West Virginia attorney Paul Harris is learning the hard way that you don't mess with Uncle Sam's efforts to get reimbursement of Medicare conditional payments.
Harris's client was injured by an allegedly defective ladder. Harris sued the retailer of the ladder and settled for $25,000. Medical expenses for the injury had been paid by Medicare to the tune of $22,000 and change. Medicare was never reimbursed by Harris or his client.
The Centers for Medicare and Medicaid Services (CMS) started enforcement proceedings, namely a federal court suit against attorney Harris to get reimbursement. The case is pending in the United States District Court for the Northern District of West Virginia. Mr. Harris filed a motion to dismiss, arguing that as an attorney for the Medicare beneficiary, he had no duty to protect Medicare's interest and is not liable for failing to reimburse Medicare. The judge assigned to the case disagreed.
U.S. District Court Judge Frederick Stamp, Jr. denied Harris' motion on November 13, 2008. In his written opinion Judge Stamp ruled that a lawyer can be held individually liable under 42 USC section 1395y(b)(2) when he or she distributes settlement funds without satisfying an existing Medicare reimbursement right.
The court cited approvingly the language of 42 CFR section 411.24(g) which provides that Medicare can recover from any entity that receives payment from a primary payer, including the beneficiary, a medical provider, a supplier, a physician, a state agency, a private insurer OR AN ATTORNEY. Mr. Harris is an attorney. When the ladder retailer (who became a primary payer as soon as it paid the settlement) sent the settlement check to Mr. Harris and the check proceeds were distributed, Mr. Harris received an attorney fee. He thus became an entity that received payment from a primary payer, thus making him personally liable to Medicare.
The morale of the story: even the little cases require care in dealing with Medicare liens, and attorneys cannot leave it up to someone else to deal with the issue.