Medicare Secondary Payer Act PA Superior Court Ruling

Medicare Secondary Payer Act Sways  PA Superior Court Ruling

Pennsylvania State Seal www.statesymbolusa.orgThe Superior Court of Pennsylvania recently upheld a ruling in the Court of Common Pleas which has created somewhat of a stir in the Medicare Compliance industry in recent days. Those familiar with the Medicare Secondary Payer (MSP) Act, however, are not surprised by what the court made plain: MSP Compliance must not be merely an afterthought in tort litigation. MSP issues must be dealt with before the case goes to trial and, indeed, before settlement negotiations begin. The mere suggestion of a potential conditional payment lien is not enough, the court concluded, to hold off enforcement of a verdict. Further, the court found that a defendant cannot pursue lien rights that belong to the United States alone.

In Zaleppa v. Seiwell, defendant Seiwell backed her automobile into a vehicle occupied by plaintiff Zaleppa, causing personal injury. At the time of the accident, Zaleppa was sixty nine years of age and a Medicare beneficiary. A jury awarded Zaleppa $15,000.00, $10,000.00 of which was compensation for physical pain and suffering, mental anguish, etc.

After the verdict, Seiwell argued that the Medicare Secondary Payer Act required Medicare’s interests to be taken into account where conditional payments may have been made. On that basis, Seiwell requested that the court allow her (and her liability carrier) to include the plaintiff, her attorney and Medicare as a payee on the draft in satisfaction of the verdict or to pay the verdict into the court until Medicare notified the court that any lien was satisfied.

The trial court denied the motion, essentially finding that the defendant’s inaction regarding Medicare’s interests did not operate to stave off the enforcement of the verdict. On appeal, the Superior court nicely analyzed the MSP Act in addressing the core question: Can a private entity (Seiwell) assert the rights of the United States government regarding potential Medicare reimbursement?

Court Rules that Obligation to Reimburse was Triggered Before Tort Litigation Established

Seiwell, quite correctly, argued that as the “primary plan” she and her liability carrier were responsible for conditional payments made to Zapella, if any. What Seiwell failed to establish, however, was the existence of a Medicare lien. The court specifically recognized that if a lien existed, MSP required the primary plan to reimburse Medicare. Significantly, the court found that a recovery demand letter, issued by Medicare, triggers the primary plan’s duty to reimburse Medicare yet also acknowledged that payment to the plaintiff triggers reimbursement rights. Despite the fact that liability is established upon payment of a judgment, the mere fact of liability for MSP does not entitle a party to post trial relief until the obligation to reimburse has been triggered.

In its analysis of the MSP, the court found that there is a fundamental difference between Medicare’s right of reimbursement and the obligation of a primary plan. Nothing in the MSP, they reasoned, authorizes a primary plan to assert Medicare’s rights as a method to guard against their own liability. Only the U.S. government is authorized to pursue its own right of reimbursement.

The Pennsylvania court also added its “two cents” to the body of case law on conditional payments. Where Medicare’s interests are raised, the primary plan must show both the existence of a lien by affirmative evidence (a Medicare lien letter) but are not empowered to pursue Medicare’s interests under the private cause of action until they are actually damaged.

PA Court’s Decision Illustrates That Ignorance or Neglect of Medicare’s Interests Carries Consequences

The Pennsylvania decision again illustrates the fact that ignorance or neglect of Medicare’s interests has dire consequences. In the Seiwell case, had the primary plan taken the simple step of requesting and receiving a lien amount from Medicare, the interests of the U.S. government would have been placed at issue and addressed in the verdict phase. Instead of seeking to limit liability by raising Medicare’s interests until after a verdict is entered, parties must be aware that Medicare reimbursement must be addressed in every case. The Seiwell case is yet another example of what is becoming an increasingly clear message: Medicare’s interests must be identified and dealt with as early as possible and to ensure compliance and avoid penalties.

MSP Conditional Payment Obligation: State Courts Have No Power?

U.S. Assistant Attorney Dispels  Incorrect  MSP Conditional Payment Obligation Presumptions

In an open letter to the Western New York Bar, Assistant U. S. Attorney Robert Trusiak addressed his position (and, presumably, the view of the United States) regarding Medicare Secondary Payer (MSP) Compliance and the potential penalties of ignoring Medicare’s interests. (Click here) In what can best be described as a warning, Trusiak dispelled what he terms “incorrect presumptions” regarding the MSP compliance obligation in tort cases. Tort litigants, he observed, routinely assert three erroneous positions in arguing their MSP reimbursement obligations.

Three  Incorrect Presumptions for MSP Compliance Obligation in Tort Cases

  • First, litigants assert that a prayer for relief or a release which does not include a medical component is sufficient to avoid the Medicare reimbursement obligation.
  • Second, it is argued that a state court is empowered to rule on the Medicare reimbursement issue based on an evidentiary hearing.
  • Third, it is claimed that the Centers for Medicare and Medicaid Services (CMS) are obligated to appear at a hearing set to determine Medicare’s interests.

Stating his case succinctly as to each of the above presumptions; Trusiak spoke regarding the omission of a prayer for relief which includes a medical component or a release which allocates for damages other than for medical treatment, he correctly points out that the conditional reimbursement obligation exists without regard to the complaint or the release. He effectively argues regarding the remaining two presumptions that a state court has neither subject matter jurisdiction nor personal jurisdiction over the United States, thus making any ruling a nullity. He is also clear that there is no obligation for CMS to appear in state court to argue what is a clearly federal question.

CMS Refuses to Accept State Court Authority

Mr. Trusiak’s letter provides clear advice to parties involved in tort litigation. The United States (CMS) will not recognize pleadings or releases that are silent with respect to conditional payment obligations. Likewise, CMS refuses to submit to a state court’s authority to adjudicate their federal reimbursement rights.

Gould and Lamb views Mr. Trusiak’s letter as further evidence that the obligations on tort litigants to comply with the MSP Act must be a primary focus of any case.  Gould & Lamb offers Conditional Payment Research and Negotiation Services where we quickly and accurately determine Medicare’s reimbursement interests, resolve those liens and ensure MSP Compliance, bringing finality to a tort case.


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