We all know that the Medicare Secondary Payer (MSP) statute -and regulations promulgated thereunder- requires personal injury claim parties (including plaintiffs, defendants, insurers and attorneys) to take certain steps to protect Medicare’s interests in the settlement of those claims.  Those steps include at a minimum reporting the claim to Medicare if the claimant is a Medicare beneficiary and reimbursing any payments made by Medicare for treatment of the injury or illness involved in the claim.

After settlement of litigation against the tobacco companies a few years ago a qui tam action was brought against those companies for failure to comply with the MSP reporting and reimbursement requirements.  Some of the smokers who received settlements from the tobacco companies were Medicare beneficiaries, and the Medicare payments for treatment of illnesses caused by smoking cigarettes were-supposedly- never reimbursed.

The qui tam action was dismissed since failure to pay an obligation owed to the federal government was deemed not to give rise to a qui tam claim.  In other words, the tobacco companies and their insurers had not violated the False Claims Act since they did not present a false claim to Medicare; at most they failed to pay an obligation owed.

In May 2009 the Fraud Enforcement and Recovery Act (FER) was passed, amending the False Claims Act to make it a violation to avoid an obligation to pay money to the federal government.

Accordingly, failure to reimbursement Medicare is now a violation of the False Claims Act.

Penalties for violating the False Claims Act include civil penalties of $5,000 to $10,000 per violation, plus treble damages, plus attorney fees.  In the context of failure to reimburse Medicare, each Medicare payment not reimbursed could be counted as a single violation giving rise to the monetary penalty.  The typical Medicare reimbursement in settlement of a personal injury claim involves dozens if not hundreds of Medicare payments.

Beginning in the first quarter of 2010, insurers and self-insureds for liability, workers’ comp and no fault claims will begin reporting their claims involving Medicare beneficiaries pursuant to the Mandatory Insurer Reporting law.  Those who are sophisticated in making qui tam claims under the False Claims Act will be waiting with open arms for those reports. They will identify which claimants, attorneys, defendants and insurers failed in their obligation to reimbursement Medicare.

The treasure map will soon be here.