• doj takes insurance carriers milestone medicare case

The U.S. Department of Justice recently filed the case of U.S. v. Stricker, et.al, to recover conditional payments under the Medicare Secondary Payer Act (42 USC §1395y(b)(2)) from a liability claims settlement that took place back in 2003. This lawsuit appears to be the first lawsuit by the government against an insurance carrier regarding funds that the carrier paid as part of liability claim settlement. The lawsuit was also filed against the plaintiff’s lawyer in the underlying claim.

The Department of Justice alleges that the insurance carrier was required under 42 CFR §411.25 to notify Medicare of any settlement, award, judgment or other payment that was made when the case was resolved, but did not. The government seeks reimbursement against the insurance carrier under the recovery action section of the Medicare Secondary Payer Act (42 USC §1395y(b)(2)(B)(iii)) as well as double damages for any conditional payments that are owed. According to the complaint, it did not matter that these defendants paid out the settlement proceeds to the plaintiff, because it claims 42 CFR §411.24(i) allows Medicare to seek payment from the liability insurance carrier regardless of whether payment has already been made to the Medicare beneficiary.

This type of lawsuit may cause insurance carriers and self-insureds to be cautious in how they distribute funds when resolving a case. Prior to this lawsuit being filed, it was unclear whether Medicare would file such actions. Now we know the answer. With this lawsuit combined with the new reporting requirements, insurance companies will likely get even more nervous about liability as it relates to Medicare liens.

We will watch this lawsuit with much interest as it will likely determine the way in which future claims will be handled by both insurance carriers and plaintiffs. Stay posted for future updates. And special thanks to Jason Lazarus with Delta Settlements for the heads up and a copy of this case, which you can find attached to this post.