Medicare does not assert MSP liability insurance-based recovery claims against settlements, judgments, awards, or other payments where the date of incident (DOI) occurred before December 5, 1980. This policy is simple in application for traumatic induced injuries, but has presented challenges for claims involving exposure, ingestion or implantation type issues. The law defines continuous exposure, ingestion or when an implant causes harm, but CMS imposes a different standard for purposes of initiating a MSP recovery claim or requiring MMSEA Section 111 reporting. This alert is intended to further clarify the policy.
The hurdle faced by most involved in exposure, ingestion and implantation claims, from a Medicare perspective, is the process by which these claims develop after the initial complaint is filed. Typically, through discovery and expert testimony, exposure periods applicable to a case are refined; or for implants, exact date of removal is known. Under previous CMS policy, these facts were ignored, and the focus was on the original allegations in the complaint, and whether such harm was part of a release. As most parties used general releases, it was impossible to envision a situation where CMS would not be allowed to seek a recovery or require data reporting.
The previous CMS approach created conflict between reality and the need for parties to comply with the Medicare Secondary Payer Act. For example, in situations where the exposure period was defined by discovery and ruling by the court to occur substantially before December 5, 1980, Medicare would still initiate a recovery. CMS would do so because the original complaint contained an allegation of exposure beyond the December 5, 1980. The actual facts did not matter.
This alert harmonizes CMS policy with the way in which exposure, ingestion and implantation cases are handled by the courts. The importance of the alert is CMS willingness to defer to State Court Orders, so long as it does not contradict governing MSP policy, law or regulation. This is extremely helpful to achieving clarity to such cases.
CMS will not initiate a MSP recovery claim or require MMSEA Section 111 reporting when all of the following criteria is met:
- All exposure or ingestion ended or the implant was removed before December 5, 1980;
- Exposure, ingestion, or an implant on or after December 5, 1980, has not been claimed in the most recently amended operative complaint (or comparable supplemental pleading) and/or specifically released; and
- There is either no release for the exposure, ingestion, or an implant on or after December 5, 1980, or where there is such a release, it is a broad general release (rather than a specific release), which effectively releases exposure or ingestion on or after December 5, 1980. The rule also applies if the broad general release involves an implant.
The allegations of the latest complaint (or comparable pleading) now control. A general release will not by its nature create MSP liability if the allegations of exposure, etc. occur before December 5, 1980. While CMS will generally defer to a state court order amending a complaint, it will not tolerate situations where it has an effect of improperly shifting a burden to Medicare. For example, an order narrowing the exposure period would be allowed, but a determination that certain injuries are not causally related may be ignored by Medicare.
Based on this alert, we believe parties will be more aggressive with pleadings to make it consistent with discovery and expert testimony where it is clear the exposures, etc. occurred before December 5, 1980.
This alert also appears to address cases involving multiple defendants and their MMSEA Section 111 reporting responsibility. Previously, a defendant whose exposure period clearly occurred before December 5, 1980 was not required to report or otherwise be responsible for MSP recovery claims. This alert implies that is no longer the case, and such defendants are subject to the law, if co-defendants fall within the exposure period. For example, if defendant A owned a building with asbestos between 1951 – 1979 and defendant B owned the building thereafter, both are subject to MSP, even though defendant A is outside of the MSP period. This application appears inequitable and will likely be something the Industry seeks further clarification.
Franco Signor continues to evaluate the MSP laws, regulations and policies from CMS. We are a full service MSP compliance provider of MMSEA Section 111 reporting, conditional payment resolution and Medicare Set Asides. Contact us today to discuss your MSP compliance needs.