5-24-2011; Several items of importance to report with regard to Medicare and the swirl of new information…or is it all that new?

Within the last two weeks, Medicare has had their conditional payment process battered by a Federal District Court and a new memo has been released which doesn’t appear to have significant changes and appears to serve more as a refresher to their previously known review guidelines.

Initially, on May 9th a Federal District Court in Arizona struck down two elements of Medicare’s conditional payment recovery process, ruling the procedures do not conform to the requirements of the Medicare Secondary Payer (“MSP”) statute. The case, Haro v. Sebelius (CV 09-134 TUC DCB Fed. D. Az.), was pursued by the Center for Medicare Advocacy to certify a class action and seek declaratory and injunctive relief curbing Medicare’s recovery processes. The Federal Court granted summary judgment to the plaintiffs.

This will have some  impact on two critical elements of current CMS practice:

1)     The decision enjoined Medicare from requiring payment of a conditional payment demand pending a Medicare beneficiary’s request for appeal or waiver of a conditional payment as it was found that the current procedure (collecting interest pre-resolution) exceeds CMS’ authority under the MSP statute.

2)     And probably more significant, the Court enjoined Medicare from seeking direct recovery for conditional payment funds from Plaintiff attorneys and indicated “There is no statutory authority, expressed or implied, to support a direct action against attorneys, except to the extent that they are end-point recipients of settlement proceeds.”

The ultimate impact of the Haro decision pends a likely appeal but for now appears to counter established case law on the MSP statute with the Court’s decision to effectively bar enforcement against attorneys (expect insofar as they hold settlement proceeds) which is in direct conflict of other federal case law. It also appears to have a significant effect on Petitioners and the companies (insurance and employers) as well as TPAs in that any burden to discover and remedy any conditional payment concern falls to them.

In other Medicare news, CMS has released a new policy memorandum dated May 11, 2011 regarding workers’ compensation (WC-MSAs).  CMS doesn’t appear to have made any substantive changes or issue any new policy guidelines but simply appears to reiterate and clarify points related to its WC-MSA process including highlighting that the review thresholds are only work load guidelines and not safe harbors.  This new Memo should be read in conjunction with prior memos to confirm the entire scope of determining and developing MSAs. A copy of the May 11, 2011 memo can be obtained online at  http://www.nqbp.com/docs/uploads/cmsmemomay112011.pdf.

The value of strong and knowledgeable defense counsel is highlighted even more with this ruling and the ongoing release of CMS memos. Please feel free to contact Shawn R. Biery, J.D., M.S.S.C. at sbiery@keefe-law.com with any questions regarding Medicare Set-Aside issues.

5-12-2011; The Appellate Court, Workers’ Compensation Division rules an injured Illinois workers only gets one bite at the permanency apple.

We consider this a solid outcome for the defense side of the practice. In Baumgardner v. Illinois Workers' Compensation Commission,  No. 1-10-0727WC (1st Dist. April 11, 2011), a claimant who suffered a knee injury, followed by two subsequent injuries exacerbating the condition, was entitled to permanency benefits under a determination based upon a single section of the Workers' Compensation Act. The Appellate Court, Workers’ Compensation Division ruled when a claimant sustained two separate and distinct injuries to the same body part and the workers' compensation claims were consolidated for hearing and decision, it was proper for the Commission to consider all of the evidence presented and enter a single award encompassing the full extent of the disability demonstrated at the final hearing.

Claimant was a Cook County employee and evidence from the record indicated he injured his knee on three separate occasions while working for the County. The first injury resulted in knee surgery, followed by an unrestricted release back to work. The second injury occurred at the claimant's home, and resulted in Claimant returning to work with a knee brace. The third injury occurred at work and as a result, Claimant's work was somewhat restricted. The County reassigned Claimant to light duty work and reclassified his position, which reduced hourly earnings. The County paid him wage differential benefits under the assumption he would receive such benefits after an award by the Arbitrator under Section 8(d)(1) of Act.

After surgery in 2002, Claimant filed three Applications for Adjustment of Claim seeking benefits. A consolidated arbitration hearing was conducted on all three applications. The County's proposed order included a provision Claimant was entitled to receive a scheduled permanent partial disability (PPD) award for a 35% loss of use of his right leg. Claimant's proposed order did not contain such a provision, and he filed a motion to “adopt” County's proposed order.

The Arbitrator issued a single decision covering all three consolidated claims. The Arbitrator awarded temporary total disability (TTD) benefits for 53 weeks for the first injury, and 53 additional weeks for the second injury. The Arbitrator additionally determined Claimant was entitled to receive wage differential benefits for the duration of his disability. Finally, the Arbitrator denied claimant's request to adopt the county's proposed PPD order providing an additional 35% LOU of the leg.

The Illinois Workers' Compensation Commission affirmed the Arbitrator’s order TTD benefits for the original injury and modified the order to include 13-2/7 weeks of TTD benefits for the third injury. The Commission also affirmed the grant of wage differential benefits, and rejected the claimant's argument he was also entitled to a scheduled PPD award for the first injury. In reaching its conclusion, the Commission determined the question of the nature and extent of the claimant's permanent disability was to be based on his condition at the time of the hearing and not based on the condition that existed 10 years earlier. The Circuit Court confirmed the Commission's decision at the initial level of appeal.

On appeal to the Appellate Court, Claimant contended he was entitled to the scheduled PPD award for his first injury because the Act does not preclude such an award when wage differential benefits were awarded on a second, aggravating injury to the same body part. Even though the facts of the case were undisputed, the Appellate Court examined whether the Commission's decision, finding Claimant was not entitled to a scheduled PPD award for his first injury, was against the manifest weight of the evidence. We don’t technically agree with their standard of review, as this would appear to be a completely legal issue, allowing de novo analysis by the Court.

The Appellate Court disagreed with Claimant's argument the Commission erred in finding his condition of ill-being resulting from the first injury had to be evaluated at the time of the arbitration hearing. The Court’s members noted the Act clearly contemplates a single determination as to the permanency of a claimant's condition as a result of a work accident.

In addition, the Court’s members asserted our WC Act prohibits a claimant from receiving any other compensation under the Act when granted a scheduled award. Therefore, the Appellate Court held, from a procedural and practical standpoint, where a claimant has sustained two separate and distinct injuries to the same body part and the claims are consolidated for hearing and decision, it is proper for the Commission to consider all of the evidence presented to determine the nature and extent of his permanent disability as of the date of the hearing.

From a purely academic perspective and with respect to the members of this Court, we do not feel this ruling is consistent with the Supreme Court’s ruling in Beelman Trucking. Please understand we consider the Beelman Trucking ruling the equivalent of a legal aberration and this ruling in Baumgardner is a much more accurate statement of what Illinois workers’ compensation law is and should be. In Beelman Trucking, claimant suffered tragic and severe injuries to all his extremities. There is no question or dispute he was a statutory total and permanent disability. On top of the lifetime statutory total and permanent award, he was then given benefits for loss of use of the arms. In Beelman Trucking, for the first and only time in Illinois WC history “double weekly permanency” was awarded where in Baumgardner this reviewing court technically refused to do that based on the facts before it. From an academic perspective, we feel this is the proper outcome but please remember we aren’t the Supreme Court—you have to follow their ruling given the applicable facts.

5-12-2011; UPDATE—Will changes to the Medicare Secondary Payer Statute assist in resolving Medicare issues and finally give us a way to appeal what are sometimes incomprehensible MSA values?

As previously reported, on March 14, 2011, the Strengthening Medicare and Repaying Taxpayers Act of 2011 (SMART Act) (H.R. 1063) was introduced in the U.S. House of Representatives. The SMART Act proposes major amendments to the Medicare Secondary Payer Statute (MSP) including

• Require CMS to respond  to requests  for conditional payment information within set timelines
• Provide MSP appeal rights
• Set MSP threshold exemptions
• Set MSP statute of limitations

Track progress here: http://www.govtrack.us/congress/bill.xpd?bill=h112-1063       

In semi-related news, Sens. Dick Durbin (D, Ill.) and John Cornyn (R, Texas) introduced versions of Medicare transparency bills on April 14. Sens. Charles Grassley (R, Iowa) and Ron Wyden (D, Ore.) introduced a joint transparency bill earlier in April and even though the three bills are different, all would accomplish the same goal of opening billions of claims filed by health professionals every year to public scrutiny. We will continue to keep you advised of updates as they occur and as previously noted, Shawn R. Biery has been granted the Medicare Set-aside Consultant Certified (MSCC) credential.

Please feel free to contact Shawn R. Biery, J.D., M.S.S.C. at sbiery@keefe-law.com with any questions regarding Medicare Set-Aside issues.