Social Security Numbers, Privacy and Medicare Secondary Payer Compliance
Roy Franco
June 19, 2013

We have written on this issue before.  Medicare beneficiary files a personal injury claim and but refuses to divulge his or her Social Security Number to protect their privacy.  Making certain seniors are protected from fraud and identity theft,  ( CLICK HERE FOR VIDEO ) the Department of Health & Human Services promotes through various media outlets the importance to not share this sensitive information.  The tension between the need to protect senior’s privacy and for Medicare to be aware of their settlements, judgments and awards in personal injury and workers’ compensation cases is at a head under the Medicare Secondary Payer electronic reporting law – 42 U.S.C. §1395y(b)(8).  Social Security Numbers (SSN) and Health Identification Numbers (HICN) are the only method that exists today by which the Center for Medicare & Medicare Services (CMS) can match an insurance carriers report of a settlement, judgment or award with a Medicare beneficiary in their system.  CMS is working on a change, but it will take time because of the need to revamp antiquated systems that will no doubt cost money.  SMART last year led the way to remove use of SSN and HICN from Medicare Secondary Payer, but recent introduction by Senator Dick Durbin of S. 612 will go even farther, if passed.

In the interim, Beneficiaries to a workers’ compensation and liability settlements will need to share their SSN or HICN with the insurance carrier.  These carriers are subject to penalties for the failure to report of up to $1,000 per day, and as a consequence are properly incentivized to demand the information, even if it means overturning a settlement.

A recent example of this situation occurred in the matter of In Re:  Asbestos Products Liability Litigation (No. VI) vs. General Electric Co. (2013 U.S. Dist. LEXIS) 76346.  In that case, the U.S. District Court for the Eastern District of Pennsylvania had to wrestle with this SSN issue as it pertains to a plaintiff of a derivative claim for loss of consortium.

The facts of this case are straight forward enough.  Claimant had an asbestos related injury and filed a claim against defendants to recover for her personal injury.  His wife filed for loss of consortium.   A settlement was reached for an undisclosed lump sum, after which defendant sought the SSN of both parties.   The wife refused, claiming she did not receive any medical treatment that would have been provided by Medicare.  Therefore, her position was that defendants were not required to electronically report her settlement to Medicare.  Defendants disagreed and withheld the settlement proceeds resulting in the present Motion to Enforce brought by plaintiff wife.

The Court sided with the defendant.  It analyzed CMS policy, including User Guides on the reporting requirement as well as the statute itself.  It concluded that the language of the law demonstrates the relevant consideration is not whether the plaintiff is entitled to any payment by a defendant for medical benefits, but rather whether the plaintiff is eligible for any benefits under the law.

In reaching its decision, the Court also looked at the query function available to defendant to determine whether any Claimant for personal injury or workers’ compensation benefits is in fact a Medicare beneficiary.  The query function requires a SSN, and at least three of the next four data points (last name, first name, gender and date of birth) match exactly with available Medicare databases before a response is returned.  This finding is helpful for defendants responsible for reporting under MSP, as it is another case in a line of cases, we have previously reported on requiring a SSN early on in any case.  It validates the need for carriers to request this information against a backdrop where privacy is highly guarded.

The MSP requires defendant to report and CMS mandates the use of a SSN or HICN.  The defendant is burdened under the law to identify the Medicare beneficiary and there is no law or regulation which requires the beneficiary to cooperate with the defendant.  Because of the sensitivity of this information and the lack of regulatory guidance for cooperation, the reporting defendant is caught in a catch 22 situation requiring court action.  This will take time, as each jurisdiction would have unique laws for a Court to analyze.  CMS regulation on the topic would help expedite the matter.  Present regulation – 42 C.F.R. §411.23 requires beneficiary cooperation with CMS when it takes action, but is silent on cooperation with a defendant being required to alert CMS to a potential conditional payment situation.  Until an alternative is reached to the SSN and HICN, such a regulation is necessary, otherwise, Parties will continue to spend money fighting these situations in Courts and delaying distribution of settlements.  Such delays cannot be beneficial for anyone involved, including the Medicare Trust Fund, which will go unreimbursed until the issue is settled.

Franco Signor works with Parties at the onset of a claim to broker cooperation that is necessary to avoid unnecessary litigation battles.  This case may not have involved a Medicare beneficiary and perhaps another alternative could have been worked out between the Parties that would have encouraged the distribution of the proceeds, and protect the reporting Party.  We specialize in looking at such issues and arrive at the best solution that mitigates MSP issues for all Parties.  The query process is not reporting under 42 U.S.C. §1395y(b)(8).  It is a tool to help Parties determine Medicare status.    It is not a record that is being tracked, once Medicare beneficiary status has been identified.   CMS will penalize the Party if a settlement, award or judgment or ongoing responsibility for medical is not properly reported.   If those situations never occur, then the Plaintiff wife’s concern that the query would trigger conditional payment claims is not supported.  Conditional payment letters can be secured prior to a settlement, but an injury is needed to start that process.  Present Medicare contractors do not process non-injury claims.  Call us today, and we can help you sort out these issues and avoid costly litigation.

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