Settlement with the U.S. Department of Justice on outstanding conditional Medicare payments is a stark reminder to look before you leap when settling a claim.

On June 18, 2018, the United States Department of Justice (DOJ) issued a press release regarding a settlement involving claims that a personal injury law firm failed to properly reimburse conditional medical payments to Medicare. This press release is a stern warning that Medicare is required, by statute, to seek reimbursement for conditional payments made as a secondary payer — and it will. See 42 U.S.C. Section 1395y (6).

Conditional payments are payments made by Medicare before a beneficiary has obtained settlement, judgement, award or other payment related to a personal injury action, inclusive of a Workers’ Compensation claim. Medicare remains the secondary payer until the settlement proceeds are appropriately exhausted, hence the need to include a Medicare Set-Aside for future medical services. If Medicare does not receive timely reimbursement for the conditional payments, the same statute and corresponding regulations permit the government to recover the conditional payments from the injured person’s attorney and any others who receive the settlement or judgmental proceeds. C. F. R. Section 411.24, for example, authorizes the right to recover payments form a primary plan or any entity, including a beneficiary, provider, supplier, physician, attorney, state agency or private insurer that has received a primary payment.

It appears that, in this case, Medicare had made a number of conditional payments to health care providers to satisfy medical bills of nine of the firm’s clients. Under terms of the settlement, the defendants agreed to pay a lump sum of $28,000 to Medicare to satisfy these outstanding conditional payments. Additionally, the law firm agreed to train and designate employees to insure the firm pays the debts on a timely basis. The Assistant U.S. Attorney, Michael S. Macko, was quoted in the press release, saying that congress enacted these rules to insure timely repayment from responsible parties. Going on to say that they [DOJ] intends to hold attorneys accountable for failing to make good on their obligations.

What is interesting is that, as part of the settlement, the firm was to acknowledge that failure to submit timely repayment of Medicare conditional payments may result in liability under the False Claims Act. This seems to imply that the DOJ considers that all parties involved in an action where conditional payments have been made are well aware of the statutory reimbursement obligations. Violations of the False Claims Act can result in increased damages, attorney’s fees, and fines per each fraudulent claim.

The settlement between the Philadelphia law firm and the DOJ should caution all parties entering into workers’ compensation settlement agreements to ensure that any and all outstanding issues, inclusive of conditional payments, be wrapped up before the ink on the agreement’s signature line is dry. It is incumbent to not only ensure that the claimant’s Medicare enrollment status is determined, but whether conditional payments have been made. If conditional payments have been made, reimbursement to Medicare should be addressed before or as part of, any settlement agreement. (You can see the press release at Westlaw.com, citation 2018 WL 3020310 D.O.J.).

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