Understanding Medicare’s Secondary Payer Private Cause of Action against Primary Payers

As a “secondary payer,” Medicare has an interest in any workers’ compensation claims where it may have paid for medical care that might be related to the workers’ compensation injury. Medicare calls payments it makes to a Medicare beneficiary “conditional payments.” The condition is that Medicare will seek reimbursement for the payments made if it turns out that a “primary payer,” such as a workers’ compensation insurer, should have paid for the treatment, pursuant to 42 USC 1395y(b)(2)(B).

The Third Circuit and Eleventh Circuit Courts have established that Medicare has a right to recover double damages through a Medicare Secondary Payer private cause of action against primary payers for failure to timely reimburse the conditional payments, pursuant to 42 USC 1395y(b)(3)(A). This cause of action is ripe and actionable 60 days after the settlement check is issued.

Thus, it is imperative that whenever a petitioner in a workers’ compensation claim is Medicare-eligible or likely Medicare-eligible, the insurer or TPA complete a “Conditional Payments Check” as soon as practicable in order to reveal any payments made by Medicare that might be related to the claim. If the search reveals that such payments were made, the parties will need to account for any reimbursement to Medicare for the bills it paid prior to settlement of the claim. If this process is not completed and reimbursement is not made within 60 days of the issuance of the settlement check, there is a risk that Medicare will seek to recover double damages through the Medicare Secondary Payer Act private cause of action.

We will continue to monitor the development of case law in this area as the courts rule on the boundaries of this cause of action, including what entities or individuals this cause of action can be brought against.

Thanks to attorney Allison Mecher for the excellent summary of this important issue.  Allison works out of the Chicago offices of I&F and joined the firm after working at the Social Security Administration, Office of Disability Adjudication and Review,

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