Trostle v. Centers for Medicare and Medicaid Services: Part II

Trostle v. Medicare: Part II

Previously, we wrote about and analyzed Trostle v. Centers for Medicare and Medicaid Services. Following dismissal for lack of jurisdiction, this Medicare lien litigation continued with a counter-suit by the United States government. Part II of our case study will explore errors made that caused the government to react with a counter suit. (Go back and read Part I, if you haven’t yet.)

 

Medicare Fights Back With a Counter-Suit

The government’s normal course of action for an unpaid Medicare lien is either (a) to garnish Social Security payments or tax refunds; or, (b) send the lien to a private collection organization. Mr. Trostle passed away at some point during the Medicare lien appeal process, so, perhaps that was the reason the government believed it needed to take a different approach to collect the funds.

Its different approach was not only to file suit against Plaintiff’s attorneys, but also, against Mr. Trostle’s Estate, and, the original defendants. The government took this suit a step farther by claiming that it is entitled to the full lien of $84,353.00, plus interest. It claimed that pursuant to 42 CFR 411.37(e), it needs not deduct attorney’s fees and costs where it must file suit to recover the lien.

This counter-suit is interesting because, for starters it exists, which is surprising in its own right following the district court ruling no subject matter jurisdiction. It is equally interesting because it includes two seemingly innocent parties: Mr. Trostle’s widow and the original defendant/insurer who seemingly followed Mandatory Insurer Reporting guidelines to protect itself. This defendant’s plight is precisely the reason why many defendants are starting to ask to pay the lien directly before paying the full settlement. We believe it is a misplaced policy, as tens of thousands of other settlements work out just fine with the plaintiff properly paying Medicare on time. Nonetheless, this one rare event might reverberate amongst the settlement community.

The good news is, the most recent action in this case where Judge James Munley of the Middle District of Pennsylvania ruled that whether the government “must” file suit in this case, is a question of fact. So this case continues.

Complicating matters further, Mr. Trostle’s attorneys – prior to Judge Munley’s decision – indicated they are willing to pay the $53,295.14 Final Demand. This offer to pay adds a whole new layer to the question as to whether the government was forced to file suit to recover.

 

Analysis: How Did We Get Here? What Went Wrong?

So many things went wrong in the underlying case:

1. Trostle’s attorneys seemingly knew that the Medicare lien was too small. At worst, they should have (and perhaps did) prepare for a huge lien increase;
2. Trostle’s attorneys failed to take advantage of the systems Medicare provides. We agree that it is difficult to settle a case where the lien is a moving target. So did Medicare. To resolve this issue, Centers for Medicare and Medicaid Services created the Final Conditional Payment Process a few years ago. Implementing that process allows Medicare to provide a locked lien for settlement;
3. Trostle’s attorneys failed to stay on top of the Medicare lien appeals process, which requires extremely specific timing. Regardless of the merits of their legal argument against the lien – Medicare’s process is laid out specifically and must be followed.
4. Trostle’s attorneys used an aggressive tactic to argue detrimental reliance when they filed in federal court. Not only is the detrimental reliance argument weak, it backfired on them. Throughout the Medicare lien resolution process, the BCRC sends CPLs that state, “Please also be advised that we are still investigating this case file to obtain any other outstanding Medicare conditional payments; therefore, the enclosed listing of current conditional payments is not final.”
5. Trostle’s attorneys did not recognize that interest would run regardless of their appeal. As a result, the $53,295.14 Final Demand is likely now over $78,000.00 (meaning there is nearly $25,000 of interest accrued today); and,
6. Although this is speculative, something caused the US Attorneys to file suit. Perhaps Mr. Trostle’s attorneys postured in their conversations to the point where the government believed it was required to file suit to recoup the funds.

The mistakes that were made by Mr. Trostle’s attorneys are common, but avoidable. The Medicare lien resolution process is complex, but can be successfully maneuvered without extra, costly steps. Read our tips on how to avoid missteps throughout the Medicare lien resolution process in part three of our case study.

If you need help with the onerous and stringent Medicare lien resolution process, call today at 833-466-2774 or click contact us.