The Risk Manager, Summer 2010

A recent suit under the MSP reinforces the warning in our Spring 2009 Newsletter that lawyers must be alert to their potential liability for repayment of conditional Medicare payments. In December 2009 the United States filed suit against attorneys, law firms, and insurance companies concerning a $300 million settlement of a PCB contamination suit for failure to repay Medicare for conditional benefits paid to 907 clients (U.S. v. Stricker, et. al., CV-09-PT-2423-E (N.D. Ala. Dec. 1, 2009).

In our 2009 article we covered U.S. v. Harris (2009 WL 891931 N.D.W.Va.), that concerned a lawyer who was required to pay Medicare $11,367.78 plus interest because conditional Medicare payments to his client were not repaid. This article is available on our Web Site at Click on Resources and select The Risk Manager (by year). What follows is an update of risk management suggestions in that article:

Read Harris – This case clearly explains an attorney’s exposure for repayment of a client’s Medicare payments complete with statutory and regulatory citations.

  • Determine at the inception of a personal injury representation whether Medicare benefits are involved. If so, advise the client that any recovery may be reduced because recovered medical expenses for which conditional Medicare payments were received must be reimbursed.
  • Include in the client’s letter of engagement that reimbursement of Medicare medical payments will come from the client’s share of any recovery – not from the lawyer’s fee. In cases of substantial Medicare payments, alert clients that reimbursement of these benefits will significantly reduce the recovery. Get the client’s written consent for you to pay Medicare’s claim from the recovery.
  • Upon receiving an award or settlement for a claim by a client who received Medicare conditional payments, be sure to reserve an adequate amount in your client trust account to cover potential Medicare repayments.
  • If a client disputes reimbursement to Medicare from a recovery received by you, be sure to comply with Kentucky Rule of Professional Conduct 1.15, Safekeeping Property, in resolving the dispute.
  • If the client receives the recovery directly and you have reason to believe he intends to ignore Medicare’s interest, contact the KBA Ethics Hotline for guidance (SCR 3.530). Protect yourself from an allegation that you assisted a client in conduct that you knew was criminal or fraudulent.
  • Ascertain from Medicare how much they are claiming and then attempt to negotiate a reduction. Be sure to conduct the negotiations with Medicare before a case is settled or tried so litigation strategy can be adjusted. A cost-benefit analysis could indicate that so little would be recovered after repaying Medicare that it is not worthwhile to pursue a third party claim. This consideration could be useful in negotiating a reduction in Medicare’s claim.
  • Examine every bill to verify what portion Medicare paid. Be sure that medical expenses not related to the recovery are not included in the Medicare claim.
  • Do not rely on the client to pay Medicare. The safest practice is for the lawyer to obtain written authority from the client to pay Medicare from the recovery before making disbursement to the client.