Providers Hold Bills to Achieve Higher Pay from Settlements.
Jeff Signor
November 8, 2012

Bogolia v. Danielson, M.D., 2012 Ind. App. Unpub LEXIS 1382 (Court of Appeals, Indiana, 11/1/2012).

Facts & Procedural History:

Plaintiffs were involved in a personal injury lawsuit and one of the doctors, John Danielson, M.D., performed surgery to Bogolia’s hand.  The total medical bills were $9,690.  Dr. Danielson did not submit his bills to Medicare for payment.  Plaintiffs called the Social Security Administration (“SSA”) and they were informed that Dr. Danielson was under contract to accept assignment on all services provided to Medicare patients, but that he had not yet submitted the bill at issue.  Plaintiffs then submitted the bill to the SSA and the SSA made a check payable to Dr. Danielson for the physician services rendered. However, Dr. Danielson refused to accept the check, because the Medicare reimbursements were less than the full amount.

Dr. Danielson filed a Complaint against plaintiffs arguing that plaintiffs were liable for the payments.  Plaintiffs answered the Complaint by filing a counter-claim and a motion to dismiss and/or for judgment on the pleadings, which was denied.  A hearing was held, during which both parties referred to the action as a personal injury matter.

The lower court essentially held that participating physicians in the Medicare system are not required to submit their bills to Medicare if there is another payer who may be responsible.

Issue:  Is Dr. Danielson required to seek compensation solely through Medicare?

Appellate Court Holding:

The Appellate Court affirmed the lower court’s holding based upon the reasoning that if plaintiffs were successful in prosecuting their personal injury action then Medicare would be considered a secondary payer.  “Medicare would be a secondary payer if the medical bills arose as a result of an accident for which a liability insurance company would make a payment.”  Under the Medicare regulations, payment “may not be made . . . with respect to any item or service to the extent that– . . . (ii) payment has been made or can reasonably be expected to be made under a . . . liability policy or plan . . . .” 42 U.S.C.A. § 1395y(b)(2)(A) (emphases added). This is to effectuate “Congress’s intent to make Medicare a secondary payer to liability insurance.” Parkview Hosp., Inc. v. Roese, 750 N.E.2d 384, 390 (Ind. Ct. App. 2001), trans. denied.

Judge Barnes concurred in the holding, but issued a separate decision “to vent his [my] frustration with the legally mandated result… The majority has the law right in my view, much to my chagrin. Thus, I grudgingly concur.”

Franco Signor LLC Commentary:

Most of us in the industry are likely to have the same frustrations articulated by Judge Barnes.  However, the Medicare Trust Fund is in considerable debt, so Medicare actually encourages such withholding of bills.  Doctors and other providers are faced with lower and lower reimbursements by Medicare and they will seek alternatives to obtain higher payments for their medical services.  Medicare requires providers to do exactly what Dr. Danielson did in this matter — to NOT bill Medicare if another primary plan exists.

In most cases we handle on behalf of our clients, providers are still submitting their bills to Medicare for payment.  Providers are given specific claim submission instructions from CMS.  However, we are seeing an increase in matters where doctors and providers are doing exactly what Dr. Danielson did in this case.  If providers are aware of a personal injury lawsuit then they are more and more holding their bills in an attempt to achieve higher reimbursements for their services.  The practical effect of this phenomena is that litigants must dig deeply to ascertain whether and to what extent Medicare has made payments, and, if not, then one solution to the situation is to ensure that a provider is not attempting to assert their own lien on the personal injury proceeds.

It is a best practice to ensure that Medicare is placed on notice of a personal injury claim involving a Medicare beneficiary.  Providers in some jurisdictions — Florida comes to mind — regularly hold their medical bills under a practice known as letters of protection.  Such letters contain a promise to pay for a given plaintiff’s treatment out of the anticipated recovery in a personal injury matter.  The growing list of liens on a given personal injury matter leaves all of us needing to perform a good deal of diligence to know whether all such liens are satisfied.  The truth of the matter is that some medical bills are paid for by Medicare, even claims involving letters of protection.

The takeaway: The practice of providers holding their bills to wait to be paid more out of a personal injury settlement is growing.  Call on us to assist with articulating such exposures in your matters involving Medicare beneficiaries!