News

January 06, 2009

Dan Anders of our office issues the following warning when the parties ignore the set aside requirements.

In a strong example of Medicare’s right to recover for payments it claims are related to an accidental injury, a federal district court in West Virginia issued a decision on November 13, 2008 finding a plaintiff’s attorney liable for repayment of funds paid by Medicare for medical treatment stemming from that injury.

In the case of USA v. Paul J. Harris, Attorney Harris represented a plaintiff who was allegedly injured by a defective ladder bought at a hardware store.  Medicare paid the plaintiff’s medical bills to the extent of $22,549.67.  The plaintiff sued the retailer who sold him the ladder and the case was settled for $25,000.00.  Following the settlement payment, Attorney Harris forwarded the details of the settlement to Medicare and Medicare calculated that it was owed $10,253.59 out of the $25,000.00 settlement.  After sending a lien notice to Attorney Harris, and after the expiration of 60 days, Medicare started enforcement proceedings against Attorney Harris.

Attorney Harris filed a motion to dismiss on the basis that his only duty was to advise Medicare of the settlement, after which Medicare could not hold him individually liable.  The court disagreed and held that a primary plan, i.e. insurance company, and an attorney, as well as other entities can be held liable for Medicare conditional payments.  The following Medicare regulation was cited:

Recovery from parties that receive primary plan payments.  CMS has a right of action to recover its payments from any entity, including any beneficiary provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment. 42 C.F.R. §411.24(g)

Since Attorney Harris received payment from the primary plan in the form of his fee from the settlement amount, he could also be held individually liable for the lien from Medicare.

Editor’s Note:

This is a stark reminder that Medicare is avoided at your own peril.  What is unclear from the facts in this case is whether or not the attorney had knowledge of the Medicare conditional payments prior to the settlement.  Given the fact that he forwarded the approved contract to Medicare following the settlement payment implies there was some knowledge on the attorney’s part.

We recommend that anytime an individual is eligible for Medicare benefits, that an itemization of conditional payments, if any, should be obtained from Medicare prior to settlement.  Further, the settlement terms should dictate which party is responsible for resolving the lien with Medicare.

USA v. Paul J. Harris, No. 5:08CV102, decided November 13, 2008

Frank J. Wiedner, Editor Wiedner & McAuliffe, Ltd One North Franklin, 19^th Floor Chicago, IL 60606 (312) 855-1105