MSP). Starting October 1, 2017, Medicare and their contractors will reject medical claims submitted post-resolution of a liability settlement on the basis those claims “should be paid from a Liability Medicare Set Aside (LMSA)”. The commentary cites the basis for rejection of the claims as enforcement of the MSP statute. It is also important to note that the alert mentions that “Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions”.
Here is a link to the announcement:
At the heart of the announcement is the following text which Synergy has continually indicated was CMS’s position regarding liability settlements and enforcement of the MSP:
“Pursuant to 42 U.S.C. §1395y(b)(2) and §1862(b)(2)(A)(ii) of the Social Security Act, Medicare is precluded from making payment when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.” Medicare does not make claims payment for future medical expenses associated with a settlement, judgment, award, or other payment because payment “has been made” for such items or services through use of LMSA or NFMSA funds. However, Liability and No-Fault MSP claims that do not have a MSA will continue to be processed under current MSP claims processing instructions.”
Enforcement of the MSP as it pertains to future Medicare covered services began back in 2001 when CMS announced in a policy memorandum the requirement to set aside a portion of workers’ compensation settlements allocated to future Medicare covered expenses. Accordingly, the MSP enforcement only took place in the context of workers’ compensation matters. The practical implication of this memorandum was the advent of the Medicare set aside. In 2007, Section 111 Reporting Requirements (part of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA)) added a mechanism for CMS to track Medicare beneficiaries who receive liability, workers’ compensation or no-fault liability settlements, judgements or awards. This Section 111 Reporting Requirement gave CMS further ammunition to track compensable ICD codes related to the liability case.
There has been little to no enforcement of MSP in the context of liability settlements up until now. In most instances, Medicare has continued to process medical claims as if there never were a recovery made for future medical care. On very rare occasions, they would deny medial claims submitted by providers. This latest commentary indicates an imminent change in the near future in regards to enforcement of the MSP. CMS is subtly sending the message that LMSAs are going to be a necessary mechanism in order to avoid denial of medical claims post-resolution. They are also suggesting there will be certain cases where LMSAs will not be necessary; although, this latest alert did not specify these circumstances.
Take Away for Plaintiff Attorneys
This alert is latest evidence to support that CMS is continuing its pursuit in establishing formal guidelines for liability MSAs. CMS started the regulatory process for liability set asides with the Advanced Notice of Proposed Rulemaking (ANPRM) proposal in May 2012. However in October 2014, CMS withdrew its Notice of Proposed Rulemaking (NPRM) for protecting Medicare’s interests with respect to future medicals. Until CMS provides formal guidance on these issues to plaintiff attorneys, Synergy will continue to advocate for techniques that lower the MSA or completely eliminate the MSA obligation. We will also continue to monitor CMS developments on this issue and keep our clients informed to ensure MSP compliance for the Plaintiff community.
Synergy will be releasing a White Paper on the Current Status of Liability MSAs and Best Practices in the very near future. In the interim, here is a link to Synergy’s CEO, Jason Lazarus’s White Paper, Debunking the MSA Mystery. This paper provides a thorough overview on LMSAs and MSP compliance.
 The MSP is a series of statutory provisions enacted in 1981 as part of the Omnibus Reconciliation Act with the goal of reducing federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay. CFR Title 42, Part 411, Subpart B, Section 411.20 (2) provides “[s]ection 1862(b)(2)(A)(ii) of the Act precludes Medicare payments for services to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following” (i) Workers’ compensation; (ii) Liability insurance; (iii) No-fault insurance.
 Parashar B. Patel, Medicare Secondary Payer Statute: Medicare Set-Aside Arrangements, Centers for Medicare and Medicaid Services Memorandum, July 23, 2001
CMS Announcement June 8, 2016 – Consideration for Expansion of Medicare Set-Aside Arrangements (MSA)
“The Centers for Medicare and Medicaid Services (CMS) is considering expanding its voluntary Medicare Set-Aside Arrangements (MSA) amount review process to include the review of proposed liability insurance (including self-insurance) and no-fault insurance MSA amounts. CMS plans to work closely with the stakeholder community to identify how best to implement this potential expansion. CMS will provide future announcements of the proposal and expects to schedule town hall meetings later this year. Please continue to monitor this website for additional updates.
What This Means for Trial Attorneys
This appears to be the latest attempt by CMS to establish some sort of formal guidelines for liability MSAs. CMS started the regulatory process for liability set asides with the Advanced Notice of Proposed Rulemaking (ANPRM) proposal in May 2012. However in October 2014, CMS withdrew its Notice of Proposed Rulemaking (NPRM) for protecting Medicare’s interests with respect to future medicals. With the NPRM, it was anticipated CMS was going to establish formal regulations for liability Medicare set-asides (MSAs). Before the failed attempt to establish regulations, the agency had only issued one formal memorandum back in September 2011.
This recent announcement from CMS follows an article published last month in AAJ’s Trial Magazine. The article indicated that CMS is making liability MSAs a priority in the next 24 months. “It recently became evident that CMS remains undeterred in its quest to develop a fund collection process for so-called ‘future’ medical care. In January, the Department of Health and Human Services issued its budget for the 2017 fiscal year. This budget included a line item indicating that CMS has requested legislative authority to pursue a new policy on the treatment of future medical care that mandates a lump sum, upfront flat fee.”
In 2014, Synergy provided commentary on the ANRPM to CMS. We provided a suggested workable framework for how to address protecting Medicare’s future interests on liability claims. Synergy will continue to work with CMS to make sure any future regulations are appropriate for the stakeholders we represent. If promulgated changes are going to occur with respect to protecting Medicare’s future interests, Synergy will continue to be the voice of reason on behalf of injury victims and plaintiff attorneys.
In Allena Burge Smiley v. Hartford Life and Accident Insurance Company, et. al, No. 15-10056 (11th Cir. 2015), the Eleventh Circuit reiterated what Synergy regularly advises clients to do regarding the statutory document request pursuant to 29 U.S.C. 1024(b)(4) – send it to the right place! The first step in properly defending against an asserted subrogation or reimbursement claim from an ERISA plan is making a request for documents pursuant to 29 U.S.C. 1024(b)(4). On July 17, 2015, the Eleventh Circuit in Allena Burge Smiley v. Hartford Life and Accident Insurance Company, et. al, No. 15-10056 (11th Cir. 2015), reaffirms the rule that unless this statutory request is sent to the “plan administrator” no penalties will be assessed.
A proper 29 U.S.C. 1024(b)(4) request is of the utmost importance for two (2) reasons: to obtain the necessary documents to evaluate the strength of the ERISA plan’s recovery rights, and to exert pressure by means of 29 U.S.C. § 1132 (c) (1) (B) penalties.
29 U.S.C. § 1024(b)(4) – The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.
29 U.S.C. § 1132(c) – Any administrator who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish … within 30 days after such request may … be personally liable … in the amount of up to $100 a day.
29 C.F.R. § 2575.502c-1 – The civil monetary penalty established by … ERISA is hereby increased from $100 a day to $110 a day.
As the Eleventh Circuit found in Smiley, despite arguments that the third-party administrator was a de facto plan administrator, the plan language of the ERISA statute places these responsibilities on the plan administrator alone, not its agents. One bright spot for the plaintiff’s bar is the Court’s affirmation that in order to obtain penalties (where the request was sent to the correct party) there is no need for the plaintiff to demonstrate “prejudice, bad faith, [or] harm” in order to obtain penalties, Byars v. Coca-Cola Co., 517 F. 3d 1256 (11th Cir. 2008); Daughtrey v. Honeywell, Inc. 3 F.3d 1488, 1494 (11th Cir. 1993).
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