The new WCMSA has been released.
CMS: NGHP Responsible Reporting Entities (RREs) that both Med Pay and
Personal Injury Protection (PIP) coverage should be included when reporting the No-Fault Insurance Limit (Field 61 of Claim Input File). As such, NGHP RREs must combine both Med Pay and PIP coverage limits for a policy when they are separate coverages being paid out on claims for the same injured party and incident under a single policy.
Health plans must continue to innovate claim systems and recovery modules, incorporating the OHI and MARx weekly and monthly update files into their claim mining Third Party Liability software.
CMS has issued new regulations regarding Medicare Workers Compensation Set Asides, while these do not as yet apply to Liability settlements, they are informative. See Version 3.1 of the WCMSA Reference Guide has been posted to the Downloads section of the Workers’ Compensation Medicare Set Aside Arrangements page on CMS.gov. Refer to Section 1.1 for a summary of updates.
In 2006 the United States Supreme Court decided Ahlborn v. Arkansas 547 U.S. 268 (2006). There, the Court in interpreting Medicaid’s long standing statutory rights of recovery held that from an unallocated third party settlements, Medicaid was only entitled to recover that portion of an unallocated settlement that represented past medicals. Thus extinguishing Medicaid’s long standing, automatic right to first dollar and full recovery. This ruling has caused an allocation to be required in almost every Medicaid Third party case. Medicaid’s statutory lien now no longer automatically attaches to the entirety of every settlement.
The aftermath of Ahlborn has resulted in a significant drop in Medicaid tort recoveries to the Medicaid system. Plaintiff attorneys instead of being obligated to reimburse Medicaid are now obligated to advocate favorable allocations for their clients. This has caused huge disputes and potential abuses where settlements are made either without recognizing medical losses or where allocations are made which force Medicaid to continue paying claims while large portions of settlements are allocated to other non-economic damages.
The general thought being that since Medicaid as an entitlement program funded by taxpayers, if there was a settlement payable by a liable third party, any settlement recoveries should first reimburse Medicaid, thus lowering the burden on Medicaid and taxpayers.
In the Bipartisan Budget Act of 2013, President Obama amended portions of the States obligations regarding Medical Assistance (42 U.S.C. 1396a) to clarify the pre Ahlborn interpretation of the law that Medicaid should be entitled to a first recovery from any responsible third party and from any and all third party monies available as a result of a liability settlement. The clarifying amendments were supposed to take effect on October 1, 2015 , that effective date was later delayed 2 years until October 1, 2017.
On February 9, 2018 President Trump signed the Balanced Budget Act of 2018 and on page 599 enacted a third postponement until October 1, 2019. ( see Act below)
Hopefully in the next 8 months congress will do the fiscally responsible thing and allow Medicaid to return to its pre Ahlborn 2006 first dollar recovery rights.
The Budget Act provided:
SEC. 53102. THIRD PARTY LIABILITY IN MEDICAID AND
17 (a) MODIFICATION OF THIRD PARTY LIABILITY RULES
18 RELATED TO SPECIAL TREATMENT OF CERTAIN TYPES OF
19 CARE AND PAYMENTS.— …..
(b) DELAY IN EFFECTIVE DATE AND REPEAL OF CER5
TAIN BIPARTISAN BUDGET ACT OF 2013 AMENDMENTS.—
6 (1) REPEAL.—Effective as of September 30,
7 2017, subsection (b) of section 202 of the Bipartisan
8 Budget Act of 2013 (Public Law 113–67; 127 Stat.
9 1177; 42 U.S.C. 1396a note) (including any amend10
ments made by such subsection) is repealed and the
11 provisions amended by such subsection shall be ap12
plied and administered as if such amendments had
13 never been enacted.
14 (2) DELAY IN EFFECTIVE DATE.—Subsection (c)
15 of section 202 of the Bipartisan Budget Act of 2013
16 (Public Law 113–67; 127 Stat. 1177; 42 U.S.C.
17 1396a note) is amended to read as follows:
18 ‘‘(c) EFFECTIVE DATE.—The amendments made by
19 subsection (a) shall take effect on October 1, 2019.’’.
FEHBP Plans Not Subject to State Laws
Coventry Health Care of Missouri, Inc. v. Nevils
April 18, 2017
The U.S. Supreme Court ruled yesterday that Contractual subrogation and reimbursement rights of federal employees’ private health insurance carriers override state laws barring subrogation and reimbursement (Ginsburg, J.) In a unanimous decision, the Court reviewed the Federal statute creating the Federal Employees Health Benefit Program (FEHBP) and held that
5 U. S. C. §8902(a), (d). FEHBA contains an express-preemption provision, §8902(m)(1), which states that the “terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law . . . which relates to health insurance or plans.”
In this case Nevils is a former federal employee who enrolled in and was insured under a FEHBA plan offered by petitioner Coventry Health Care of Missouri.1 Nevils v. Group Health Plan, Inc., 418 S. W. 3d 451, 453 (Mo. 2014) (Nevils I ). When Nevils was injured in an automobile accident, Coventry paid the medical expenses. Nevils sued the driver who caused his injuries and recovered a settlement award. Coventry asserted a lien for $6,592.24 against part of the settlement proceeds to cover medical bills it had paid. Nevils I, 418 S. W. 3d, at 453. Nevils repaid that amount, thereby satisfying the lien. Nevils then filed this class action against Coventry in Missouri state court, alleging that Coventry had unlawfully obtained reimbursement. Nevils premised a claim on Missouri law, which does not permit subrogation or reimbursement in this context, Coventry asserted a lien for $6,592.24 against part of the settlement proceeds to cover medical bills it had paid. Nevils I, 418 S. W. 3d, at 453. Nevils repaid that amount, thereby satisfying the lien. Nevils then filed this class action against Coventry in Missouri state court, alleging that Coventry had unlawfully obtained reimbursement. Coventry countered that §8902(m)(1) makes subrogation and reimbursement clauses in FEHBA contracts enforceable notwithstanding state law. The trial court granted summary judgment in Coventry’s favor, The Missouri Supreme Court reversed. Nevils I, 418 S. W. 3d, at 457. The Court granted certiorari, vacated the Missouri Supreme Court’s judgment, and remanded for further consideration in light of OPM’s recently adopted rule. Coventry Health Care of Mo., Inc. v. Nevils, 576 U. S. ___ (2015). On remand, the Missouri Supreme Court adhered to its earlier decision. Nevils v. Group Health Plan, Inc., 492 S. W. 3d 918, 920, 925 (2016) The Court granted certiorari to resolve conflicting interpretations of §8902(m)(1). 580 U. S. ___ (2016). Compare 492 S. W. 2d, at 925 (majority opinion), with Bell v. Blue Cross & Blue Shield of Okla., 823 F. 3d 1198, 1199 (CA8 2016)
Nevils contended that, if §8902(m)(1) covers subrogation and reimbursement clauses in OPM contracts, then the statute itself would violate the Supremacy Clause by assigning preemptive effect to the terms of a contract, not to the laws of the United States. The Court concluded, however, that the statute, not a contract, strips state law of its force. Without §8902(m)(1), there would be no preemption of state insurance law. FEHBA contract terms have preemptive force only as they “relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits),” §8902(m)(1)—i.e., when the contract terms fall within the statute’s preemptive scope. It is therefore the statute that “ensures that [FEHBA contract] terms will be uniformly enforceable nationwide, notwithstanding any state law relating to health insurance or plans.”
In its analysis the Court referred to the broad preemptive powers of ERISA as an analogy, the substantive difference being that ERISA does preempt State law, but not State insurance laws. Here the Court clearly stated that State Insurance laws in as far as they relate to FEHBP plans are Preempted by Sec. 8902(m)(1).
See the full case at:
Pa highest court clarifies road map for Workers Comp carriers to protect Subrogation claims.
The Honorable Judge Olson has clarified the “Magic words “ by which a Workers Comp Carrier in Pennsylvania can assert a Subrogation claim against a Third Party pursuant to the much litigated Section 319 of the Pa Workers Comp Act. In the Matter of Hartford Insurance Group on behalf of Chunli Chen v. Kamara et al. (2017 Pa. Super LEXIS 84) The Superior court clarified the years old conundrum where Workers Comp Carriers were prohibited from asserting direct Third Party Subrogation claims to protect their interests. This law has not changed, but the court clarified that Workers comp Carriers may assert Third Party Claims “ On behalf of “ their insureds. In an act of deliberate careful drafting Counsel for the Hartford was successful on appeal in having the court distinguish between a Workers Comp carriers attempt to bring an independent subrogation action which was recently again prohibited by the Court in Domtar Paper ( see Liberty Mutual Insurance Co. v. Domtar Paper., 113 A.3d 1230 ( Pa. 2015).
The Hartford carefully drafted its complaint to file” On behalf of Chunli Chen, its insured and by doing so the Court allowed the Complaint to proceed.
Defendant also argued that because the insurer was not actually at the accident scene, it should be prohibited from filing the state required verification as to the facts and circumstances pursuant to which the claim was incurred. The Court held that Pa R.C.P. 1024 which requires a verification to a complaint, was not violated by the signing of a verification by an employee of the Hartford, because “ Hartford is a party to this litigation and janes Young, as a representative of Hartford , properly verified the complaint. “
The court noted that the verification merely required verification “ to the best of my information and belief” this was sufficient to make the verification valid, even if the Hartford representative had no personal first hand knowledge of the facts.
This clarification will now allow Workers Compensation carriers to bring subrogation suits not only their own interests but on behalf of their insureds. And since Section 319 of the Pa Workers Comp act provides the Workers Comp carrier with an absolute lien as to its interests, WC carriers will be pleased to pursue viable cases where the member previously failed to bring an action for whatever reason.
New York Court of Appeals Upholds No-Fault Rule Denying Health Insurer Reimbursement and Equitable Subrogation Rights
Members Left in the Middle
In a well-reasoned yet anti-consumer opinion, the NY Court of Appeals in the matter of Aetna v. Hanover has reconfirmed a position taken by the NYS Insurance Department since 2008 that health insurers do not have legal standing to assert a direct claim of subrogation or reimbursement under the NY automobile no-fault system. The Court went on to further dismiss the possibility that a health insurer could take an assignment of its members claim against the auto insurer notwithstanding health insurance contract language that may assign rights against third parties to the health insurer. Finally, the Court, without regard to over 200 years of equitable subrogation case precedent, summarily dismissed the health insurer’s equitable right to subrogation. The result is that health insurers will be required to deny all auto related claims until a final decision can be made under the NYS no- fault system. This could leave claims unpaid for years and members in the middle.
In the Hanover case, Luz Herrera was injured while operating a vehicle insured by Hanover Insurance Company. At the time of the accident Herrera also had health insurance through plaintiff Aetna Health Plan. Aetna alleged that the bills should have been paid by Hanover and sought reimbursement from Hanover without response. In 2010 Herrera submitted copies of $19,649.10 in bills paid by Aetna to Hanover. Hanover did not respond to Herrera’s demands either. Herrera then demanded arbitration under the NYS no fault statute. The arbitrator denied Herrera’s claim citing that the copies of medical bills paid by Aetna were not “bills” within the no-fault act. Aetna continued to pay an additional $23,525.73 in bills submitted directly by providers. Aetna then commenced an action against Hanover seeking reimbursement. Aetna argued that Hanover breached its contract of insurance with Herrera and that Aetna was the assignee of that right. The NY Supreme Court ruled that Aetna has no standing under NY CCR 65-3.11(a) stating that “there was no authority permitting a health insurer to bring a subrogation action against a no-fault insurer for sums the health insurer was contractually obligated to pay its insured” see http://law.justia.com/cases/new-york/court-of-appeals/2016/97.html
Health insurers, who are obligated to pay promptly upon receipt of a claim, are surely disappointed by the Appeals Court decision. Coverage under NYS no-fault is universally excluded under all health plan contracts. This is in keeping with the universal insurance maxim that specific loss policies (e.g. those that cover a specific type of injury including auto, workers’ compensation, premises liability, black lung) are primary to general accident and health type policies which provide general coverage for all injuries unless otherwise excluded or specifically covered under another primary policy covering the same risk (auto).
Health Insurers would prefer to pay claims when received and then either subrogate or coordinate coverage with other insurers leaving members with the assurance that their medical claims will be covered and treatment uninterrupted. By not allowing insurers to make a claim under 11NYCRR 65-3.11(a), the NYS Court of Appeals has failed to correct the policy of the NYS Insurance Department that leaves members in the middle. The Court confirmed the right of appeal only applies to providers not insurers. The Court also further confused the assignment of claims issue. Members traditionally assign their rights to payment by the auto carrier to the provider upon treatment (so that the provider may bill and be paid directly by the no fault carrier). The Court reasoned that if the member has already assigned the claim to the provider then the member cannot reassign its claim to the health insurer, consequently the health insurer has no standing.
NYS laws and the Court have failed to account for the reality of today’s modern electronic health payment system. Health insurers pay providers and process claims within days of the service using EDI payment processing. Members want treatment, not arguments between their auto and health insurers. Gone are the paper claim submissions and manual reviews still common with auto insurers and workers’ compensation insurers. Providers are very cash flow conscious and simply want paid without regard to which insurer is truly responsible. In the real world, auto and workers’ comp appeals are cumbersome and time consuming. Providers and members have little incentive to file appeals of auto denials when there is now almost universal secondary health insurance available.
NYS health insurers are now left without any way to recoup payments which are the responsibility of an auto insurer. They will be wise to review their claims carefully using updated processing logic and data mining to identify suspect auto cases. The Court has clearly stated there is no way for the health insurer — under law or equity — to be repaid for a claim prematurely paid when payment should have been the responsibility of the auto insurer.
The U.S. Supreme court today in the case of Montanile v. National Elevator ruled that ERISA health Benefit Plans are limited under the laws of Equity to recover only those specific traceable funds available from a settlement . In the case of Montanile, the Defendant settled his personal injury case for $500,000 arising from an automobile accident and the Plan asserted a claim of $121,044. After settlement the Plan and the Plaintiffs attorney were unable to agree upon a settlement of the Medical claims and the Plaintiffs attorney advised the Plan it was going to distribute the balance of the settlement proceeds ( Approx. $240,000) to the member in 14 days if the plan did not object, hearing no objection the attorney distributed. Approximately 6 months later the plan filed suit against the member pursuant to ERISA Sec. 502(a)(3). However by this time much of the funds had been dissipated on non-traceable items and expenses.
The Supreme Court has held that the Plan, notwithstanding having a separate reimbursement agreement signed by the member, is only entitled to recover from traceable assets under Equity and does not have a general lien claim against the member’s general assets. This presents a huge issue for Subrogation recoveries. The requirement that the plan be able to trace the proceeds allows participants to dissipate assets without fear of liability. The Court has reverted to its opinion in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U. S. 204, 217 (2002). which required the strict tracing of assets. The court goes on to cite its more recent decisions in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U. S. 356, 363 (2006) and US Airways, Inc. v. McCutchen, 569 U. S. ___ (2013) as more recent examples of their opinion that ERISA plans only have Equitable rights as defined by ERISA and not Legal rights.
The Court goes on to acknowledge that the Plan could have immediately sued to enforce its equitable claim, but to the extent it did not the Plan has lost its equitable claim to attach non-settlement general assets.
The United States Office of Personnel Management (OPM) has just issued a final rule to amend the Federal Employees Health Benefits (FEHB) Program regulations to reaffirm the exempt nature of the FEHBP plan as not subject to State laws. (see OPM FEHPB conditional payment regs). 5 U.S.C. 8902(m)(1), provides: “The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued there under, which relates to health insurance or plans”
The conditional nature of FEHB Program benefits and benefit payments was again reiterated as was the express requirement that Plans have express language in their contracts. By issuing a final rule in this fashion, OPM is exercising its rule making authority under 5 U.S.C. 8913 to ensure that carriers enjoy the full subrogation and reimbursement rights provided for under their contracts thus overruling any Courts opinions such as Empire Healthchoice Assurance, Inc. v. McVeigh which sought to apply state laws to hinder the administration of FEHBP plans.
The Connecticut Supreme Court in a lengthy and detailed opinion has just ruled In the case of Rathbun et al v, Health Net of the Northeast, Inc. that HealthNet a Managed Medicaid program, (http://www.jud.state.ct.us/external/supapp/Cases/AROcr/CR315/315CR16.pdf)
can be the designated assignee of the State’s Statutory Third Party Recovery rights and that Health Net, thru its agent the Rawlings Company, can recover from Members directly proceeds recovered from third party litigation even if the proceeds were not specifically designated as repayment of Medicals.
The Plaintiffs in this class action argued that not only did Connecticut’s anti-subrogation rules apply to Managed Care Plans, but that without a specific finding as to the amount of Medicals included in the settlement, that Health Net had an Ahlborn problem and would be prohibited from collecting anything. The Ct Supreme Court dismissed each or these arguments and allowed the Medicaid Managed Care Plan to collect directly from the participant.