Health Law Certificate Program 2016: Health Law ... AV... · Health Law Certificate Program 2016: Health Law Fundamentals Part 2 August 4, 2016 | 4.75 Law and Legal and 1.0 Ethics

Health Law Certificate Program 2016: Health Law Fundamentals Part 2

August 4, 2016 | 4.75 Law and Legal and 1.0 Ethics CLE credits WSBA Activity ID #1014040

Agenda – Day Two 9:00 am – 10:00 am Session 6: Selected Topics in Legal Ethics

Paul Swegle, Newyu, Inc. 10:00 am - 11:00 am Session 7: Health Care Fraud

Michelle Peterson, Michelle Peterson Law, PLLC Kayla Stahman, U.S. Attorney’s Office, Western District of Washington

11:00 a.m. - 11:15am Break 11:15 am – 12:15 pm Session 8: Nursing Home Litigation: Causes of Action

Scott Breneman, Breneman Grube PLLC 12:15 pm - 1:15 pm Lunch on your own 1:15 pm - 2:15 pm Session 9: The Affordable Care Act: A Five Year Review and What’s Next

Bruce F. Howell, Shareholder, Schwabe, Williamson and Wyatt 2:15 pm - 2:30 pm Break 2:30 pm - 3:30 pm Session 10: Emerging Issues in Bioethics

Commissioner Eric Schmidt, Washington State Court of Appeals Division II

3:30pm - 4:15pm Session 11: Getting Paid: Dealing with Medicare and Medicaid Issues in

Litigation Tom Degan, Chemnick Moen Greenstreet

Program Chairperson Erica L. Wolf, Director of Graduate Programs, Seattle University School of Law Erica Wolf is the Director of Graduate Programs for the School of Law and Senior Attorney for the Center for Indian Law & Policy. She is also an Adjunct Professor of Law at the Ronald A. Peterson Law Clinic, where she teaches a clinical course in Indian Trusts & Estates. Professor Wolf is a 2005 graduate of Seattle University School of Law. Professor Wolf has been involved with the School of Law Center for Indian Law & Policy (CILP) for almost ten years-as an adjunct faculty member, Supervising Attorney, Managing Attorney, and most recently, Executive Director. Prior to joining Seattle University School of Law, Professor Wolf worked as an attorney in private practice. Her practice involved litigation, business law, and estate planning. She is a member of the state bars of Washington, California, and Alaska, and is a member of the federal bar in the Western District of Washington.

Faculty Biographies Jonathan Bashford, Lane Powell PC Jonathon Bashford helps companies navigate complex regulations and manage compliance risk, with a focus on long term care including skilled nursing facilities, assisted- and independent-living facilities, and other clients in the health care sector. His areas of expertise include licensing, Medicare and Medicaid certification and payment, state and federal surveys, False Claims Act, fraud and abuse, certificates of need, Americans with Disabilities Act, Fair Housing, HIPAA, corporate practice of medicine, and guardianship. He advises and represents clients before various state and federal agencies; as well as in state and federal courts in complex litigation, class action defense, and appellate practice. Prior to joining Lane Powell, Jon worked as an Assistant Attorney General representing state agencies including the Washington State Aging and Disability Services Administration. He is a graduate of Harvard Law School, where he was student body treasurer and a board member of the Harvard Legal Aid Bureau. He was named a “Washington Rising Star” by Super Lawyers in 2015 and 2016. Tina Boyd, General Counsel & Compliance Officer, Navia Benefit Solutions, Inc. Tina oversees Navia’s legal affairs and advises the management team regarding business and compliance issues. Tina also handles the design, drafting, and administration issues related to welfare benefit and fringe benefit plans. She advises on issues related to HIPAA, COBRA, and ERISA compliance, as well as mergers and acquisitions as they relate to cafeteria plans. Additionally, Tina heads nondiscrimination testing for self-insured, self-funded and cafeteria plans and assists with corrective procedures and plan design changes. Tina received her Bachelor of Science in Cell and Molecular Biology from the University of Washington and her law degree from Seattle University. She is a member of the Washington State Bar Association and serves as Secretary and Activities Chair of the Washington State Corporate Counsel Executive Committee. She also volunteers for the Employers Council on Flexible Compensation (ECFC), a Washington DC based non-profit organization dedicated to the maintenance and expansion of private employee benefit programs on a tax-advantaged basis. Tina serves as a member of ECFC’s conference and legislative committees. Finally, Tina volunteers as a mentor for the Future of the Law Institute, a program for minority and economically disadvantaged high school students interested in learning more about a career in the law. Scott Breneman, Founding Member, Breneman Grube Orehoski, PLLC Scott Breneman is a founding member of the Seattle law firm Breneman Grube Orehoski, PLLC. He has been a trial lawyer for over 25 years, and has litigated and tried hundreds of personal injury, wrongful death and malpractice cases. He has extensive experience with insurance coverage disputes. Scott is “AV®” rated by Martindale-Hubbell, rated 10 of 10 by Avvo, and is an Eagle member of the Washington State Association of Justice (“WSAJ”). He is a contributing author to the WSAJ Nursing Home Litigation Deskbook (Multi-Entity Corporate Defendants). Scott is an Order of the Coif, cum laude graduate of the

University of Wisconsin Law School, where he served as a Note & Comment Editor for the University of Wisconsin Law Review. Emily Cooper, Staff Attorney, Disability Rights Washington Emily Cooper has spent her legal career practicing in areas of public interest focusing on the issues impacting individuals with disabilities. She has been a staff attorney at Disability Rights Washington since 2006 where she has worked on systemic impact litigation, monitoring facilities that serve people with disabilities including community settings, investigating abuse and neglect, and testifying in front of the legislature. Emily is currently Plaintiffs’ Counsel in Trueblood v. DSHS, a class action lawsuit regarding delays in competency services causing individuals with mental illness to suffer prolonged incarceration. Emily has also served on the American Civil Liberties Union (“ACLU”) of Washington’s Board of Directors since 2011 and is the Director of Advocacy for the Washington Attorneys with Disabilities Association (“WADA”). Emily graduated from Seattle University School of Law in 2003 and now teaches there as an adjunct professor. Melanie Curtice, Partner, Stoel Rives LLP Melanie Curtice is a partner in the Seattle office of Stoel Rives LLP and a member of the Employee Benefits section in the firm’s Benefits, Tax and Private Client group where she works with public and private companies and governmental employers on health and welfare benefit plan matters and tax, ERISA, HIPAA and other compliance issues that arise in connection with such arrangements. In December 2011, Melanie was appointed by then Washington Governor Christine Gregoire to the first governing board of the Washington Health Benefits Exchange and served on governing board through 2014. Melanie was selected by Best Lawyers® as Seattle Employee Benefits (ERISA) Law Lawyer of the Year, 2014; is listed in Best Lawyers in America® (Employee Benefits (ERISA) Law), 2012-2015; and was selected as one of “America’s Leading Lawyers for Business” (Washington) by Chambers USA (currently, Labor & Employment: Employee Benefits & Compensation), 2010-2016. Thomas Degan, Chemnick Moen Greenstreet Thomas J. Degan Jr. is an attorney who has successfully litigated a wide variety of cases in federal and state courts, administrative hearings, and before arbitration panels. His wide ranging legal practice has included defending individuals accused of crimes, representing victims of negligence, and defending large corporations accused of negligence. After nearly 15 years of practice, Tom decided to limit his practice to representing victims of medical negligence and joined the law firm of Chemnick Moen Greenstreet. Tom became interested in subrogation early in his career, when he realized just how dramatically subrogation claims could change his clients’ recoveries. As a result, Tom fights to maximizing his clients’ recoveries through creative and determined efforts to reduce or eliminate subrogation claims, because he thinks subrogation is simply a legal device used by insurance carriers to obtain a windfall at the expense of their insureds. Judge Michael Finkle, King County District Court Michael Finkle is a King County District Court Judge, currently assigned to the Bellevue Courthouse. He previously presided over King County District Court’s Regional Mental Health Court and Regional Veterans Court. Judge Finkle chaired the work group that created Regional Veterans Court, and prior to taking the bench he served on the work group that created Seattle Municipal Mental Health Court. Judge Finkle is also an adjunct professor at Seattle University Law School, where he teaches Law, Policy & Mental Health, and is a member of the faculty of the National Judicial College, the Washington State Judicial College, the National Institute for Trial Advocacy, and the Kessler-Eidson Trial Techniques program at Emory University School of Law in Atlanta, Georgia. In addition to serving as a criminal trial judge, Judge Finkle is recognized nationally as an expert in criminal competency and therapeutic justice issues. He has chaired, co-chaired, and served on numerous statewide and regional committees focused on mental health issues within the criminal justice system. Judge Finkle has published nationally, and has presented to national and international audiences, on criminal competency and therapeutic justice. Bruce T. Goto, Riddell Williams P.S.

Bruce Goto is a principal with Riddell Williams and a senior member of the firm’s Corporate Transactions and Finance practice, with a special focus on intellectual property and information technology issues. He prides himself in providing speedy and pragmatic advice for clients, and has been recognized repeatedly in Best Lawyers of America, Chambers, and Washington Super Lawyers, among others. Bruce prepares and negotiates complex contracts covering cloud computing, outsourcing, application and technology development and licensing, information technology, enterprise services, and the manufacture, distribution, and marketing of various products. He develops brand strategies and registers trademarks, and counsels his clients on cyber security issues. Alan Gottlieb, Second Amendment Foundation Alan M. Gottlieb is Founder of the Second Amendment Foundation. He is also the author or co-author of numerous books including Dancing In Blood: Exposing the Gun Lobby to Destroy Your Rights, Politically Correct Guns, The Gun Rights Fact Book, The Gun Grabbers, Things You Can Do to Defend Your Gun Rights, Gun Rights Affirmed and Black and Blue. He is also co-author (with Dave Workman) of Shooting Blanks: The Democrats War Against Guns, America Fights Back: Armed Self-Defense in a Violent Age, These Dogs Don’t Hunt: The Democrats’ War On Guns, Assault on Weapons: The Campaign to Eliminate Your Guns and Shooting Blanks: Facts Don’t Matter to the Gun Control Crowd. Alan has published articles in the San Francisco Examiner, Washington Post, Chicago Tribune and USA Today. Mr. Gottlieb has appeared on over 6,000 TV and radio talk shows, including Lou Dobbs, ABC’s 20/20, The O’Reilly Show, MSNBC’s Hardball with Chris Matthews, CNN’s Crossfire, CBS Morning News, Laura Ingraham Show, BBC, NBC’s Today Show, Good Morning America and China TV. Bruce F. Howell, Shareholder/Healthcare Group Industry Leader, Schwabe Williamson & Wyatt Bruce Howell is one of the pioneers in the practice of health law. From being one of the founders of the Dallas (Texas) Bar Association's Health Law Section to one of the first attorneys to be certified as a Board Certified Health Lawyer by the Texas Board of Legal Specialization. Mr. Howell has experienced a vast array of issues across the health industry spectrum. He focuses his practice on various aspects of health law, including reimbursement, fraud and abuse, managed care issues, physician practice management issues, and the Affordable Care Act of 2010. He also handles cases involving genetics, organ transplant technology, laboratory matters, clinical research and health care insurance coverage. Mr. Howell has represented companies and individuals in health care governmental investigations and counseled clients in structuring transactions to comply with health law regulatory requirements. He has also created compliance programs, and consulted on corporate governance matters and tax enforcement matters in nonprofit tax/health care work. Mr. Howell is also experienced in litigating cases related to health care insurance, ERISA issues, and health law regulatory matters as well as serving as an expert witness in some of these areas. He counsels providers and businesses in complying with the requirements of and finding financial opportunities in connection with the Affordable Care Act of 2010. Mr. Howell serves on the ABA Health Law Section as Chair of the Health Lawyer Editorial Board. Anita Khandelwal, The Defender Association Anita is currently the Policy Director at the King County Department of Public Defense. Previously, she was a senior attorney at the Public Defender Association, a nonprofit law firm in Seattle, where her job duties includde identifying criminal justice policies in need of reform and bringing litigation to address systemic issues facing criminal defendants, such as delays in the provision of competency services (Trueblood). She worked at the Public Defender Association a total of five years and as a federal public defender for the Western District of Washington nearly two years. She’s had other excellent legal experiences since graduating from Yale Law School in 2005, all of which demonstrate her commitment to indigent defense and criminal justice reform. This position, entailing the development of both internal and external policy positions, is a critical one in establishing the department as a regional and national leader in criminal justice reform. Andrea N. LaFazia-Geraghty, M.S.W., M.P.H., Prevention Services Manager, King County, Department of Community and Human Services, Behavioral Health & Recovery Division Andrea has a Master’s degree in Social Work and in Public Health; she has worked in the behavioral health and prevention field for the past 15 years and has a solid understanding of the cultural context of

mental health and substance abuse in diverse populations. She manages substance use prevention and mental health promotion services for King County Behavioral Health & Recovery Division and has served as the project director of multiple SAMHSA discretionary grants. Andrea was previously the director of prevention in the State of Oklahoma and has experience managing the CSAP block grant, and various other discretionary funds and grants. Andrea served as the Oklahoma Liaison for the University of Oklahoma’s Southwest Prevention Center and Center for Substance Abuse Prevention’s Center for the Application of Prevention Technologies, providing technical assistance and training services in prevention to the region. After her husband was injured while serving in Operation Iraqi Freedom, Andrea became an advocate for veterans and spouses, serving as the President of local veteran service organization and leading a county-wide Regional Veteran Initiative, all while being his caregiver. Other experience includes social work, supervision of social workers, juvenile justice/criminal justice system, program evaluation, and research assistant. Karin Mitchell, Johnson, Graffe, Keay, Moniz & Wick, LLP Karin Mitchell was born and raised in Washington State. She graduated from Seattle Pacific University in 1985, with a Bachelor’s of Science in Nursing. After graduation she worked at Fred Hutchinson Cancer Research Center, initially as a Bone Marrow Transplant Nurse and then as the Adult/Pediatric Critical Care Education Specialist. During this time, Ms. Mitchell co-chaired the Medical Standard, Practice Committee and worked in Quality Management. In 1998, Ms. Mitchell accepted a position at Amgen, Inc. Over ten years, Ms. Mitchell held a variety of positions at Amgen on both the West and East Coasts. Her last position was as a Senior Marketing Manager. Ms. Mitchell lectured nationally and internationally and published textbook chapters on a variety of topics in oncology, hematology, immunology and critical care medicine. In 1996, Ms. Mitchell had the privilege of leading the President Eisenhower Citizen Ambassador Delegation to South Africa. In 2008, Ms. Mitchell resigned from Amgen, Inc. to attend law school. Ms. Mitchell graduated from Seattle University School of Law in 2011. Currently, Ms. Mitchell is an Associate Attorney at Johnson, Graffe, Keay, Moniz & Wick, where she has worked since being hired as a Law Clerk in May 2009.Since law school Ms. Mitchell lectures on a variety of issues related to medical malpractice, HIPAA, and medical ethics. Karin is also a national board member for the “National LGBTQ Taskforce” based in D.C., volunteers with Washington NAMI to provide legal review for the various county affiliates, and mentors to law students through QLaw. She is currently serving as the Secretary for the Board of NAMI Washington. David M. Newman, Managing Attorney, The Rainier Law Group PLLC Attorney David M. Newman began practicing law in 1994, following a career as a newspaper reporter and editor in the Idaho Panhandle for Spokane's daily newspaper, The Spokesman-Review. David is the managing attorney for The Rainier Law Group in Bellevue. He has a civil litigation practice, and about 40 percent of his work is related to firearms law. David graduated from the Gonzaga University School of Law, where he was a Thomas More Scholar. Michelle Peterson, Michelle Peterson Law PLLC After practicing for 15 years in both a large law firm and a small boutique litigation firm, Michelle opened her own firm in December 2014, Michelle Peterson Law, PLLC. Michelle continues to focus her practice in commercial litigation, white collar criminal defense and government investigations. Michelle’s experience includes representing businesses and individuals in all aspects of litigation, including white collar criminal prosecutions, qui tam matters, government investigations and commercial disputes. She also focuses her practice on compliance issues and governmental investigations relating to long-term care and senior housing, including false claims, anti-kickbacks, and Medicare and Medicaid reimbursements. Michelle has experience defending clients against False Claims Act allegations and also representing relators in pursuing these claims. John M. Quirk, Senior Counsel, Group Health Cooperative John’s practice focuses on health plan and health coverage legal matters, Medicare and other government health care programs, taxation and tax-exemption issues, and health care organization transactions and compliance. John also leads Group Health’s Regulatory Affairs team and is a member of Group Health’s Legal Department Leadership Team. Prior to Group Health, John was an attorney in the Amazon.com Tax Department, where his work involved advising related to domestic and international

taxation issues, mergers and acquisitions, and general corporate matters. John began his legal career as an associate attorney at Miller Nash LLP (now Miller Nash Graham & Dunn) in Portland, Oregon, where his practice focused on taxation and tax-exemption issues and general corporate matters. John earned his LL.M in Taxation from New York University School of Law, his J.D. from Seattle University School of Law (’05), and a B.B.A. in Accounting from the University of Portland. Eric B. Schmidt, Commissioner, Washington State Court of Appeals Division II Commissioner Eric B. Schmidt was appointed as a court commissioner for Division II of the Court of Appeals, effective January 1, 2002. Prior to his appointment, Commissioner Schmidt was the Senior Health Law Judge for the Washington State Department of Health from 1996 to 2001. Commissioner Schmidt graduated from Seattle University School of Law (formerly University of Puget Sound School of Law) in 1985. He holds a bachelor's degree in kinesiology, a master's degree in philosophy and Ph.D. in philosophy and bioethics from the University of Washington. He's also an adjunct professor of law at Seattle University School of Law, teaching bioethics and the law and medical liability. Jennifer K. Sheffield Jennifer Sheffield focuses her practice on health care and complex commercial litigation matters. She represents health care providers and long term care providers, handling cases that involve allegations of malpractice, negligent hiring and supervision, neglect, wrongful death and personal injury. Her experience includes litigation of commercial disputes in federal and state court. Jennifer was named a “Washington Rising Star” in 2013, 2014 and 2015 by Super Lawyers magazine. Jennifer is a graduate of Seattle University School of law, where she was Editor in Chief of Seattle University Law Review. Amnon Shoenfeld, MSW, Senior Advisor, Many Minds Collaborative Amnon received his Master of Social Work degree from the University of Washington in 1979. He worked in community mental health in King County for over 40 years, as a counselor at Seattle Mental Health Institute, as a Designated Mental Health Professional doing crisis outreach and involuntary commitments, as a supervisor and coordinator for King County Crisis and Commitment Services, and as the Director of the Mental Health, Chemical Abuse and Dependency Services Division where he was responsible for publicly funded mental health and substance abuse prevention and treatment services in King County from 2002 until his retirement in 2014. Amnon led the development of the Mental Illness and Drug Dependency Plan, which is funded by a 1/10th of one percent sales tax passed by the King County Council in 2007. He was honored with the Distinguished Alumnus Award from the School of Social Work in 2014. Gavin Skok, Riddell Williams P.S. Gavin Skok is Chair of Riddell Williams' Litigation Group and a member of the firm's Privacy and Data Security Group. He is a commercial litigator who represents regional and national companies in state and federal courts and arbitrations, with an emphasis on class action defense, data security litigation, and unique or challenging commercial disputes. He is also a regular author and speaker at CLEs and inhouse client trainings regarding privacy, data security, class actions and attorney-client privilege issues. Prior to joining Riddell Williams, Gavin was a federal judicial law clerk to United States District Court Judge Robert H. Whaley. Kayla Stahman, Assistant US Attorney, Western District of Washington Kayla Stahman is an Assistant United States Attorney in Seattle who focuses her practice on health care fraud cases. Prior to serving as an AUSA, Kayla was an Associate in the Securities Regulatory and Enforcement Group at Wilmer Cutler Pickering (now Wilmer Hale) in Washington D.C. Kayla is a graduate of Stanford Law School and Emory University. Cameron Stout, Wiand Guerra King Cameron Stout is a certified mediator with a Northern California-based mediation and law practice centered in Silicon Valley. He focuses on complex commercial and business litigation, securities matters, as well employment cases, and estate and elder abuse disputes. He is on the mediation and arbitration panels of certain San Francisco Bay Area Superior Courts, and the Equal Employment Opportunity Commission. Cameron’s expertise in the field of mediation stems from his thirty years as a nationally-

recognized securities litigator. In addition to financial service arbitrations, broker-dealer litigation, and regulatory investigative and enforcement actions, Cameron also has significant experience in employment litigation and investigative consulting, which includes the prosecution and defense of trade secret injunctive actions. Cameron has also represented financial service companies in complex commercial disputes involving UCC issues such as check fraud and forgery, and third-party instruments. Cameron has training in family law mediation and disputes. After graduating from Princeton University in 1980 with a B.A. in American History, he obtained his J.D. with honors from the University of San Francisco School of Law. He clerked for San Francisco Superior Court Judge Stuart Pollak. From 1985 through 1988, Cameron specialized in insurance coverage and defense, and claimant securities litigation and arbitration. Cameron joined Keesal Young & Logan in late 1988 where he practiced until 2012 when he joined Holland and Knight ‘s San Francisco litigation partnership. Cameron is admitted to practice in all of the state courts of California, the United States District Courts for the Northern and Central Districts of California, and the Ninth Circuit Court of Appeals. Cameron is not admitted to practice in Florida. Cameron has an AV Preeminent Peer rating from Martindale-Hubbell, and has been named a California Super Lawyer in the years 2010-2012. Cameron speaks before lawyer and client groups, and conducts attorney training and coaching. Shata L. Stucky, Riddell Williams, P.S. Shata L. Stucky is an attorney at Riddell Williams P.S., where she focuses her practice on commercial litigation, insurance coverage, and privacy and data security issues. She assists clients with the development of privacy policies and terms of use, advises clients on privacy statutes and regulations, helps companies respond to data breaches, and has defended major corporations in nationwide class actions alleging breach of data privacy obligations. Shata has earned the Certified Information Privacy Professional/United States (CIPP/US) credential through the International Association of Privacy Professionals (IAPP). Prior to joining Riddell Williams, Shata clerked for the Honorable Harriet Lansing (ret.) of the Minnesota Court of Appeals. Paul A. Swegle, General Counsel, Observa, Inc Paul Swegle is. and Newyu, Inc. and he serves as Acting General Counsel to Payment Gear, Inc. He is the Chair of the Corporate Counsel Section of the WSBA and serves on the WSBA’s Securities Law Committee. Paul is also a member of the Board of Advisors for Seattle University School of Law’s new LL.M. in Innovation and Technology Law Degree Program. Paul has worked on financings and M&A deals totaling more than $11 billion. He is a former SEC Enforcement and Corporation Finance attorney and served two appointments as Special Assistant United States Attorney. Paul currently serves on the Board of the Alliance for Pioneer Square and also Co-Chairs the annual Cystic Fibrosis StairClimb in Seattle.

Health Care Law and the Emerging Law of Mental Health

Session 6 ‐ Selected Topics in Health Law Ethics

1

Identifying the Client,Protecting Confidentiality, and Managing Multijurisdictional

Practice Issues

Paul Swegle

August 4, 2016

Identifying the Client

• Company

• Affiliates

• Subsidiaries

• Other stakeholders– Officers, directors

– Owners



2


• The existence of an attorney‐client relationship “turns largely on the client’s subjective belief that it exists”– In re McGlothlen, 99 Wn.2d 515, 522, 663 P.2d 1330 (1983)

• Subjective belief does not control unless it is reasonably formed based on the circumstances, including the attorney’s words or actions– Bohn v. Cody, 119 Wn.2d 357, 363, 832 P.2d 71 (1992)


• Healthcare Organizations. Need for vigilance heighted by:– Organizational complexity/affiliate relationships

– Ever‐changing regulatory mandates

– Trends toward greater integration and transparency

• The Organizational Client and its “Constituents”. RPC 1.13(a) states the following overarching principle: A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

• Role Clarification. The above principle is not always well understood by others. • Rule 1.13(f) ‐ In dealing with an organization's directors, officers, employees, members,

shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.

• Dual Representation. Carries special risks, both for the lawyer and the clients. Requires strong alignment of interests, such as between a parent company and its wholly‐owned subsidiaries.



3

Identifying the Client:Potential Issues

• Conflicts of Interest ‐Where counsel has mistakenly allowed a colleague, affiliate or other third party to believe that counsel is actually their/its attorney too, the attorney may find it impossible to fulfill his or her duties to the real client under the conflicts rules because of the “pre‐existing relationship” that has developed.

• Malpractice Liability – Failure to adequately represent the self‐declared client.

• Confidentiality Issues – Violation of RPC 1.6, loss or Attorney‐Client Privilege.

Identifying the ClientHypotheticals

• Fellow employee Beth asks you, in‐house counsel, for information about her rights under a company stock plan.

• A dominant shareholder calls to ask for your opinion regarding the tax consequences of a previous restructuring transaction.

• The Chair of the Audit Committee calls to discuss a specific internal audit report with you.



4

Protecting Confidentiality

• Duty to Protect. Comment 2 to Rule 1.13 ‐ the in‐house lawyer has a duty to protect the client’s confidences – to not divulge “information relating to the representation” unless the client gives informed consent or the disclosure is “impliedly authorized to carry out the representation.”

• Case‐by‐Case. For in‐house counsel, “the representation” is not a single project or issue – it involves numerous separate and distinct projects and issues. – Use professional judgment to determine which employees are

appropriate recipients of any “information relating to the representation.”

– Carefully manage written and oral communications.

Protecting ConfidentialityHypotheticals

• Andrew, a highly regarded Project Manager, stops you in the hallway to ask how the acquisition of XYZ Hospital is going.

• Marsha, the CFO, stops you in the hall to ask how a certain internal investigation (not involving her) is going.

• The CEO knows you have been working with the board’s compensation committee on her new employment agreement and calls you in to ask how it’s looking.

• You’re GC of a large HMO and you are invited to speak at a CLE on how your organization is responding to certain new regulatory mandates.



5

Multijurisdictional Practice

• RPC 5.5(a) ‐ A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.

– It’s a violation to violate any jurisdiction’s licensing requirements, not just WA’s.

– Any work in other jurisdictions requires a similar analysis.

Multijurisdictional Practice

• RPC 5.5(b) ‐ A lawyer who is not admitted to practice in this jurisdiction shall not:

– (1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or

– (2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.



6

Temporary Practice

• RPC 5.5(c) ‐ A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that:

(1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter;(2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized; (3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.

• RPC 5.5 (d) ‐ A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services in this jurisdiction that:

(1) are provided to the lawyer’s employer or its organizational affiliates and are (i) provided on a temporary basis and (ii) not services for which the forum requires pro hac vice admission; …

Non‐Temporary Alternatives• Two non‐temporary alternatives in WA:

– APR 3(c) ‐ Admission by Motion as a fully licensed attorney for under APR 3(c) if the attorney has practiced 3 out of last 5 years.

» APR 3(c) ‐ two primary hurdles: (1) active legal experience for 3 out of the last 5 years; and (2) passing the Washington Law Component (WLC) test.

– APR 8(f) ‐ “Limited house counsel license.”

» APR 8(f) ‐ Attorneys admitted as “house counsel” under APR 8(f) are strictly limited to providing advice to their employer‐client and cannot appear in court, but still must abide by the same MCLE requirements and license fees as fully licensed members.

• Oregon – Attorney Admission Rule 16.05:– Admission of House Counsel – proof bar passage, entity‐employer affidavit, OR Bar

investigation into character and fitness, and pass Professional Responsibility Exam.

– Business cards, letterhead and directory listings must identify the attorney's employer and that admitted to practice in Oregon only as house counsel or the equivalent;

– Admission suspended if employment terminates



7

Multi‐jurisdictional Practice Hypotheticals

• Lawyer joins Washington‐based ABC HMO as in‐house counsel

• Lawyer is licensed to practice in California• Lawyer’s office will be located in Washington• XYZ Hospital is ABC’s wholly owned subsidiary, located in Oregon

• Lawyer will spend 2/3 of her work time in Washington, at ABC’s offices

• Lawyer will spend 1/3 of her work time in Oregon, at XYZ’s offices

Multi‐jurisdictional Practice Hypotheticals

• Manager asks Lawyer to draft non‐compete agreements for new ABC HMO’s employees (WA).

• Manager asks Lawyer to draft cost‐sharing agreement between ABC HMO and XYZ Hospital.

• Manager asks Lawyer to review and advise about his employment agreement, which is up for renewal.

• Manager asks Lawyer to travel to Idaho to lead due diligence for potential hospital acquisition.

• Manager asks Lawyer to review a contract governed by Delaware law.



8

Excerpts from Comments

• “Other than as authorized by law or this Rule, a lawyer who is not admitted to practice generally in this jurisdiction violates paragraph (b) if the lawyer establishes an office or other systematic and continuous presence in this jurisdiction for the practice of law.” RPC 5.5 cmt. 4

• “Presence may be systematic and continuous even if the lawyer is not physically present here. Such a lawyer must not hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.” RPC 5.5 cmt 4

• “In Washington, paragraph (d)(1) applies to lawyers who are providing the services on a temporary basis only. If an employed lawyer establishes an office or other systematic presence in this jurisdiction for the purpose of rendering legal services to the employer, the lawyer must seek general admission through APR 3 or house counsel admission under APR 8(f).” RPC 5.5 cmt. 17

Discussion


Session 7: Health Care Fraud

1

Federal Prosecution of Health Care Fraud

Kayla Stahman, AUSA

U.S. Attorney’s Office

700 Stewart Street, Suite 5200

Seattle, Washington 98101

(206) 553-4319

Views expressed in these slides and in the accompanying presentation are those of the author/speaker and do not necessarily reflect the views of the Department of Justice, the United States Attorney’s Office, or any other government agency or department.

Michelle Peterson

Michelle Peterson Law, PLLC

1420 Fifth Avenue, Suite 2200

Seattle, Washington 98101

(206) 224-7618

Sources of Cases

Offices of Inspectors General

FBI

Insurance Companies

Medicare Program Integrity Contractor

Qui Tam Relators

Altruistic Whistleblowers/Hotline Complaints

Patients

Disgruntled Employees

Ex-Spouses

2



2

Frequently Used Criminal Statutes:

Health Care Fraud – 18 USC § 1347 (public or private health care benefits programs)

False, Fictitious, Fraudulent claims – 18 USC § 287

Conspiracy to Defraud the United States – 18 USC § 371

Theft of Public Money – 18 USC § 641

Conspiracy to Defraud the United States with Respect to False Claims – 18 USC § 286

False Statements – 18 USC § 1001

False Statements Relating to Health Care Matters – 18 USC §1035

Wire Fraud – 18 USC § 1343

Mail Fraud – 18 USC § 1341

Criminal Prosecution of Health Care Fraud

3

Criminal Investigative Tools

Search Warrant: Issued upon finding of probable cause by judicial officer(s) that federal criminal violation has occurred. Fruits of search can be shared with civil side.

Grand Jury Subpoena: Production/testimony cannot be shared with civil side.

HIPAA Subpoena: DOJ administrative subpoena issued in connection with open criminal investigation. Production canbe shared with civil side. Testimony cannot be compelled.

4



3

Civil Health Care Prosecutions

Civil Remedies:

False Claims Act, 31 USC § 3729

Treble damages and $5,500 - $11,000 civil penalties per claim

Qui Tam Action, 31 USC § 3730

Common Law Claims: Breach of Contract; Unjust Enrichment; Payment by Mistake; Fraud

5

Elements of False Claims Act (“FCA”) Violation, 31 U.S.C. § 3729

Claim for payment

Falsity

Materiality

“Knowledge”

6



4

Elements of False Claims Act (“FCA”) Violation, 31 U.S.C. § 3729

(a)(1). FCA imposes liability on any person who:

A. knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval

B. knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim

C. conspires to commit a violation of the statute

7

Elements of False Claims Act (“FCA”) Violation, 31 U.S.C. § 3729 (continued)

G. knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government

8



5


Materiality: Statement must be material to Medicare’s payment decision:

“[A statement] having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b)(4)

9


(b)(1) “Knowingly” –

(A)(i) Actual knowledge that a claim for payment or record/statement used to get claim paid is false

(ii) Deliberate ignorance of the truth or falsity of a claim or record/statement

(iii) Reckless disregard of the truth or falsity of a claim or record/statement

(B) No specific intent to defraud is required

10



6


(b)(2) “Claim” -- any request or demand for money or property:

(A)(i) Presented to an officer, employee or agent of the United States, or

(ii) Made to a contractor, grantee, or other recipient if the money or property is to be spent or used on the government’s behalf or to advance a government program or interest, and if the United States

(3) “Obligation” -- an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment

11


Liability: Civil penalty between $5,500 and $11,000 (adjusted for inflation), plus 3 times the amount of damages sustained by the government. See 31 U.S.C. 3729(a)(1)(G)

Burden of Proof: Preponderance of the Evidence. See 31 U.S.C. § 3731(d)

Statute of Limitations: 6 years from the date of the violation or not more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date of the violation. See 31 U.S.C. §3731(b)

12



7

ACA’s Changes to the FCA

Incorporate AKA: Establishes that a violation of the Anti-Kickback Statute (“AKS”) can be the basis for an FCA violation.

Knowledge and Intent: Changes intent-and-knowledge requirements under AKS. Now, a “person need not have actual knowledge or specific intent to commit a violation of this section”

Hanlester Defense: Affects Hanlester defense, interpreting AKS to require proof defendant (1) had specific knowledge of the law, and (2) had specific intent to disobey the law. Hanlester Network v. Shalala, 51 F.3d 1390 (9th Cir. 1995).

13

ACA’s Changes to the FCA

Overpayments: Creates Per Se FCA Violation for Failure to Report and Return Overpayments:

ACA provides a 60-day deadline for reporting and returning overpayments.

Deadline is the later of:

(A) the date which is 60 days after the date on which the overpayment was identified; or

(B) the date any corresponding cost report is due, if applicable.

Effective for overpayments “identified” as of March 23, 2010.

14



8

Qui Tam Actions

Typical Relators:

Disgruntled/Concerned Employees (salesmen, compliance officers, QA personnel)

Ex-Employees

Competitors

Consultants

Ex-Spouses/Significant Others of Corporate Insiders

Patients

15

Qui Tam Actions

Procedural Posture:

Action filed under seal.

Statutorily-mandated 60-day investigation with extensions for good cause.

Government required to elect intervention/non-intervention.

16



9

Qui Tam Actions

Relators:

Relator’s share = 15-25% or 25-30%.

Relator who “planned and initiated.”

Relator may object to government settlement.

3730(h): Whistleblower protection provision.

17

Civil Investigative Tools

OIG Subpoena: Administrative subpoena issued by investigative agency (HHS-OIG). Documents only. Production may be shared with criminal side.

Civil Investigative Demands: Authority to issue recently delegated to United States Attorneys. Testimony and documents.

18



10

Importance of Intervention

The Government intervenes in roughly 30% of qui tam cases filed.

Rate has stayed roughly consistent since 1986

In intervened cases, there is a “success” rate (settlement or verdict) of roughly 90%

In non-intervened cases, the “success” rate is inversed or roughly 10%

19

“Public Disclosure Bar”

“Parasitic” lawsuits – i.e., lawsuits based upon criminal indictments or other information already known to the government.

Affordable Care Act recently amended the FCA, liberalizing the showing Relators must make when the information upon which the allegations in their qui tam lawsuits are based has been “publicly disclosed.”

A Relator must have either

(1) voluntarily provided the information to the government prior to the public disclosure or

(2) have knowledge that is “independent of and materially adds to” the publicly disclosed allegations.

20



11

Administrative Remedies

Civil Monetary Penalties Law

Exclusion Proceedings

Suspension Proceedings

Corporate Integrity Agreement – typically imposed in conjunction with FCA settlement

Annual independent audit with prescribed error rate (5%)

Annual reporting requirement

21

FY2015 False Claims Act Statistics and Recoveries

$3.5 billion in FCA settlement and judgments

$1.9 billion resulted from health care fraud matters (Medicare, Medicaid, Tricare, VA, Federal Employee Health Benefits Program)

Approximately $1.83 billion of FY2013 recoveries associated with qui tam actions

Total FCA recoveries since FCA substantially amended in 2009 = $26.4 billion, $16.5 billion of that related to health care matters.

22



12

USAO/DOJ Health Care Fraud Enforcement Priorities

Pharmaceutical Companies: Off-Label Promotion, Kickbacks, Pricing to Federal Customers

Labs (Genetic Testing/Urine Testing): Physician Kickbacks and Tests Never Performed

Individual Providers: Pain Management Practices, Upcoding, Medical Necessity, Services Not Rendered, Kickbacks

Hospitals: Upcoding DRGs, Medical Necessity (in-patient vs. out-patient procedures, etc.), Kickbacks

Nursing Homes: Overutilization of Services, Medical Necessity/Ability-to-Benefit, Quality of Care Nursing Home Task Force

Physical, Occupational and/or Speech Therapy: Overutilization, Missing Prescriptions, Use of Timed Codes vs. “Per Encounter” Codes

23

Frequently Seen Medicaid Issues

Home Health Care Services not rendered, medically unnecessary services, provider not

trained/qualified

Assisted Living Facilities/Group Homes Services not rendered or deficient care, worthless services,

untrained/unlicensed providers

Skilled Nursing Inadequate care, medically unnecessary services

Occupational/Physical/Speech Therapy Over-utilization, patient lacks inability to benefit

Psychological Counseling Over-utilization, patient lacks ability to benefit

Pain Management Over-utilization, upcoding

24



13

Characteristics of a Good Case

Objective evidence of wrongdoing

Widespread/persistent wrongdoing

Actual/potential risk of patient harm

Significant monetary loss

Readily ascertainable damages

Relatively straightforward scheme

Blatant/flagrant nature of conduct

Clear and reasonable payer prohibition

If medical necessity is an issue, limited potential for battle of experts

Financial means of defendant → Individual v. Entity

Availability of claims data/medical records

25

Case Studies

Oncology: Dr. Fata

Unnecessary Testing: Millennium Lab

Nursing Home Failure of Care: Houser Nursing Homes

26


Session 8: Nursing Home Litigation: Causes of Action

1

Health Care Law

SEATTLE UNIVERSITY SCHOOL OF LAW

Presented by:

Scott Breneman

August 2016

The Demographics of Nursing Homes Residents (2014 data)

Source: U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services: Nursing Home Data Compendium 2015 Edition, page 181, Retrieved 7/272016 from: https://www.cms.gov/site-search/search-results.html?q=nursing%20home%20data%20compendium

All Residents Type of Ownership

ResidentCharacteristic Number Percentage For Profit Non-Profit Government

Number 1,406,220 1,006,161 311,699 88,360

Percentage 100.0 71.6 22.2 6.3

SexMale 483,516 34.4 35.6 28.6 40.3

Female 922,704 65.6 64.4 71.4 59.7

Age0-21 years 2,758 0.2 0.2 0.4 0.1

22-30 years 4,509 0.3 0.4 0.2 0.3

31-64 years 210,655 15.0 17.2 8.1 13.8

65-74 years 232,077 16.5 18.1 11.5 15.6

75-84 years 371,295 26.4 26.7 25.5 26.2

85-95 years 475,050 33.8 30.8 42.7 36.1

95+ years 109,859 7.8 6.6 11.6 8.0



2

National Center on Elder Abuse Administration on Aging, Statistics/Data, http://http://www.ncea.aoa.gov/library/data/ (last visited 8/5/2015)

The U. S. 2010 Census recorded the greatest number and proportion of people age 65 and older in census history: 40.3 million, or 13% of the total population.

This “Boomer Generation” effect will continue for decades.

By 2050, people age 65 and older are expected to comprise 20% of the total U.S. population.

By 2050, it is projected that there will be 19 million people aged 85 or older.

Venues of abuse: Elder abuse occurs in communitysettings, such as private homes, as well as institutionalsettings like nursing homes and other types of long termcare facilities. Id.

Extent of abuse: In 2000, one study interviewing 2,000nursing home residents reported that 44% said they hadbeen abused and 95% said they had been neglected or seenanother resident neglected. Id.1

Hidden abuse: One study estimated that only 1 in 14 casesof elder abuse ever comes to the attention of authorities. Id.2

The New York State Elder Abuse Prevalence Study foundthat for every case known to programs and agencies, 24were unknown. Id.3

1Citing Broyles, K. (2000). The silenced voice speaks out: A study of abuse and neglect of nursing home residents. Areport from the Atlanta Long Term Care Ombudsman Program and Atlanta Legal Aid Society to the National CitizensCoalition for Nursing Home Reform. Atlanta, Ga.

2Citing National Research Council. (2003) Elder mistreatment: Abuse, neglect and exploitation in an aging America.Washington, D.C.: The National Academies Press.

3Citing Lifespan of Greater Rochester, Inc., Weill Cornell Medical Center of Cornell University. & New York CityDepartment for the Aging. (2011) Under the Radar: New York State Elder Abuse Prevalence Study. New York.



3

Hidden abuse: A May 2008 study conducted by the U.S.Government Accountability Office revealed that state surveysunderstate problems in licensed facilities: 70% of state surveys missat least one deficiency and 15% of surveys miss actual harm andimmediate jeopardy of a nursing home resident. Id.4

“Deficiency citations are based on the interpretive guidelines from the “StateOperations Manual for Provider Certification.” 5 The three principal sourcesof data used in the HHS Nursing Home Data Compendium are: (1) CMS’sdatabase for survey and certification information, named Certification andSurvey Provider Enhanced Reporting (CASPER); (2) United Statespopulation data from the United States Bureau of the Census; and (3) theMinimum Data Set (MDS): a set of clinical data collected on every residentof every Medicare- and Medicaid-certified nursing home in the country. 6

4Citing U.S. Government Accountability Office (2008). Nursing Homes: Federal Monitoring Surveys Demonstrate ContinuedUnderstatement of Serious Care Problems and CMS Oversight Weaknesses (Publication GAO–08-517).

5 U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services: Nursing Home Data Compendium2015 Edition, page 3, Retrieved 7/272016 from: https://www.cms.gov/site-search/search-results.html?q=nursing%20home%20data%20compendium .

6 Id..

Figure 2.6. Percentage of Nursing Home Surveys Resulting in a Health Deficiency for Actual Harm or Immediate Jeopardy to Nursing Home Residents

Source: U.S. Department of Health and Human Services, Centers for Medicare and MedicaidServices: Nursing Home Data Compendium 2015 Edition, page 53, Retrieved 7/272016 from:

https://www.cms.gov/site-search/search-results.html?q=nursing%20home%20data%20compendium



4

For-Profit Nursing Home Chains: the bigger the corporation the worse the care?

The 10 largest for-profit chains operate about 2,000 nursing homes in theUnited States, controlling approximately 13 percent of the country’s nursinghome beds.7

Among the top 10 for-profit nursing home chains in 2013, operatingrevenues ranged from $900 million (The Ensign Group) to $4.68 billion(Genesis HealthCare Corp.)8

“Poor quality of care is endemic in many nursing homes, but we found thatthe most serious problems occur in the largest for-profit chains,” saidfirst author Charlene Harrington, RN, PhD, professor emeritus of sociologyand nursing at the UCSF School of Nursing.9

7Charlene Harrington, et al., Nursing Staffing and Deficiencies In the Largest For-Profit Nursing Home Chains and Chains Owned by PrivateEquity Companies, Health Services Research, Vol. 47, pp. 106-128, February 2012 (available athttp://onlinelibrary.wiley.com/doi/10.1111/j.1475-6773.2011.01311.x/full); see also University of California San Francisco news:https://www.ucsf.edu/news/2011/11/11037/low-staffing-and-poor-quality-care-nations-profit-nursing-homes.

8Provider Magazine: http://www.providermagazine.com/reports/Documents/2014/Top50_2014.pdfNursing

9 University of California San Francisco news: https://www.ucsf.edu/news/2011/11/11037/low-staffing-and-poor-quality-care-nations-profit-nursing-homes reporting above-referenced Nursing Staffing and Deficiencies In the Largest For-Profit Nursing Home Chains and ChainsOwned by Private Equity Companies.

“Low nurse staffing levels are considered the strongest predictor of poornursing home quality.” 10

“The study found that for-profit homes strive to keep their costs down byreducing staffing, particularly RN staffing…Together, these companies hadthe sickest residents, but their total nursing hours were 30 percent lowerthan non-profit and government nursing homes. Moreover, the top chainswere well below the national average for RN and total nurse staffing, andbelow the minimum nurse staffing recommended by experts.” 11

“The 10 largest for-profit chains were cited for 36 percent moredeficiencies and 41 percent more serious deficiencies than the bestfacilities. Deficiencies include failure to prevent pressure sores, residentweight loss, falls, infections, resident mistreatment, poor sanitaryconditions, and other problems that could seriously harm residents.” 12

For-Profit Nursing Home Chains: the bigger the corporation the worse the care?

10 Id..11 Id..12 Id..



5

In 2014, 92.2% of US nursing homes were dually (Medicare and Medicaid)certified.13

A 2012 report by federal health care inspectors concluded that the U.S.nursing home industry overbills Medicare $1.5 billion a year for treatmentspatients don’t need or never receive. 14

Thirty per cent of claims sampled from for-profit homes were deemedimproper, compared to 12 percent from non-profits. 15

“Federal prosecutors brought 120 now-resolved civil and criminal casesagainst nursing homes and related individuals from 2008 to 2012, twice thenumber of the prior five years…” 16

13 Source: U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services: Nursing Home Data Compendium 2015Edition, page 1, Retrieved 7/272016 from: https://www.cms.gov/site-search/search-results.html?q=nursing%20home%20data%20compendium

14 For-Profit Nursing Homes Lead in Overcharging While Care Suffers; Bloomberg Business, Dec. 31, 2012:http://www.bloomberg.com/news/articles/2012-12-31/for-profit-nursing-homes-lead-in-overcharging-while-care-suffers.

15 Id..

16 Id..

Nurse staffing levels are typically measured based on “hours per resident day” (“hprd”). 17

Some states’ statutes and regulations incorporate specific nursing homedirect care staffing standards. For example, California calls for 3.2 hprd ofdirect care staff. 18

In Washington, WAC 388-97-1080(1) and (4) recite:

(1) The nursing home must ensure a sufficient number of qualified nursingpersonnel are available on a twenty-four hour basis seven days per week toprovide nursing and related services to attain or maintain the highestpracticable physical, mental and psychosocial well-being of each resident asdetermined by resident assessments and individual plans of care.

(4) The nursing home must ensure that staff respond to each resident'srequests for assistance in a manner which promptly meets the quality of lifeand quality of care needs of all the residents.

17 See, e.g., Design for Nursing Home Compare Five-Star Quality Rating System: Technical Users’ Guide, February 2015, page 2, found at:https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/CertificationandComplianc/downloads/usersguide.pdf.

18 Charlene Harrington, Nursing Home Staffing Standards in State Statutes and Regulations (2010), found at:http://theconsumervoice.org/uploads/files/issues/Harrington-state-staffing-table-2010.pdf.



6

Nursing homes are governed by both state and federal statutes andregulations. 18

Every nursing home receiving Medicare and/or Medicaid funds must complywith federal regulations. 19

BACKGROUND AND STRUCTURE OF FEDERAL REGULATION

In a 1986 study, conducted at the request of Congress, the Institute ofMedicine (“IOM”) found that residents of nursing homes were being abused,neglected, and receiving inadequate care. The IOM proposed sweepingreforms, most of which became law in 1987 with the passage of the NursingHome Reform Act (“NHRA”), which was part of the Omnibus BudgetReconciliation Act of 1987 (“OBRA”).

18 Joanne Werner and Michelle Chan. “State and Federal Regulation of Nursing Homes.” In Washington NursingHome Litigation Deskbook, First Edition, edited by Roger Leslie. (Washington State Association for Justice,2013). Joanne Werner, R.N., M.S., J.D. spoke at Seattle University School of Law’s 2014 Health Care Law and thePatient Affordable Care Act (August 19, 2014) on this same topic: “Nursing Home Litigation: Causes of Action”.In connection with her presentation in 2014, Ms. Werner prepared an excellent slide deck. The compiler of thisslide deck has liberally consulted Ms. Werner’s slide deck from 2014, as well as the chapter she wrote in theWashington Nursing Home Litigation Deskbook, as a guide in compiling this slide deck. Much credit is due Ms.Werner for this slide deck.

19 Id.

The NHRA requires a “nursing facility” 20 to have “sufficient”nursing staff to provide enough nursing and related services forresidents to attain or maintain the “highest practicable” physical,emotional and psycho-social well-being. 42 U.S.C. § 1396r(b)(2),(b)(3).

The NHRA also provides a residents’ “Bill of Rights” 21, whichinclude:

The right to choose a personal attending physician, to befully informed in advance about care and treatment, to be fullyinformed in advance of any changes in care or treatment thatmay affect the resident's well-being, and (except with respectto a resident adjudged incompetent) to participate in planningcare and treatment or changes in care and treatment (i.e., theright to participate in the resident’s own care plan)

The right to privacy

20 42 U.S.C. § 1396r(a)

21 42 U.S.C. § 1396r(c) . 42 CFR Part 483 (Subpart B: §§ 483.1 - 483.75) codifies in the federal regulations the residents’“Bill of Rights”.



7

The right to be free from physical restraints (with certainexceptions) and abuse

The right to reasonable accommodation of individual needsand preferences

The right to voice grievances without facing discriminationor reprisal

The right to participate in family and resident groups, and insocial, religious and community activities

The right to refuse certain intra-facility room transfers(relocating resident from non-SNF to SNF)

The right to examine, upon reasonable request, the resultsof the most recent survey of the facility conducted by theSecretary or a State with respect to the facility and any plan ofcorrection in effect with respect to the facility.

Residents are entitled to periodic assessments and a writtencare plan developed specifically for that resident.

FEDERAL AND STATE PARTNERSHIP IN ENFORCING THE LAW

The backbone of government oversight is the survey system: Thefederal government contracts with states to conduct unannounced fullhealth surveys or inspections at least every 15 months. 22

CMS promulgates standards for state enforcement of the law regardingnursing homes. CFR Part 488 (survey, certification and enforcementprocedures). To receive Medicaid and Medicare payments for long-term careof residents, nursing homes must be certified by the state to be in substantialcompliance with the NHRA’s requirements.

The NHRA, in general, does not mandate minimum staff hours per residentday (hprd). Rather, the NHRA focuses on expected outcomes for nursinghome residents.

In Washington, DSHS is responsible for enforcement of CMS regulations. 23

22 See State Operations Manual found at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107c07.pdf, Including sec. 7207.2.2 (unannounced surveys) and sec.7205.1 (surveys no more than 15 months apart ). See also 42 CFR 488.308 andhttps://www.dshs.wa.gov/altsa/residential-care-services/long-term-care-residential-options.

23See https://www.dshs.wa.gov/altsa/residential-care-services/long-term-care-residential-options.



8

FEDERAL AND STATE PARTNERSHIP IN ENFORCING THE LAW

CMS INTERPRETIVE GUIDELINES FOR THE FEDERAL REGS

CMS publishes, in the State Operations Manual (SOM)Appendix PP, interpretive guidelines (also known as Guidanceto Surveyors for Long Term Care Facilities) for the federalregulations (which are contained in 42 CFR Part 483)

Appendix PP:

Sets forth each of the Part 483 regulations.

Attached, or “tagged”, to each regulation, is a “F-Tag” number (e.g.,“F279”) (much like a medical billing code is “tagged” to a medicalcondition). The F-Tags serve as an indexing system (or short handreference) to the regulations that are in Appendix PP.

Following each regulation is the Interpretive Guideline for suchregulation.

FEDERAL AND STATE PARTNERSHIP IN ENFORCING THE LAW CMS INTERPRETIVE GUIDELINES FOR THE FEDERAL REGS

Here is an example of what one regulation (comprehensive care plan), with itsaccompanying F-tag number (279) and interpretive guideline looks like in

Appendix PP 24 :

24 See https://www.google.com/#q=http:%2F%2Fwww.hpm.umn.edu%2Fnhregsplus%2FResources%2520and%2520Publications%2FCMS_Survey_Resources%2FCMS%2FComplete_som107_rev010711.pdf.



9


The SOM, and its Appendix PP, is used to enforce over 180 F-tags with whichnursing homes must comply. DSHS publishes data showing the F-tags thatnursing homes are most frequently cited for non-compliance.25 For 2013, thetop F-tag citations were:

24 See https://www.google.com/#q=http:%2F%2Fwww.hpm.umn.edu%2Fnhregsplus%2FResources%2520and%2520Publications%2FCMS_Survey_Resources%2FCMS%2FComplete_som107_rev010711.pdf.


SOM Deficiency Categorizations: Four severity levels:

Level 1: Deficiency that has potential for minimal harm

Level 2: Minimal harm occurred.

Level 3: Harm occurred, (resident’s ability to maintain or reach highestpracticable physical or mental well-being was compromised) but not imminentjeopardy.

Level 4: Harm, immediate jeopardy (noncompliance has caused, or is likely tocause, serious injury, harm, impairment or death to a resident).

Deficiency level correlates to level of civil monetary penalty assessed againstthe facility.



10

POTENTIALLY RELEVANT WASHINGTON STATUTES AND REGS

The State of Washington has adopted the federal regulations, in addition to its own statutes and regulations.25

25See WAC 388-97-0020; RCW 74.42 et seq.(Nursing Home Operating Standards); WAC 246-842 et seq. (Standards ofPractice and Competencies and Training of Nursing Assistants ); and WAC 388- 97 et seq. (Nursing Homes includingResidents Rights and Quality of Care).26 See also Nurse Practice Act (RCW Ch. 18.79)27RCW Ch. 70.129 applies to assisted living facilities (RCW Ch. 18.20); soldiers’ and veterans’ homes (Ch. 72.36); and adult family homes (Ch. 70.128)

Abuse of Vulnerable Adults Act (“AVAA”) RCW Ch.74.34

Nursing Home – Resident Care, Operating Standards RCW Ch. 74.42

Washington Nursing Home Act RCW Ch. 18.51

Nursing Homes and Resident’s Rights and Quality of Care WAC 388‐97 et seq.

Practical and Registered Nursing WAC 246‐840 et seq. 26

Nursing Assistants – Nursing Homes WAC 246‐842 et seq.

Assisted Living Facilities RCW Ch. 18.20

Long‐Term Care Resident Rights RCW Ch. 70.12927

Residential Long‐Term Care Services WAC 388‐112 et seq.

Adult Family Homes RCW Ch. 70.128

Adult Family Home Minimum Licensing Requirements WAC 388‐76 et seq.

Regulation of Health Professions‐Uniform Disciplinary Act RCW Ch. 18.130

POTENTIALLY RELEVANT WASHINGTON STATUTES AND REGULATIONS

SOURCE: This table was created by Joanne Werner, R.N., M.S., J.D. and was included in her materials inconnection with her speaking at Seattle University School of Law’s 2014 Health Care Law and the PatientAffordable Care Act (August 19, 2014) on this same topic: “Nursing Home Litigation: Causes of Action”.



11

POTENTIALLY RELEVANT WASHINGTON STATUTES AND REGULATIONS

A violation of an applicable statute or regulation does not establish negligenceper se, but can be used as evidence of negligence. 28

A history of such violations can be used as evidence of a pattern of neglectand abuse under the VAS (RCW 74.34.020(15)).

Repeat violations may also constitute evidence of negligence on the part of the corporate entities that own, manage and control the nursing home.

28See WPI 60.03; RCW 5.40.050; Joyce v. State Dept. of Corrections, 155 Wn.2d 306, 324 (2005).

POTENTIAL CAUSES OF ACTION:

Violation of the Abuse of Vulnerable Adults Act (“AVAA”; RCW Ch. 74.34)

Corporate Negligence/Vicarious Liability

Intersects with insurance coverage issues, including what are the policylimits of the licensee

“Alter ego”/corporate veil-piercing to get to the assets of “upstream”entities that “dominate and control” the subsidiary or affiliate licensee.

Medical Negligence (RCW 7.70.040)

Evidence of Negligence based on statutory or regulatory violations: Nursing Home – Resident Care RCW Ch. 74.42/WAC 388-97 WA Nursing Home Act RCW Ch. 18.51/WAC 388-97 Nurse Practice Act RCW Ch. 18.79/WAC 246-840 NHRA

Failure to obtain informed consent (RCW 7.70.050)



12

POTENTIAL CAUSES OF ACTION:

Common law negligence

Breach of contract

Breach of fiduciary duty

Negligent infliction of emotional distress

Types of Injuries or conditions frequently caused by nursing home neglect or abuse

Pressure ulcers 29

Medication errors (including unnecessary drugs)

Infections

Falls

Malnutrition

Weight loss (avoidable)

Dehydration

Fractures

29Cf. CMS “State Medicaid Director Letter” dated July 31, 2008 in which CMS defines Stage III and IV pressure ulcers as“hospital-acquired conditions” that are “Serious Reportable Events (commonly referred to as ‘Never Events’)…of a naturesuch that the risk of occurrence is significantly influenced by the policies and procedures of the health care organization”and notifies that Medicare will no longer pay the extra cost of treating such condition that occurs while the patient is in thehospital. http://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SMD073108.pdf.



13

Important Aspects of the Abuse of Vulnerable Adults Act (“AVAA”; RCW Ch. 74.34)

Provides special protections and remedies for the abuse or neglect ofvulnerable adults. Remedies include damages on account of the vulnerableadult’s injuries, pain and suffering, and loss property. RCW 74.34.200(1).

The AVAA establishes a separate cause of action with its own standards ofproof which are different from common law negligence. Warner v. RegentAssisted Living, 132 Wn. App 126, 134 (2006); Conrad v. Alderwood Manor,119 Wn. App. 275, 291 (2003).

A plaintiff can recover for both negligence and neglect and such recoverydoes not constitute a double recovery. Id.

The common law negligence standard does not apply to claims under theAVAA. Warner at 134. All the plaintiff needs to show is that the vulnerableadult was “neglected,” as defined under the AVAA. Id.


Expert testimony is not required to establish neglect under the AVAA. Id.

Under the AVAA, statements of family members, alone, are sufficient to placethe claim of neglect before the jury. Id. at 134-35. 30

AVAA cause of action for damages survives the death of the vulnerable adult.RCW 74.34.210.

A plaintiff prevailing under AVAA shall be awarded his or her actual damages,together with a reasonable attorneys’ fee and “costs” to include thereasonable fees for a guardian, guardian ad litem and experts, if any, thatmay be necessary to the litigation. RCW 74.34.200(3).

30 Cf. the medical negligence standard of proof which generally requires the plaintiff to produce expert testimony toestablish the standard of care as well as most aspects of causation unless the medical facts are observable to a layperson and can be described without medical training. Hill v. Sacred Heart Medical Center, 143 Wn. App. 438, 177 P.3d1152 (2008).



14


AVAA primary elements of proof (RCW 74.34.200(1)):

1. Plaintiff or decedent must be a “vulnerable adult”;

2. Defendant must be a “facility”;

3. The “vulnerable adult” must have been subjected to “abuse,” “neglect” or “financial exploitation”


1. “Vulnerable adult” (RCW 74.34.020(21):

“Vulnerable adult” includes a person:

(a) Sixty years of age or older who has the functional, mental, or physical inability to care for himself or herself; or(b) Found incapacitated under chapter 11.88 RCW; or(c) Who has a developmental disability as defined under RCW 71A.10.020; or(d) Admitted to any facility; or(e) Receiving services from home health, hospice, or home care agencies licensed or required to be licensed under chapter 70.127 RCW; or(f) Receiving services from an individual provider; or(g) Who self-directs his or her own care and receives services from a personal aide under chapter 74.39 RCW.



15


2. “Facility” (RCW 74.34.020(6):

“Facility” means a residence licensed or required to be licensed underchapter 18.20 RCW, assisted living facilities;

chapter 18.51 RCW, nursing homes;

chapter 70.128 RCW, adult family homes;

72.36 RCW, soldiers' homes;

or chapter 71A.20 RCW, residential habilitation centers;

or any other facility licensed or certified by the department (DSHS (notDOH, which licenses hospitals)).


Note the strategy that some entities that traditionally would be considerednursing homes might employ to (arguably) avoid the reach of the AVAA:

the entity becomes licensed as an “acute care hospital” (under RCW70.41 (licensed by DOH));

the entity has certain what it alleges are “sub-acute units” within the“acute care hospital” licensed as nursing homes (under RCW 18.51and 74.46 (Nursing Home Medicaid Payment System);

the entity then asserts that the resident was never admitted to thesub-acute unit, but rather was always admitted to the acute carehospital.



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3. “Abuse” (RCW 74.34.020(2):

“Abuse” means the willful action or inaction that inflicts injury, unreasonableconfinement, intimidation, or punishment on a vulnerable adult. In instancesof abuse of a vulnerable adult who is unable to express or demonstratephysical harm, pain, or mental anguish, the abuse is presumed to causephysical harm, pain, or mental anguish. Abuse includes sexual abuse,mental abuse, physical abuse, and personal exploitation of a vulnerableadult, and improper use of restraint against a vulnerable adult” whichincludes “physical abuse”; “mental abuse”; “personal exploitation”; and“improper use of restraint”.


3. “Neglect” (RCW 74.34.020(15):

“Neglect” means (a) a pattern of conduct or inaction by a person orentity with a duty of care that fails to provide the goods and servicesthat maintain physical or mental health of a vulnerable adult, or thatfails to avoid or prevent physical or mental harm or pain to avulnerable adult; or (b) an act or omission by a person or entity witha duty of care that demonstrates a serious disregard ofconsequences of such a magnitude as to constitute a clear andpresent danger to the vulnerable adult's health, welfare, or safety,including but not limited to conduct prohibited under RCW9A.42.100.



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3. “Financial exploitation” (RCW 74.34.020(7):

“Financial exploitation” means the illegal or improper use, controlover, or withholding of the property, income, resources, or trust fundsof the vulnerable adult by any person or entity for any person's orentity's profit or advantage other than for the vulnerable adult's profitor advantage.


As of May 2016, an implied private cause of action under the AVAAexists against mandated reporters who fail to report abuse. Kim v.Lakeside Adult Family Home, 185 Wn. 2d 532 (2016).

RCW 74.34.035 requires mandated reporters to immediately reportabuse or neglect to DSHS, and sexual or physical assault to DSHSand appropriate law enforcement.

Mandated reporters include individual providers; social workers; employeesand operator of a facility; employees of a social service, welfare, mentalhealth, adult day health, adult day care, home health, home care, or hospiceagency; county coroner or medical examiner; Christian Science practitioner;or health care provider subject to chapter 18.130 RCW. RCW 74.34.020.

In Kim, the mandated reporters were a RN and LPN employed by a homehealth agency who were visiting other patients than the deceased, who wasa resident of the facility. These nurses allegedly observed signs of abuse ofthe resident, but were not providing nursing services to that resident.



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Other considerationsInsurance coverage issues

Does the licensee entity have enough insurance to cover damages,including after consideration of “wasting” policy issues?

WAC sections 388-97-4167 and 388-97-4168 became effective in early 2010.They, respectively, require nursing homes licensed in the State of Washington tocarry minimum limits of one million dollars each occurrence, and two milliondollars in the aggregate, of “commercial general liability insurance or businessliability insurance” and “professional liability insurance or errors and omissionsinsurance.”

“Wasting” policies. Many nursing homes have what are known as “wasting” or“wasting limit” policies. These are liability policies that have the costs of defenseincluded within (not in addition to) the policy limits. This means that all claimsinvestigation and legal fees of the insurance defense counsel reduce the policylimit. If, for example, the insured has a $1,000,000 policy limit and $150,000 isspent on claims and defense expenses/fees, then there only would be $850,000remaining to pay any claims.

Some recent developments regarding arbitration clauses in nursing homecontracts

Woodward v. Emeritus Corp., 192 Wn. App. 584 (2016): Div. 3 affirmed trial court’sdenial of defense motion to compel arbitration in an AVAA case based onpredispute arbitration provision in an admissions agreement drafted by the assistedliving facility that called for any dispute “whether in contract or in tort”, etc. to “beresolved exclusively by binding arbitration and not by lawsuit or resort to judicialprocess” “administered in accordance with the procedures in effect for consumerarbitration adopted by the American Arbitration Association.”

AAA Healthcare Policy Statement: Per AAA, in 2003, the AAA “announced that itwould not administer healthcare arbitrations between individual patients andhealthcare service providers that relate to medical services, such as negligenceand medical malpractice disputes, unless all parties agreed to submit the matter toarbitration after the dispute arose.”

Defense argued 1) that AAA administration is not required by the parties’agreement; and 2) if an agreed administration fails, the courts have statutoryauthority to substitute another process.



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Div. 3 rejected defense argument 1). In support of its argument 2), the defenserelied on Nail v. Consolidated Resources Health Fund I, 155 Wn. App. 227 (Div. 3)where the parties had agreed that the “arbitrators shall apply the applicable rules ofprocedure of the AAA.” Div. 3 rejected argument 2) by observing that the AAA’sconsumer arbitration rules explicitly provided that should the AAA decline toadminister an arbitration, either party may choose to submit its dispute to theappropriate court for resolution.

Alternatively, Div. 3 held that the agreement was substantively unconscionable asapplied to the plaintiff estate’s negligence and AVAA claims. First, the agreement’sprovision that “each party shall be responsible for its own legal fees” underminedthe plaintiff’s entitlement under AVAA to an award of attorneys’ fees. Second, theAAA’s rules at issue, designed for simple business disputes, were “inherentlyunsuited to the nature and complexity of the estate’s claims”, including regardinglimits on discovery and arbitrator’s compensation.


Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. Oct. 9, 2015):Kentucky Supreme Court decided that powers-of-attorney possessed by nursinghome residents’ relatives at the time of their admissions did not given themauthority to enter in to binding pre-dispute arbitration agreements on behalf of theirrelatives. A power in the POA to “institute or defend suits” or to“make…contracts…in relation to real and personal property” was insufficient towaive residents’ constitutional rights to jury trial and access to courts. Even ageneral power “to do and perform for me and in my name all that I might do ifpresent” was insufficient. The Court also ruled that wrongful death claims could notbe sent to arbitration because these claims belonged to the beneficiaries andneither the decedents or their agents had power to waive the access to court rightsof the beneficiaries.

Wisler v. Manor Care of Lancaster Pa., LLC, 124 A.3d 317 (Pa. Super. 9/8/15): son signedarbitration clauses purportedly on behalf of his father upon his father’s admissions to nursinghome. Court refused to enforce the arbitration clauses because the son failed to show thathe had the authority to sign such a document and relinquish his father’s constitutional right totrial. Even if son had been able to supply a valid POA giving him authority to make medicaldecisions for his father, such would not necessarily have given him the right to consent toarbitration on behalf of his father.



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Hypothetical arbitration clause: What are the arguments for and againstenforcement?

“Dispute Resolution. Except for any collection action takenunder paragraph X above, any dispute arising under thisAgreement shall be subject to and resolved according to thecommercial arbitration rules of the American ArbitrationAssociation. The parties may agree to select an alternatearbitration service, an alternative method of arbitration, or analternative method of dispute resolution.”

Scott Breneman

Breneman Grube Orehoski, PLLC

1200 Fifth Ave., Suite 625

Seattle, WA 98101

T: 206‐224‐1650

[email protected]


Session 9: The Affordable Care Act: A Five Year Review and What’s Next

1

ANNUAL UPDATE ON THE AFFORDABLE CARE ACT

Health Care Law and the Emerging Law of Mental HealthSeattle University School of Law

AUGUST 4, 2016

BRUCE F HOWELL JD MSHealthcare Industry Group Leader

Schwabe, Williamson & Wyatt

THE RELIGIOUS ISSUES



2

THE CASES

• Hobby Lobby Stores Inc. v. Sebelius,Case No. 12-6294 (10th Cir. June 27, 2013) (U.S. SCt 13-354 and 356)

• Conestoga Wood Specialties Inc. v. Sebelius, Case No. 13-1144 (3d Cir. June 26, 2013)(U.S. SCt 13-354 and 356)

THE CASES

• University of Notre Dame v. Kathleen Sebelius et al (S. Ct. 14-392)

• Wheaton College v. Burwell, (573 US ___ 2014)



3

THE CONGRESSIONAL CHALLENGE

• House of Representatives v. Burwell,(US D Ct. Dist.Col.,Civil Action No. 14-1967) (RMC)

• Standing granted



4

THE TAXATION ISSUE

• Sissel v. US Dept of Health and Human Services et al., Case No. 10:1263 (BAH) (June 28, 2013)

• En banc and cert denied (www.supremecourt.gov/orders/court orders/01191620zor-15gm.pdf



5

IMPLIED CERTIFICATION

• Universal Health Services, Inc. v. United States, 579 US ___ (2016)



6

THE PERSONAL INJURY QUANDARY

THE SELF REPORTING ISSUE



7

ACA § 6409

ACCOUNTABLE CARE ORGANIZATIONS



8

ACA § 3022 (Medicare Shared Savings Program)

RISK ADJUSTMENTS



9

ACA § 1343

RISK CORRIDORS



10

• Gerhart v. Watkins, No. 16-cv-00151(S.D. Iowa May 3, 2016)

• Highmark, Inc. v. United States,No. 16-587 C (Fed. C. May 17, 2016)

• Moda Health Plan, Inc. v. United States,(US Ct Claims No. ___)

• Health Republic Insurance Company v. United States, (US Ct Claims, No. 16-259C)

THE EXCHANGE PICTURE



11

OREGONCONNECTICUT

ILLINOIS

OREGONCONNECTICUT

ILLINOIS

Health Care Law and the Emerging Law of Mental Health Session 10 – Emerging Issues in Bioethics

Seattle University School of Law Summer Practice Academy


Emerging Issues in Bioethics

Eric B. Schmidt, J.D., Ph.D.

August 5, 2016

The following are emerging issues in bioethics and the law, not in any

particular order:

1) Abortion Regulation in Light of Whole Women’s Health v.

Hellerstadt.

2) Conscientious Objection by Health Care Providers and Entities in

Light of Stormans, Inc. v. Wiesman.

3) Expansion of Aid in Dying Beyond the Death with Dignity Acts

Enacted Thus Far.

4) Gene Editing with CRISPR/Cas9 and Gene Drive.

5) Acquisition of Community Hospitals by Catholic Organizations and

the Availability of Reproductive Medicine Services.

6) Paying for Organs in Transplantation Medicine and New

Transplants.

7) Opioid Prescribing.

8) Clinical Trial Enrollment Issues.

9) Guns and Public Health.

10) Three-Parent Embryos and Implications for Parenthood.

Medicare, Medicaid, and ERISA Subrogation: Secondary Payer Issues in Litigation Page - 1

Medicare, Medicaid, and ERISA Subrogation: Secondary Payer Issues in Litigation

Thomas J. Degan Jr. Chemnick Moen Greenstreet 155 NE 100th St., Suite 400

Seattle, WA 98125-8011 (206) 443-8600

[email protected]

What is subrogation and why does it matter? In the context of tort claims the practical definition of the term “subrogation” means your

client’s insurer attempting to recoup benefits it paid pursuant to the insurance contract from your

client’s recovery from another insurance company. 1 In my opinion, it is simply another way for

insurers to increase profits by taking money from accident victims who need it.2 Regardless,

understanding subrogation law is required for all practitioners of tort law.

Imagine you just settled your very first personal injury lawsuit. The first thing your client

wants to know is: “How much money will I receive?” The answer to that question depends, in

part, on who paid your client’s medical bills. Did a private insurance company pay the medical

bills? Medicaid? Medicare? Workers Compensation? Different laws and rules govern how much

each of these entities is entitled to be repaid from your client’s settlement. Thus, in terms of

importance to your client, subrogation is extremely important. Every dollar you can avoid paying

1 Attached is an article from Bloomberg Business by David Armstrong dated June 10, 2015, which describes how George Rawlings started the subrogation firm the Rawlings Company in the 1980s, by convincing insurers to seek subrogation of health care expenses. 2 Insurers do not count on their ability to recover via subrogation when determining health care premiums. See Subrogation on Medical Expense Claims: The “Double Recovery” Myth and the Feasibility of Anti-Subrogation Laws, 96 Dickinson Law Review 581 (1992). This is because when an insurer pays a loss, the insurer will simply pay an anticipated loss that has already been distributed over a pool of similarly situated individuals. Id. This is accomplished by using actuarial and statistical data. Id. When the insurer sets the initial premium that the insured will pay he takes into account the insured’s pro-rata share of the total estimated losses for the pool as well as the insured’s share of the insurers profit to be realized from that individual insured. Id. Therefore, the insurer will never suffer an actual loss when it does not recover payment made for any particular claim. In other words, the insured’s premiums have already covered the loss so the money goes to the insurer and attorney working for the insurer to collect the money.

Health Care Law and the Emerging Law

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Session 11: Getting Paid: Dealing with

Medicare and Medicaid Issues in Litigation


to insurers that claim they are entitled to subrogation is a dollar that goes directly into your

client’s pocket.

In Washington, we have robust laws that set limits on when and how much money

insurers are entitled to obtain pursuant to a subrogation claim. Washington has adopted the

“made whole doctrine,” “common fund doctrine,” and “equitable sharing rule.” See Thiringer v.

American Motorist Co., 588 P.2d 191 (1978); Mahler v. Szucs, 135 Wn.2d 398 (1989). Before

addressing any subrogation issue, litigators should have a good understanding of basic

Washington subrogation law.

The “made whole doctrine” basically means that insurers have no right to be paid back

for the medical bills it paid until its insured is fully compensated. Once you determine that your

client has been fully compensated, then the “equitable sharing” or “proportionate share” rule

applies.

“Equitable sharing,” mean that insurers must pay their share of the costs and expenses

that their insured incurred making a recovery from the tortfeasor. For example, your client had to

hire and pay an attorney 1/3 of the recovery, as well as pay the litigation costs, thus the insurer

who benefits from all that work and expense should pay its fair share of those fees and costs. In

other words, insurers do not get a free ride. These doctrines generally apply to all claims of

subrogation in Washington, but like most legal matters exceptions exist.

For example, when medical expenses are paid by Medicare, Medicaid, or a self-funded

ERISA plan, additional complexity arises because these insurers get to play by a different set of

rules. The reason that these medical payors get special treatment is that their subrogation rights

are statutorily created and precisely defined. Thus, in addition to Washington subrogation law,

litigators must know and be familiar with the statues and special rules applicable to these entities.


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What follows is a basic outline for addressing subrogation issues that arise when claim related

medical expenses are paid for by Medicare, Medicaid or a self-funded ERISA plan.

Medicare Subrogation After the SMART Act

According to the Federal Government, “Medicare is the federal health insurance program

for people who are 65 or older, certain younger people with disabilities, and people with End-

Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes

called ESRD).” Medicare was created to be the medical insurer of last resort, meaning all other

forms of insurance should pay medical expenses before Medicare pays. However, Medicare may

pays medical expenses when other insurance will not pay promptly. For example, when someone

is injured in motor vehicle collision, the at-fault party’s insurance will the other party’s medical

expenses until the personal injury claim is resolved. When Medicare makes such a payment, it is

called a “Conditional Payments,” and Medicare is entitled to get paid back, when there is a

subsequent settlement, judgment, or award.

Since Medicare is a federally created health insurance program it has special statutes that

govern its right to subrogation. See 42 USC §1395y(b)(2)(B)(iii). Medicare has a super priority

to get paid. In fact, the statutes related to Medicare’s subrogation rights provide that Medicare

recipients, their lawyers, and the liability insurers paying the settlement are all individually liable

for reimbursing Medicare, pursuant to 42 CFR 411.24(h) and (i). You read that correctly—the

lawyer can be held personally liable for failing to repay Conditional Payments made Medicare

for a client’s medical expenses.

Dealing with a Medicare “Recovery Claim”—which is Medicare’s preferred term for its

subrogation right—has historically been less than pleasant. Attorneys and their clients often had

a difficult time simply communicating with Medicare. It was virtually impossible to obtain a


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timely determination from Medicare regarding which medical expenses Medicare claimed as

Conditional Payments or the amount it was owed. Further, there was no “statue of limitations”

for Medicare to claim repayment, meaning that theoretically Medicare could years later claim it

was owed additional money. After years of complaints, Congress recognized that problems

existed and passed legislation to attempt to address these and other problems.

On January 10, 2013 legislation known as the “Strengthening Medicare and Repaying

Taxpayers Act” (SMART Act) was signed into law. This law was written to fix problems with

the Medicare Secondary Payer system and process, by requiring the Centers for Medicare and

Medicaid Services (CMS) to streamline its process, eliminating the uncertainty and costly delays

in settling claims and providing funds to the beneficiaries sooner.

SMART Act Highlights:

1. The SMART Act created a “safe harbor” for insurers who are unable to obtain a plaintiff’s SSN after a good faith effort.

2. The SMART Act eliminates the use of SSNs and Medicare numbers. (Section 204) 3. The SMART Act creates a three-year statute of limitation for all MSP claims.

(Section 205) The three-year statute of limitations for MSP recovery actions accrues from the date of receipt of the Section 111 report.

4. The SMART Act creates certainty through a mechanism to “lock in” Conditional

Payment amounts prior to settlement. Under the Act, CMS has 65 days from the receipt of a request to provide the Medicare reimbursement amount, which can be extended 30 days after additional notice is provided to CMS with respect to a failure to respond to the initial request. After this period, the parties can rely on the reimbursement amount available on the CMS website.

5. Finally, as of January 1, 2014, certain small liability claims are exempt from reporting

and reimbursement. (Section 202) These claims include claims that fall below the annual threshold as calculated by the Secretary of Health and Human Services (HHS). The “threshold” amount is currently $300.00

On May 17, 2016, Medicare finally adopted final rules implementing the SMART Act’s

settlement provision, which can be found at 42 CFR Part 411. The final rule “specifies the


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process and timeline for expanding CMS’ existing Medicare Secondary Payer (MSP) Web portal

to conform to section 201 of the SMART Act.

The SMART Act has somewhat streamlined Medicare subrogation. However, the process

is still lengthy and should be started as soon as possible.

The steps necessary to address a Medicare subrogation are relatively straight forward, but

they are also inflexible. Indeed, since you are dealing with a agency of the Federal government,

the key to dealing with a Medicare subrogation is to get started as early as possible early. In the

past, lawyers had to deal with two separate entities the Medicare Secondary Payer Recovery

Contractor (MSPRC) and the Coordination of Benefits Contractor (COBC). Under the SMART

Act, these two entities were combined into one entity named the Coordination of Benefits and

Recovery (COBR). Having to deal with only one entity helped to streamline the process, but

only slightly. The following are the general steps for dealing with a Medicare subrogation claim.

1. Reporting the Case to Medicare

You must contact the Benefits Coordination and Recovery Center (BCRC) to report your

case. Be prepared to provide the following information regarding your client:

a. Full Name b. Medicare Health Insurance Claim Number (HICN) c. Gender and Date of Birth d. Address and Phone Number

In addition, you will need to provide the following information about the case:

a. Date of Injury/Accident, or Date of First Exposure, Ingestion or Implant b. Description of Alleged Injury, Illness or Harm c. Type of Claim (Liability Insurance, No-Fault Insurance, Workers’

Compensation) d. Insurer or Workers’ Compensation Name and Address

Finally, you will need to provide the following information regarding yourself:

a. Attorney or Law Firm Name


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b. Address and Phone Number

After you provide this information, you will receive a Rights and Responsibilities letter

and brochure. You are supposed to receive this within 65 days, so calendar the date. The Rights

and Responsibilities letter is mailed to all parties associated with the case, which means that a

copy should be sent to you and your client. If you don’t receive the letter, contact COBR.

2. Review the Rights and Responsibilities Letter And Conditional Payment Information.

The Rights and Responsibilities letter will explain your obligation to repay Medicare, and

describe how to contact Medicare. You should also set up an account through the Medicare

Secondary Payer Recovery Portal (herein after “Web portal”). The Rights and Responsibilities

Letter will describe how to do this. Having access to your clients account through the Web portal

is the best way to handle Medicare subrogation.

Up to 120 days before an anticipated date of a settlement, judgment, or award you may

notify CMS, once and only once, via the Web portal that a settlement, judgment, or award is

expected to occur within 120 days or less. After receiving notice, Medicare will compile all the

conditional payments that it thinks are related to the claim and posts that information on the Web

portal within 65 days (which can be extended 30 days by CMS).

The conditional payments posted on the Web portal describe the treatments and payments

that Medicare attributes to your case. Review these payments carefully. If payments unrelated to

the claim are included as conditional payment, then you need to contact Medicare and dispute

inclusion of the charge.

You may then a dispute the conditional payments complied by Medicare, once and only

once, if you think the conditional payments posted on the Web portal are unrelated to the

pending claim, then you may dispute those claims. Disputes submitted through the Web portal


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will be resolved within eleven (11) business days of receipt of the dispute and supporting

documentation.

To dispute payments included in the Conditional Payment Letter, you must submit

correspondence to the BCRC and include any records or other documents to support your

assertion that the payment is unrelated to your claim. The letter and documentation can be

submitted via mail, fax, or through the Web portal. The BCRC will review the information and

upon completion of its review will notify you and your client of its decision.

3. Settlement

After resolving all disputes, you may download or otherwise request a time and date

stamped conditional payment summary statement through the Web portal. The final Conditional

Payment amount is reliable as long as the claim settles within three (3) days of download.

Within 30 days of settlement, judgment, award, or other payment, the beneficiary, or his

or her attorney or other representative, must submit through the Web portal documentation of the

date of settlement, judgment, or award, including the total settlement amount, the attorney fee

percentage, and costs. If settlement information is not provided within 30 days or less of securing

the settlement, the final conditional payment amount obtained through the Web portal is void.

Once settlement, judgment, award, or other payment information is received, CMS will

apply a pro rata reduction to the final conditional payment amount in accordance with § 411.37

and will issue a final MSP recovery demand letter.

Medicaid Medicaid, like Medicare, has a statutory right to subrogation. However, unlike Medicare,

Medcaid is subject to both State and Federal law. Due to the messy collision of state and federal

law, litigation ensued to determine the extent of Medicaid’s subrogation rights.


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In 2006, the United States Supreme Court decided Arkansas Department of Health and

Social Services v. Ahlborn, 547 U.S. 268 (2006) (“Ahlborn”). The Court’s decision in this case is

presently the law governing Medicaid liens asserted against recoveries in personal injury cases.

In Ahlborn the Supreme Court held that Medicaid agencies may only recoup their liens from the

portion of a settlement (or verdict) that represents compensation for past medical expenses.

The plaintiff, Heidi Ahlborn suffered severe injuries in a car accident. Her medical

benefits were paid, in part, by the Arkansas Department of Social Services (“ADHS”), the state

agency responsible for overseeing Medicaid. She commenced a personal injury action which was

subsequently settled for $550,000. The settlement was far less than it might have been worth due

to liability issues. ADHS had paid over $200,000 for medical expenses, and argued that it was

entitled to recoup the entire amount it paid in medical expenses from Ms. Ahlborn’s recovery.

Ms. Ahlborn asserted that because she had received a limited recovery, ADHS’s lien should be

reduced. The parties stipulated that Ahlborn’s claim was reasonably valued at $3,040,708.12. It

was further agreed that the settlement amounted to approximately one-sixth of the total value,

and if Ahlborn’s construction of federal law was correct, ADHS would be entitled to only the

portion of the settlement that constituted its proportionate share for the medical payments it

made. That amount would be $35,581.47, which represented the original amount of the Medicaid

lien, reduced by approximately the same proportion that Ahlborn’s total recovery was reduced.

The Supreme Court agreed with Ms. Ahlborn’s construction of the statute. Since Ms.

Ahlborn recovered only approximately one-sixth of the value of her injury, ADHS was only

entitled to approximately one-sixth the value of its medical lien and was prohibited by statute

from obtaining more. While the parties had stipulated to the full value of the settlement and the

amount representing payment for past medical expenses, the Supreme Court treated the


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stipulation as having the same effect as a judicial decision. “The effect of the stipulation is the

same as if a trial judge had found that Ahlborn's damages amounted to $3,040,708.12 (of which

$215,645.30 were for medical expenses), but because of her contributory negligence, she could

only recover one-sixth of those damages.” It noted that, where the parties could not reach a

similar stipulation, the issue could be resolved, “if necessary, by submitting the matter to a court

for decision.”

In Washington RCW 43.20B.060(2) and RCW 74.09.180 allow the DSHS to impose its

lien on a Medicaid recipient’s entire recovery from a third party. Since these statutes conflict

with 42 U.S.C. § 1396p, pursuant to Ahlborn the federal statute is operative and the state statutes

are preempted. Unfortunately, the is not the end of the story.

The budget passed by Congress (H.J.Res.59 — 113th Congress (2013-2014)), and signed

into law by President Obama on December 26, 2013 amended sections of Medicaid Secondary

Payer statute (42 U.S.C. § 1396a(a)(25)). The amendments give states the ability to recover costs

from the full amount of a beneficiary’s liability settlement, instead of only the portion of the

settlement designated for medical expenses. In addition, the amendments establish an option for

states to place liens against Medicaid beneficiaries’ liability settlements. In essence, the

amendments included in the budget nullify the Supreme Court’s holding in Ahlborn. Thus, the

law with regard to Medicaid is currently in a state of flux.

The amendments contained in the budget were set to go into effect October 1, 2014.

However, in March 2014 Congress passed the “Protecting Access to Medicare Act of 2014,”

which was signed into law on April 1, 2014. The Act delayed the date for implementation of the

provisions that abrogate Ahlborn for two years. The full text of the “Protecting Access to

Medicare Act of 2014” can be found at [https://beta.congress.gov/bill/113th-congress/house-


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bill/4302/text]. We will find out this fall if the amendments will now go into effect on October 1,

2016, or are changed or delayed by additional legislation.

ERISA The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that

sets minimum standards for most voluntarily established pension and health plans in private

industry to provide protection for individuals in these plans. Since subrogation money is free

money for these health plans, the generally claim they are entitled to full compensation, and

exempt from state insurance law including “made whole doctrine,” “common fund doctrine,” and

“equitable sharing rule.”

Therefore, the most important part of handling an ERISA subrogation is determining

whether Federal or State insurance law applies. Federal law only applies to “self-funded” ERISA

plans. This is because a self-funded ERISA plan under 29 U.S.C. §514 preempts Washington

State law. ERISA plans which are not self-funded are subject to Washington State law. Thus, a

self-funded ERISA plan can exempt itself from the “made whole” doctrine, because it is subject

to Federal law. In contrast, an ERISA plan that is not self-funded is subject to Washington

insurance law and cannot avoid application of the “made whole doctrine.”

Therefore, before undertaking any action you must answer the threshold question: Is this

a self-funded ERISA plan? This question is difficult to answer. This is because currently every

plan claims to be a “self-funded” ERISA plan. As a practical matter the Plan Administrator hires

a third-party “claims administrator.” These are quasi collection agencies that simply follow a

script in order to recoup money for the plan. This means that the only way to determine whether

or not you are dealing with a “self-funded” plan it to figure it out for yourself.


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1. Are you dealing with a “self-funded” ERISA plan?

Get a copy of the plan’s Form 5500 at www.freeerisa.benefitspro.com. Look at box 9a

and 9b (“plan funding arrangement” and “plan benefits arrangement”). There are four boxes the

Plan can select: (1) Insurance; (2) Section 412(e)(3) insurance contracts; (3) Trust; and (4)

General assets of the sponsor. If only the boxes for Trust and General assets of the sponsor are

selected, then you are most likely dealing with a self-funded ERISA plan. If any of the other

boxes are selected, then you should consult the schedules attached to the Form 5500 in order to

try and determine the relationship between the payor of the Plan benefits and the Plan.

2. Request a copy of the Plan Documents.

Requesting the plan documents does two things: 1) you should get a copy of the plan so

that you can determine whether or not the plan is “self-funded,” whether or not the plan

abrogates the “made whole” or “common fund” doctrine, whether or not the Plan complies with

29 U.S.C. 1102(b), and also search for any other Plan language that may help you negotiate with

the plan; and 2) it starts the 30 day clock in which the Plan Administrator must provide the plan

documents.

The ERISA Plan Administrator must respond to written requests for information from the

plan participant. However, there is an important distinction between the “plan administrator”

(who will be listed on the Form 5500), and the “claims administrator” (who will be the one who

contacts you about the ERISA subrogation claim). The “claims administrator” is usually an

entity hired as a collection agent for the ERISA plan. There is no obligation for the claims

administrator to provide any documentation to the plan beneficiary. Instead, the obligation to

provide plan documents rests with the plan administrator (to be safe, we have our clients request

plan documents). 29 U.S.C. 1132(c) provides for penalties for an administrator’s refusal to


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supply required information. Should the Plan Administrator fail to provide a plan participant

with the documents requested within 30 days, then the Plan can be fined up to $100 per day.

Further, ERISA specifically authorizes a plan participant to bring a civil action to enforce this

right. See 29 CFR § 502(a)(1)(A). The following is a copy of redacted letter we used to request

ERISA plan documents:

DATE

Mr./Ms. Plan Administrator Plan Administrator for _______ Welfare Benefit Plan RE: Request for Welfare Benefit Plan Documents Dear Mr./Ms. Administrator:

My name is PLAN PARTICIPANT. Pursuant to my right as a plan participant and beneficiary of _________ Welfare Benefit Plan, I respectfully request copies of the following materials: 1. Copes of the Summary Plan Description and other plan documents relating to my health insurance coverage for the years 2011, 2012, 2013 and 2014; 2. Administrative Services Contract between Nordstrom Inc. Welfare Benefit Plan (Employer/Plan) and Aetna Life Insurance Co. (Plan Insurers/Claim Administrator) for the years 2011, 2012, 2013 and 2014;

3. Copies of all contracts including, but not limited to: Insurance contracts, Stop Loss Contracts, Health Insurance Contracts, Insurance Intermediary Services Contracts, and Administrative Services Contracts related to the Aetna Medical Plan serving Washington State participants for the years 2011, 2012, 2013 and 2014; 4. Amendments to the Plan Documents for Aetna Medical Plan serving Washington State participants (including but not limited to the Summary Plan Description) for the years 2011, 2012, 2013 and 2014; 5. Copies of the Summary of Material Modifications statements for the years 2011, 2012, 2013 and 2014; and


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6. Copies of form 5500, including all attached schedules, filed with the U.S. Department of Labor for the years 2011, 2012, 2013 and 2014 (if available).

Please forward these materials to my attorneys at the ADDRESS.

Thank you. Very truly yours,

(Client Signature)

Do not rely on the Summary Plan Description for your analysis of the ERISA plan.

Insurance companies frequently copy Summary Plan Descriptions, so it is imperative to obtain

the actual plan documents since this document is the contract.

The plan documents should have a section that refers to the type of plan administration.

This section will typically include language about “contract administration” if it is a self-funded

plan, or “insurance” in the case of an insured plan. If it is a self-funded plan, then examine the

plan documents to make certain the plan complies with 29 USC 1102(b)3.

3. Do Any Equitable Doctrines Apply?

The next thing to look for is whether or not the self-funded ERISA plan addresses

reimbursement. In U.S. Airways Inc. v McCutchen, 133 S. Ct. 1537 (2013), the Supreme Court

held that a self-funded ERISA plan is a contract between two parties, so when the contract is

clear as to the manner of reimbursement the rules of the contract apply. Thus, the “made whole”

and “common fund” doctrine were inapplicable because, generally, equity cannot override the

3 Every employee benefit plan shall—

(1) provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the plan and the requirements of this subchapter, (2) describe any procedure under the plan for the allocation of responsibilities for the operation and administration of the plan (including any procedure described in section 1105 (c)(1) of this title), (3) provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan, and (4) specify the basis on which payments are made to and from the plan.


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plain language of a contract. However, the Court also held that if the contract language was

unclear, or was silent, then these equitable doctrines may apply.

This is, again, why it is absolutely imperative that you obtain and study the plan

documents. Only after you are armed with the ERISA plan’s funding status and plan language

should you approach the plan in order to negotiate an ERISA based subrogation claim.

4. The Supreme Court’s Latest ERISA Case: Montanile v. Board of Trustees.

This year the U.S. Supreme Court decided Montanile v. Bd. of Trustees of Nat. Elevator

Indus. Health Benefit Plan, 136 S. Ct. 651, 193 L. Ed. 2d 556 (2016). In Montanile the plaintiff

was severely injured when a drunk driver ran through a stop sign and crashed into his vehicle in

2008. He was insured by an ERISA health insurance plan. He received a $500,000 settlement

from the drunk driver’s insurer, and received about $240,000 after paying his attorney fees and

costs. The ERISA plan demanded full repayment of the $121,044.02 in medical expenses it paid.

If Montanile repaid the ERISA plan he would have receive only about $120,000. Instead,

Montanile’s attorney sent a letter to the ERISA plan advising them that they had 14 days to file

suit, or they were going to release the settlement funds to Mr. Montanile. The Plan didn’t

respond within 14 days and the money was disbursed. Mr. Montanile spent the money on

untraceable thinks like food, rent, and medicine.

Six months later, the plan sued Montanile in federal court seeking repayment of the

$121,000. Montanile argued the fund couldn’t put an equitable lien on his assets because he’d

spent the accident money on himself and his daughter. The district court disagreed and ordered

him to repay, and the 11th Circuit Court of Appeals upheld the order, ruling that an ERISA

fiduciary (that’s the health insurance plan in this case) can enforce an equitable lien against a


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plan participant’s general assets, and that dissipation of the specific fund to which the lien

attached cannot destroy the underlying reimbursement obligation.

The United States Supreme Court reversed the 11th Circuit Court of Appeals. It held that

when an ERISA-plan participant wholly dissipates a third-party settlement on non-traceable

items, like food, rent, and utilities, the plan fiduciary may not bring suit to attach the participant's

separate assets under ERISA. The Court held that the “…when a participant dissipates the whole

settlement on non-traceable items, the fiduciary cannot bring a suit to attach the participant's

general assets under Sec. 502(a)(3) because the suit is not one for ‘appropriate equitable relief.’”

In addition, the Court held:

If, instead of preserving the specific fund subject to the lien, the defendant dissipated the entire fund on nontraceable items, that complete dissipation eliminated the lien. Even though the defendant's conduct was wrongful, the plaintiff could not attach the defendant's general assets instead.

Montanile, at 136 S.Ct. 659.

The Board also contends that, unless plans can enforce reimbursement provisions against a defendant's general assets, plans will lack effective or cost-efficient remedies, and participants will dissipate any settlement as quickly as possible, before fiduciaries can sue. We have rejected these arguments before, and do so again.

Id., at 661.

Accordingly, Montanile provides a template for every plaintiff’s lawyer that represents

ERISA plan participants. When there is a dispute regarding plan reimbursement, the plaintiff’s

lawyer should send the ERISA plan a letter giving it 14 days to file suit to secure its lien, and if it

dose not, then disburse the funds to their client.


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30487 Federal Register / Vol. 81, No. 95 / Tuesday, May 17, 2016 / Rules and Regulations

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 411

[CMS–6054–F]

RIN 0938–AR90

Medicare Program; Obtaining Final Medicare Secondary Payer Conditional Payment Amounts via Web Portal

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule.

SUMMARY: This final rule specifies the process and timeline for expanding CMS’ existing Medicare Secondary Payer (MSP) Web portal to conform to section 201 of the Medicare IVIG and Strengthening Medicare and Repaying Taxpayers Act of 2012 (the SMART Act). The final rule specifies a timeline for developing a multifactor authentication solution to securely permit authorized users other than the beneficiary to access CMS’ MSP conditional payment amounts and claims detail information via the MSP Web portal. It also requires that we add functionality to the existing MSP Web portal that permits users to: Notify us that the specified case is approaching settlement; obtain time and date stamped final conditional payment summary statements and amounts before reaching settlement; and ensure that relatedness disputes and any other discrepancies are addressed within 11 business days of receipt of dispute documentation. DATES: These regulations are effective June 16, 2016. FOR FURTHER INFORMATION CONTACT: Suzanne Mattes, (410) 786–2536. SUPPLEMENTARY INFORMATION:

I. Background The Medicare IVIG and Strengthening

Medicare and Repaying Taxpayers Act of 2012 (the SMART Act) was enacted on January 10, 2013. Section 201 of the SMART Act amends section 1862(b)(2)(B) of the Social Security Act (the Act) and requires the establishment of an internet Web site (referred to as the ‘‘Web portal’’) through which beneficiaries, their attorneys or other representatives, and authorized applicable plans (as defined in section 1862(b)(8)(F) of the Act (42 U.S.C. 1395y(b)(8)(F)) who have pending liability insurance (including self- insurance), no-fault insurance, or workers’ compensation settlements,

judgments, awards, or other payments, may access related CMS’ MSP conditional payment amounts and claims detail information.

The existing MSP Web portal currently permits authorized users (including beneficiaries, attorneys, or other representatives) and applicable plans to register through the Web portal in order to access MSP conditional payment amounts electronically and update certain case-specific information online.

Beneficiaries are able to log into the existing Web portal by logging into their MyMedicare.gov accounts. The Web portal provides detailed data on claims that Medicare paid conditionally that are related to the beneficiary’s liability insurance (including self-insurance), no- fault insurance, or workers’ compensation settlement, judgment, award, or other payment (hereinafter, for ease of reference, referred to as ‘‘settlement(s)’’). This detailed claims data for each claim includes dates of service, provider information, total charges, conditional payment amounts, and diagnosis codes.

Beneficiaries’ attorneys or other representatives, as well as applicable plans, may register through the Web portal to access conditional payment information. In order to comply with federal privacy and security requirements, including the Federal Information Security Management Act (FISMA), we have implemented a multifactor authentication tool that will permit authorized individuals, other than the beneficiary, to securely access detailed conditional payment information through the Web portal.

Once the beneficiary’s attorney or other representative is designated as an authorized user, he or she may log into the Web portal to view the conditional payment amount and perform certain actions, which include addressing discrepancies by disputing claims and uploading settlement information. It is important to note that, in situations where there is a pending insurance or workers’ compensation settlement, the beneficiary is designated as the ‘‘identified debtor’’. This means that only the beneficiary and his or her attorney or other representative have the authority to take action on the beneficiary’s MSP recovery case. This includes disputing claims and requesting a final conditional payment amount through the Web portal. An applicable plan is only able to take these actions if it submits proper proof of representation. The applicable plan cannot take action on a beneficiary’s case unless it has obtained proof of

representation that authorizes it to act on behalf of the beneficiary.

In keeping with the requirements of the SMART Act, we have added functionality to the existing Web portal that permits users to notify us when the specified case is approaching settlement, download or otherwise obtain time and date stamped final conditional payment summary statements and amounts before reaching settlement, and ensure that relatedness disputes and any other discrepancies are addressed within 11 business days of receipt of dispute documentation.

II. Provisions of the Interim Final Rule With Comment and Analysis of and Response to Public Comments

A. Introduction

In the September 20, 2013 Federal Register (78 FR 57800), we published an interim final rule with comment period (IFC) that specified a timeline for developing a multifactor authentication solution to securely permit authorized users other than the beneficiary to access CMS’ MSP conditional payment amounts and claims detail information via the MSP Web portal. It also required that we add functionality to the existing MSP Web portal that permits users to: Notify us that the specified case is approaching settlement; obtain time and date stamped final conditional payment summary statements and amounts before reaching settlement; and ensure that relatedness disputes and any other discrepancies are addressed within 11 business days of receipt of dispute documentation. We received 21 timely public comments. In this final rule, we provide a general overview of the public comments received by subject area, with a focus on the most common issues and suggestions raised.

B. Definitions

In the September 2013 IFC (78 FR 57804), we defined ‘‘Applicable plan’’ as the following laws, plans, or other arrangements, including the fiduciary or administrator for such law, plan or arrangement:

• Liability insurance (including self- insurance).

• No fault insurance. • Workers’ compensation laws or

plans. We also defined ‘‘Medicare Secondary

Payer conditional payment information’’ as a term that means all of the following:

• Dates of service. • Provider names. • Diagnosis codes. • Conditional payment amounts. • Claims detail information.

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Comment: Many commenters requested that we define certain terms in the regulation.

Response: We note we have defined ‘‘applicable plan’’ in § 411.39(a) of the regulation text.

We note that we are removing the definition of ‘‘Medicare Secondary Payer conditional payment information’’ to avoid redundancy and confusion. The language of the rule, itself, specifies which pieces of conditional payment information will be available via Web portal, based upon the level of authorization the user has when he or she accesses the Web portal.

C. Accessing Conditional Payment Information Through the Medicare Secondary Payer Web Portal

In the September 2013 IFC (78 FR 57801), we noted that we will continue to provide beneficiaries with access to details on claims related to their pending settlements through the Web portal. This will include dates of service, provider names, diagnosis codes, and conditional payment amounts. Beneficiaries and their attorneys or other representatives will continue to be able to dispute the relatedness of claims and submit a notice of settlement and other types of documentation through the Web portal. We have added functionality that will permit beneficiaries to download or otherwise electronically obtain time and date stamped payment summary statements, and exchange other information securely with Medicare’s contractor via the Web portal.

A beneficiary’s attorney or other representative and the applicable plan will continue to be able to register to use the Web portal and access conditional payment amounts. To access more detailed information related to a beneficiary’s pending settlement, users will register to use a multifactor authentication process, as defined in and required by the most recent version of the CMS Enterprise Information Security Group Risk Management Handbook, Volume III, Standard 3.1, CMS Authentication Standards, developed in accordance with FISMA and regulations promulgated by the National Institute of Standards and Technology (NIST). The most recent version of CMS’ Risk Management Handbook can be found at http://www.cms.gov/Research-Statistics-Data- and-Systems/CMS-Information- Technology/InformationSecurity/Downloads/RMH_VIII_3-1_Authentication.pdf.

With this tool, a beneficiary’s authorized attorney or other representatives or an authorized

applicable plan that has appropriately registered to access the Web portal, and has registered to use the multifactor authentication tool, has access to more detailed MSP conditional payment information for a specified MSP recovery case. This additional information includes dates of services, provider names, diagnosis codes, as well as the conditional payment amounts already available through the Web portal. If an authorized user does not register to use the multifactor authentication tool, he or she will continue to have access to the conditional payment amounts and he or she will continue to be able to perform certain functions, but details, including dates of service, provider names, diagnosis codes, will not be visible to that user.

Comment: Many commenters stated that beneficiaries should not be required to set up separate accounts to access the Web portal because they can already access the information on the Web portal through their MyMedicare.gov accounts.

Response: The provisions of the September 2013 IFC do not require that beneficiaries set up separate accounts. Beneficiaries who access the existing Web portal are instructed to login to their MyMedicare.gov accounts. Beneficiaries will continue to access information on the Web portal through their MyMedicare.gov accounts.

Comment: Many commenters stated that ‘‘pre-registration’’ to use the Web portal negates its utility and pre- registration should not be required.

Response: To clarify, registration is already required when accessing the existing Web portal for the first time. Once an authorized user has access to the portal, the user may, at any time, elect to register to use the multifactor authentication tool to access more detailed information. We note that authorized users will be able to view information on the Web portal, regardless of whether the beneficiary has accessed the portal or logged in through MyMedicare.gov.

Comment: Many commenters stated that multifactor authentication is not needed because CMS already provides this information by mail and it will delay development of the Web portal solution.

Response: We require written proof of representation or consent to release (depending on the nature of the relationship between the beneficiary and the individual or entity requesting the beneficiary’s information) before we provide privacy protected information, by mail or by phone, to authorized representatives or other authorized

individuals or entities. To provide information that is categorized as personally identifiable information via the internet, all government agencies, including CMS, are bound by statutory requirements imposed by the Federal Information Security Management Act (FISMA), as well as security regulations promulgated by the National Institute of Standards and Technology. For more information on security requirements, see section II.D. of this final rule.

D. Obtaining a Final Conditional Payment Amount

In the September 2013 IFC (78 FR 57801), we noted that once the beneficiary, his or her attorney or other representative, or an applicable plan provides notice of pending liability insurance (including self-insurance), no- fault insurance, and workers’ compensation settlements, judgments, awards, or other payments to the appropriate Medicare contractor, the Medicare contractor will compile and post claims that are related to the pending settlement for which Medicare has paid conditionally. Once a recovery case is established and posted on the Web portal, the beneficiary, or his or her attorney, other representative, or authorized applicable plan may access the recovery case through the Web portal, and notify CMS once—and only once—that a settlement is expected to occur in 120 days or less. Conditional payment information will be posted to the Web portal within 65 days or less of receipt of the notice of the pending settlement.

Section 1862(b)(2)(B)(vii)(V) of the Act permits us to extend our response timeframe by an additional 30 days if we determine that additional time is required to address related claims that Medicare has paid conditionally. We anticipate that such situations would include, but are not limited to, the following:

• A recovery case that requires CMS’ contractor to review the systematic filtering of associated claims for a case and subsequently adjust those filters manually to ensure that claims are related to the pending settlement.

• CMS’ systems failures that do not otherwise fall within the definition of exceptional circumstances.

Section 1862(b)(2)(B)(vii)(V) of the Act also permits us to further extend our claims compilation response timeframe by the number of days required to address the issue(s) that result from ‘‘exceptional circumstances’’ pertaining to a failure in the claims and payment posting system. Per the statute, such situations must be defined in regulations in a manner such that ‘‘not


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http://www.cms.gov/Research-Statistics-Data-and-Systems/CMS-Information-Technology/InformationSecurity/Downloads/RMH_VIII_3-1_Authentication.pdf







more than 1 percent of the repayment obligations . . . would qualify as exceptional circumstances.’’ Therefore, we are adding new regulations at 42 CFR 411.39 that define exceptional circumstances to include, but not be limited to: System failure(s) due to consequences of extreme adverse weather (loss of power, flooding, etc.); security breaches of facilities or network(s); terror threats; strikes and similar labor actions; civil unrest, uprising or riot; destruction of business property (as by fire, etc.); sabotage; workplace attack on personnel; and similar circumstances beyond the ordinary control of government or private sector officers or management.

If the beneficiary, or his or her authorized attorney or other representative, believes that claims included in the most up-to-date conditional payment summary statement are unrelated to the pending liability insurance (including self- insurance), no-fault insurance, or workers’ compensation settlement, he or she may address discrepancies through the dispute process available through the Web portal. The beneficiary, or his or her authorized attorney or other representative, may dispute the relatedness of an individual conditional payment once and only once. The beneficiary or his or her authorized attorney or other representative may be required to submit additional supporting documentation in a form and manner specified by the Secretary to support the assertion that the disputed conditional payment is unrelated to the settlement. If the Medicare contractor does not accept a dispute for a particular conditional payment, that conditional payment will remain part of the total conditional payment amount and may not be disputed through this process again.

Once CMS has been notified that a pending settlement is 120 days or less from settlement, disputes submitted through the Web portal will be resolved within 11 business days of receipt of the dispute, including any required supporting documentation, as per section 1862(b)(2)(B)(vii)(IV) of the Act.

After disputes have been fully resolved, the beneficiary, or his or her attorney or other representative, may

download or otherwise request a time and date stamped final conditional payment summary statement through the Web portal. This statement will constitute the final conditional payment amount if settlement is reached within 3 days of the date on the conditional payment summary statement. If the beneficiary or his or her attorney is approaching settlement and any disputes have not been fully resolved, he or she may not download or otherwise request a final conditional payment summary statement until the dispute has been resolved.

It is important to note that, per section 1862(b)(2)(B)(vii)(IV) of the Act, this dispute process is not an appeals process, nor does it establish a right of appeal regarding that dispute. There will be no administrative or judicial review related to this dispute process. However, the beneficiary will maintain his or her appeal rights regarding CMS’ MSP recovery determination, once CMS issues its final demand. Those appeal rights are explained in the final demand letter issued by CMS, and more information may be found in 42 CFR 405, subpart I.

The beneficiary or his or her attorney or other representative may obtain the recovery demand letter by submitting settlement information specified by the Secretary through the Web portal in 30 days or less from date of settlement. The amount and type of settlement information required will be the same information that CMS typically collects to calculate its recovery demand amount. This information will include, but is not limited to: The date of settlement, the total settlement amount, the attorney fee amount or percentage, and additional costs borne by the beneficiary to obtain his or her settlement. This information must be provided within 30 days or less of the date of settlement. Otherwise, the final conditional payment amount obtained through the Web portal will expire and any additional conditional payments with dates of service through and including the date of settlement will be included in the recovery demand letter. Once settlement information is received, we will apply a pro rata reduction to the final conditional payment amount in accordance with 42 CFR 411.37 and

issue a MSP recovery demand letter. We expect to incorporate a method into the Web portal that will allow settlement information to be entered directly through the Web portal and/or uploaded directly through the Web portal.

If the underlying liability insurance (including self-insurance), no-fault insurance, or workers’ compensation claim derives from alleged exposure to a toxic substance or environmental hazard, ingestion of pharmaceutical drug or other product or substance, or implantation of a medical device, joint replacement or something similar, the beneficiary or his or her attorney or other representative must provide notice to the CMS contractor via the Web portal before beginning the process to obtain a final conditional payment summary statement and amount through the Web portal. Many of these types of recovery cases require additional manual filtering and review to ensure that the claims included in the payment summary statement are related to the pending settlement.

An applicable plan may only obtain a final conditional payment amount related to a pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation settlement, in the form and manner described in 42 CFR 411.39(c), if the applicable plan has properly registered to use the Web portal and has obtained from the beneficiary, and submitted to the appropriate Medicare contractor, proper proof of representation. The applicable plan may obtain read only access if the applicable plan obtains from the beneficiary proper consent to release and submits it to the appropriate Medicare contractor.

The final conditional payment amount obtained via the Web portal represents Medicare covered and otherwise reimbursable items and services that are related to the beneficiary’s settlement and that are furnished prior to the time and date stamped on the final conditional payment summary statement. Systems and process changes to provide final conditional payment summary statements and amounts via the Web portal were implemented on January 1, 2016. BILLING CODE 4120–01–P


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BILLING CODE 4120–01–C

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DIAGRAM 1

Medicare's contractor is notified a liability insurance (including selfinsurance), no-fault insurance, and/or workers' compensation

claim has been filed.

120 days or less before

Settlement: The beneficiary

notifies CMS through the web

portal.

30 days or less after Settlement:

The beneficiary supplies settlement information through

the web portal.

The beneficiary disputes claims and

CMS responds within 11 days of receipt.

The beneficiary does not dispute claims.

Medicare applies a pro rata reduction to the Final Conditional Payment amount, in accordance with 42

C.F.R.411.37

Medicare posts its initial compilation of claims on the MSP

Web portal within 65 days or less.

3 days before Settlement:

The beneficiary downloads his or

her Final Conditional

Payment amount.

CMS issues a Final Demand Letter


Comment: Many commenters requested clarity on what it means to dispute a claim ‘‘once and only once.’’

Response: We have clarified the language in the final rule to reflect that a claim, meaning an individual conditional payment amount, or line item, on a payment summary statement, may be disputed once and only once. An individual or entity may submit disputes more than once, but never for the same conditional payment or line item.

Comment: Many commenters requested clarity on what it means to provide initial notice and why notice about the impending settlement must be supplied separately.

Response: In order for us to establish an MSP recovery case and initiate claims compilation in our system, we must know that there is a pending insurance or workers’ compensation claim. This means that a beneficiary, his or her attorney or other representative, or the insurer or workers’ compensation entity must call or write to us. This type of notice does not necessarily mean that the reported insurance or workers’ compensation claim is 120 days (or less) from settlement. If the insurance or workers’ compensation claim is, in fact, 120 days or less from settlement, that notice may be provided through the Web portal, once a recovery case has been posted on the Web portal.

Comment: Many commenters requested clarification regarding whether Medicare continues to make conditional payments after the initial claims compilation is complete, how the claims refresh interacts with the dispute process, and whether the concept of the claims refresh is consistent with what the SMART Act requires.

Response: Medicare pays conditionally up through and including the date of settlement. In this final rule, we have removed the claims refresh requirement.

Comment: Many commenters requested that we remove the limitation that an anticipated settlement may be reported to CMS once and only once, via the Web portal, after we have completed the initial claims compilation.

Response: We recognize that it can often be difficult to project exactly when a settlement will occur. However, the SMART Act imposed workload timeframes on CMS related to the processing of cases that expect to settle within 120 days. Where we fail to comply with such timeframes, the SMART Act requires us to relinquish certain rights related to recovery. As a result, we have developed the ’’once and only once’’ requirement to

encourage conscious decision-making by identified debtors and to promote our ability to provide timely and responsive service.

Comment: Many commenters requested clarification regarding the timeframe in which settlement information must be provided and specifically requested that CMS utilize a 90-day timeframe, rather than a 30-day timeframe. A few commenters requested that the 30-day timeframe remain optional because this timeframe is not in the SMART Act. They further asserted that there is no need for such a timeframe because many beneficiaries do not have attorneys, thereby negating the need to apply a pro rata reduction.

Response: In this final rule, we clarify that settlement information must be submitted within no more than 30 days of reaching settlement in order for CMS to remain bound by any final conditional payment amount it provided through the Web portal.

We recognize that the intent of the final conditional payment process is to expedite Medicare reimbursement and promote timely settlement. However, we are required to apply a pro rata reduction, in accordance with to 42 CFR 411.37, to account for attorney fees and costs borne by the beneficiary to obtain his or her settlement. In order to comply with this regulatory requirement and comport with the aforementioned intent of the final conditional payment process, we have imposed a requirement that settlement information must be submitted within no more than 30 days of reaching settlement.

Comment: Many commenters expressed concern that being required to reach a settlement within 3 days of obtaining a final conditional payment amount is not a reasonable timeframe.

Response: The SMART Act specifically established this 3-day timeframe. As a result, we maintain this requirement in this final rule. If settlement is not reached within 3 days of obtaining the final conditional payment amount, we are not bound by the final conditional payment amount. This means that, once settlement information is submitted, we will review any conditional payments it made for dates of service up through and including the date of settlement and issue our demand letter.

Comment: Many commenters raised concerns regarding the IFC’s reference to future medical obligations.

Response: We recognize that the SMART Act did not specifically reference future medical care, but medical care related to the insurance or workers’ compensation claim may continue to be provided after the date of

settlement. As a result, we have retained the language referencing future medical items and services.

E. Discussion of Additional Comments by Public Comment Topic

1. Publication of an IFC Versus a Proposed Rule

Comment: Many commenters requested that CMS retract the IFC and issue a proposed rule before finalizing a rule related to the MSP Web portal.

Response: Section 201of the SMART Act imposed an obligation on the Secretary to promulgate final regulations not later than 9 months after the date of the enactment of this clause. In order to promulgate a final rule in such a short timeframe, we were required to forego the more traditional rulemaking process, which would have resulted in significant delay, and publish an IFC that simply reflected the addition of key process components that the SMART Act requires CMS to include in existing recovery program.

2. Timeframes of the IFC Comment: Many commenters

questioned whether certain timeframes stipulated in the IFC comported with the requirements in the SMART Act.

Response: We recognize that there is some confusion regarding the 65-day Secretarial response timeframe and 120- day protected period. We have clarified the language in this final rule to establish that a final conditional payment amount may be requested at any time after a recovery case has been posted on the Web portal. Additionally, there is no requirement that 120 days must elapse before a final conditional payment amount may be requested.

Comment: Many commenters raised concerns that beneficiaries will be unable to meet timeframes specified in the IFC because they do not have or use computers or because they do not access the Internet.

Response: We understand these concerns, but pursuing a final conditional payment amount before settlement is not required. Information will be available on the Web portal, regardless of whether the Final conditional Payment process is used. Further, the existing process that CMS’ contractor uses to provide conditional payment information and demand letters via mail will continue to be available.

III. Provisions of the Final Regulations After consideration of all of the

comments received, we are finalizing the provisions included in the September 2013 IFC (78 FR 57800) with the following modifications to § 411.39:


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• Paragraph (a), we are removing the definition of ‘‘Medicare Secondary Payer conditional payment information’’ to avoid redundancy and confusion.

• Paragraph (b), we removed language related to Web portal functionality before January 1, 2016.

• Paragraph (c)(1)(iii), we removed the claims refresh requirement.

• Paragraphs (c)(1)(iv) and (v), we revised the language to clarify that a claim, meaning an individual conditional payment amount, or line item, on a payment summary statement, may be disputed once and only once. An individual or entity may submit disputes more than once, but never for the same conditional payment or line item.

• Paragraph (c)(1)(viii), we revised the language to clarify that settlement information must be submitted within no more than 30 days of reaching settlement in order for CMS to remain bound by any final conditional payment amount it provided through the Web portal.

• Paragraph (c)(2), we revised the language to clarify that a final conditional payment amount may be requested at any time after a recovery case has been posted on the Web portal.

IV. Collection of Information Requirements

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995.

V. Regulatory Impact Statement We have examined the impact of this

rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96– 354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for

major rules with economically significant effects ($100 million or more in any 1 year). We have determined that the effect of this final rule on the economy and the Medicare program is not economically significant, since it imposes certain requirements on the Agency to merely improve its current mechanism for providing conditional payment information to beneficiaries, their attorneys or other representatives, and authorized applicable plans.

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $7.5 million to less than $38.5 million in any 1 year. Individuals and states are not included in the definition of a small entity. We have determined that this final rule will not have a significant economic impact on a substantial number of small entities because there is and will be no change in the administration of the MSP provisions. Therefore, we are not preparing an analysis for the RFA.

In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 for proposed rules of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We have determined that this final rule will not have a significant effect on the operations of a substantial number of small rural hospitals because there is and would be no change in the administration of the MSP provisions. Therefore, we are not preparing an analysis for section 1102(b) of the Act.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2015, that threshold is approximately $146 million. This final rule has no consequential effect on state, local, or tribal governments or on the private sector because there is and will be no change in the administration of the MSP provisions.

Executive Order 13132 establishes certain requirements that an agency

must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. Since this final rule does not impose any costs on state or local governments, the requirements of Executive Order 13132 are not applicable. In accordance with the provisions of Executive Order 12866, this final rule was not reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 411

Kidney diseases, Medicare, Physician referral, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services adopts as final, the interim rule amending 42 CFR part 411 which was published on September 20, 2013 (78 FR 57800) with the following changes:

PART 411—EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE PAYMENT

■ 1. The authority citation for part 411 continues to read as follows:

Authority: Secs. 1102, 1860D–1 through 1860D–42, 1871, and 1877 of the Social Security Act (42 U.S.C. 1302, 1395w–101 through 1395w–152, 1395hh, and 1395nn).

■ 2. Amend § 411.39 by: ■ A. In paragraph (a) removing the definition of ‘‘Medicare Secondary Payer conditional payment information’’. ■ B. Revising paragraph (b)(1)(ii). ■ C. Removing paragraph (b)(2). ■ D. Redesignating paragraph (b)(3) as (b)(2). ■ E. Revising newly redesignated paragraph (b)(2). ■ F. Revising paragraph (c).

The revisions read as follows:

§ 411.39 Automobile and liability insurance (including self-insurance), no- fault insurance, and workers’ compensation: Final conditional payment amounts via Web portal.

* * * * * (b) * * * (1) * * * (ii) The appropriate Medicare

contractor has received initial notice of a pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation settlement, judgment, award, or other payment and has posted the recovery case on the Web portal.

(2) Beneficiary’s attorney or other representative or applicable plan’s


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access using the multifactor authentication process. A beneficiary’s attorney or other representative or an applicable plan may do the following:

(i) Access conditional payment information via the MSP Recovery Portal (Web portal).

(ii) Dispute claims. (iii) Upload settlement information

via the Web portal using multifactor authentication. * * * * *

(c) Obtaining a final conditional payment amount. (1) A beneficiary, or his or her attorney or other representative, or an authorized applicable plan, may obtain a final conditional payment amount related to a pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation settlement, judgment, award, or other payment using the following process:

(i) The beneficiary, his or her attorney or other representative, or an applicable plan, provides initial notice of a pending liability insurance (including self-insurance), no-fault insurance, and workers’ compensation settlement, judgment, award, or other payment to the appropriate Medicare contractor before accessing information via the Web portal.

(ii) The Medicare contractor compiles claims for which Medicare has paid conditionally that are related to the pending settlement, judgment, award, or other payment within 65 days or less of receiving the initial notice of the pending settlement, judgment, award, or other payment and posts a recovery case on the Web portal.

(iii) If the underlying liability insurance (including self-insurance), no- fault insurance, or workers’ compensation claim derives from one of the following, the beneficiary, or his or her attorney or other representative, must provide notice to CMS’ contractor via the Web portal in order to obtain a final conditional payment summary statement and amount through the Web portal:

(A) Alleged exposure to a toxic substance.

(B) Environmental hazard. (C) Ingestion of pharmaceutical drug

or other product or substance. (D) Implantation of a medical device,

joint replacement, or something similar. (iv) Up to 120 days before the

anticipated date of a settlement, judgment, award, or other payment, the beneficiary, or his or her attorney, other representative, or authorized applicable plan may notify CMS, once and only once, via the Web portal, that a settlement, judgment, award or other

payment is expected to occur within 120 days or less from the date of notification.

(A) CMS may extend its response timeframe by an additional 30 days when it determines that additional time is required to address claims that Medicare has paid conditionally that are related to the settlement, judgment, award, or other payment in situations including, but not limited to, the following:

(1) A recovery case that requires manual filtering to ensure that associated claims are related to the pending settlement, judgment, award, or other payment.

(2) Internal CMS systems failures not otherwise considered caused by exceptional circumstances.

(B) In exceptional circumstances, CMS may further extend its response timeframe by the number of days required to address the issue that resulted from such exceptional circumstances. Exceptional circumstances include, but are not limited to the following:

(1) Systems failure(s) due to consequences of extreme adverse weather (loss of power, flooding, etc.).

(2) Security breaches of facilities or network(s).

(3) Terror threats; strikes and similar labor actions.

(4) Civil unrest, uprising, or riot. (5) Destruction of business property

(as by fire, etc.). (6) Sabotage. (7) Workplace attack on personnel. (8) Similar circumstances beyond the

ordinary control of government, private sector officers or management.

(v) The beneficiary, or his or her attorney, or other representative may then address discrepancies by disputing individual conditional payments, once and only once, if he or she believes that the conditional payment included in the most up-to-date conditional payment summary statement is unrelated to the pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation settlement, judgment, award, or other payment.

(A) The dispute process is not an appeals process, nor does it establish a right of appeal regarding that dispute. There will be no administrative or judicial review related to this dispute process.

(B) The beneficiary, or his or her attorney or other representative may be required to submit supporting documentation in the form and manner specified by the Secretary to support his or her dispute.

(vi) Disputes submitted through the Web portal and after the beneficiary, or

his or her attorney, other representative, or authorized applicable plan has notified CMS that he or she is 120 days or less from the anticipated date of a settlement, judgment, award, or other payment, are resolved within 11 business days of receipt of the dispute and any required supporting documentation.

(vii) When any disputes have been fully resolved, the beneficiary, or his or her attorney or other representative, may download or otherwise request a time and date stamped conditional payment summary statement through the Web portal.

(A) If the download or request is within 3 days of the date of settlement, judgment, award, or other payment, that conditional payment summary statement will constitute Medicare’s final conditional payment amount.

(B) If the beneficiary, or his or her attorney or other representative, is within 3 days of the date of settlement, judgment, award, or other payment and any claim disputes have not been fully resolved, he or she may not download or otherwise request a final conditional payment summary statement.

(viii) Within 30 days or less of securing a settlement, judgment, award, or other payment, the beneficiary, or his or her attorney or other representative, must submit through the Web portal documentation specified by the Secretary, including, but not limited to the following:

(A) The date of settlement, judgment, award, or other payment, including the total settlement amount, the attorney fee amount or percentage.

(B) Additional costs borne by the beneficiary to obtain his or her settlement, judgment, award, or other payment.

(1) If settlement information is not provided within 30 days or less of securing the settlement, the final conditional payment amount obtained through the Web portal is void.

(2) [Reserved] (ix) Once settlement, judgment,

award, or other payment information is received, CMS applies a pro rata reduction to the final conditional payment amount in accordance with § 411.37 and issues a final MSP recovery demand letter.

(2) An applicable plan may only obtain a final conditional payment amount related to a pending liability insurance (including self-insurance), no- fault insurance, or workers’ compensation settlement, judgment, award, or other payment in the form and manner described in § 411.38(b) if the applicable plan has properly registered to use the Web portal and has obtained


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from the beneficiary, and submitted to the appropriate CMS contractor, proper proof of representation. The applicable plan may obtain read only access if the applicable plan obtains from the beneficiary, and submits to the

appropriate CMS contractor, proper consent to release. * * * * *

Dated: April 25, 2016. Andrew M. Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services.

Dated: April 29, 2016. Sylvia M. Burwell, Secretary, Department of Health and Human Services. [FR Doc. 2016–11270 Filed 5–13–16; 11:15 am]

BILLING CODE 4120–01–P


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