Whenever an employer reaches a settlement agreement with an employee who has open workers’ compensation claims, the employer should not forget about their potential obligations to protect Medicare’s interest in the settlement proceeds. I’ve written about this issue several times in the past, so for more details, see my posts here: Dealing With Medicare And Medicaid Liens When Settling A Workers’ Compensation Claim; Medicare Set-Aside Facts and Fiction; Medicare Set-Aside Facts and Fiction-Part II.
Generally employers can check whether Medicare has made any payments for conditions allowed in the workers’ compensation claim (which may give Medicare an interest in the settlement proceeds) by checking an online database or by calling Medicare and waiting on hold for a long, long, long time. Recently Medicare Advantage plans have added a wrinkle in the process.
Medicare Part C plans are offered through private insurance companies and approved by Medicare. They are also known as Medicare Advantage or Medicare Health plans. You must be enrolled in Medicare Part A and Part B before enrolling in a Part C plan. Those who choose to use Medicare Advantage choose the plan themselves and sign up directly with the private insurer. 22.6 million people are expected to enroll in a Medicare Advantage Plan (“MAP”) in 2020.
By law, Part C plans must pay for at least the same health care services as Original Medicare. Part C plans also sometimes pay for things that are not covered by Original Medicare, such as vision and dental care. Most, but not all, Medicare Advantage plans also provide some prescription drug coverage. Several U.S. District Courts have held that private insurers offering Part C coverage have the same rights as Medicare to recover conditional payments.
The first such case was decided in 2012 by the United States Court of Appeals for the Third Circuit in Humana Medical Plan and Humana Insurance Company v. GlaxoSmithKline, LLC. The court found that private parties like Humana may bring suit when a primary plan fails to appropriately reimburse any secondary payer.
Since then, dozens of federal courts have ruled similarly, including on August 8, 2016, when the United States Court of Appeals for the Eleventh Circuit published its opinion in Humana Medical Plan Inc. v. Western Heritage Insurance Company, concluding that Medicare Advantage Plans may sue primary payers for double damages under the Medicare Secondary Payer Act.
Medicare Advantage plans have a 3 year statute of limitations to seek reimbursement for claims. Recent case law suggests that the “clock” starts ticking when Medicare is provided with the notice of the settlement. See MSP Recovery Claims, Series LLC v. Farmers Ins. Exch., 2019 U.S. Dist. LEXIS 128995. The court clarified that the three year statute of limitations begins to run when Medicare and not the Medicare Advantage Organization is provided with notice.
The lesson for employers is that if you enter into a settlement with an employee who might become Medicare eligible soon, or which is above a certain amount (see above) and that includes active workers’ compensation claims make sure that you not only double check with Medicare, but confirm with the employee that they are not enrolled in a Medicare Advantage Plan.