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

Trostle v. Medicare Part I

What happens when a personal injury attorney skips out on the Medicare lien resolution process that CMS has set out? Apparently CMS sues the attorney. That’s what happened to a Pennsylvania personal injury law firm, even while they held the total Medicare lien in trust.

 

Here’s the story –

David Trostle brought a personal injury claim against a pharmacy for incorrectly filling his Fosrenal prescription with Lithium Carbonate. Mr. Trostle spent sixty-six days in multiple medical facilities treating for lithium toxicity. Those sixty-six days led to Medicare paying $84,353.00 of medical bills and the entire ordeal led to Mr. Trostle settling for $225,000.00.

Unfortunately, Medicare’s BCRC agent failed to include all $84,353.00 on its various Conditional Payment Letters (“CPLs”) throughout the litigation. In fact, around the time of settlement the most recent CPL was for just $1,212.32. Plaintiff’s attorneys then provided settlement details to the BCRC with an offer to reimburse CMS $1,212.32. Unfortunately, that isn’t quite how Medicare’s process works. As is normal, the BCRC took this settlement information and applied it to the Medicare lien pursuant to 42 CFR 411.37(c). But, the BCRC took its one final chance to review bills. It correctly discovered the lien should be $84,353.00 (before Medicare procurement) and issued a Final Demand for $53,295.14.

The 2019 circuit court opinion seems to indicate that Mr. Trostle’s attorneys held the $53,295.14 in trust pending appeals.

The proper Medicare process would be to appeal first to the BCRC, second a Qualified Independent Contractor (or, “QIC,” usually Maximus Federal Services or C2C Solutions), third to an Administrative Law Judge, and fourth to the Medicare Appeals Council. Only then, as the fifth step (and likely three years later) can a plaintiff file a case in federal court.

Mr. Trostle’s attorneys tried the first appeal to BCRC alleging they had detrimentally relied on the $1,212.32 number and should only have to pay that amount. Regrettably, Mr. Trostle’s attorneys did not file the second appeal to a QIC in time. That appeal was dismissed as late. That rejection provided instructions on how to seek an extension of the late filing for good cause. But, the attorneys instead filed a complaint in federal court. That federal court quickly dismissed the case for lack of Subject Matter Jurisdiction.

 

Common Issues the Attorneys Ran Into –

At this point, Mr. Trostle’s attorneys had already made a few incorrect decisions relating to Medicare’s stringent process. As attorneys, we understand that everything is fungible and there are many gray areas – but that is in the legal process. Medicare’s process is administrative. It is set and it is strict. Follow it or suffer the consequences!

The first issue was that Mr. Trostle’s attorneys attempted to treat the Medicare lien as an equitable device. It is a statutory device with specific rules and a set procedure. First, they likely knew the lien should be something much larger than $1,212.32 so their reliance was either misplaced or disingenuous. The second issue they encountered was that they took a risk in trying to use equitable defenses, like detrimental reliance, where Medicare lien is based in law and not equity.

The third issue set Mr. Trostle down a path on which he could not succeed. His attorneys did not follow the proper Medicare appeal procedure (likely because most attorneys have little experience with this procedure). Their second appeal was not denied, but rather, dismissed as late.

The United States Government did not take well to their next maneuver – the lawsuit against Medicare and its Medicare lien. This opened a whole new can of worms where the government is now trying to negate the automatic reductions of 42 CFR 411.37(c). Read about that in part two of our case study.

 

If you need help with the onerous and stringent Medicare lien resolution process, contact us.

2 Comments

  1. Paul damato on April 19, 2019 at 11:28 am

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