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New Court Decision Reminds Primary Payers to Rely on Medicare Final Demand Letter in Determining Amount of Conditional Payments

As Medicare primary payers, carriers and self-insured employers should be aware of the Trial Order issued by the Supreme Court of New York, New York County on 3/15/18 in Mayo v. NYU Langone Medical Center, 2018 WL1335262 (N.Y. Sup.) (3/15/18). The Order vacated a settlement on the basis of mutual mistake of the parties because they relied on a Conditional Payment Letter for the amount of a conditional payment lien, rather than a final demand from Medicare. The difference between the amount of conditional payment reimbursement requested in the Letter and the final demand was $142,939.58!

The Plaintiff's estate in Mayo moved for an order declaring a medical malpractice settlement null and void on the basis that relying on a Conditional Payment Letter requesting $2,824.50 in reimbursement rather than a final demand in the amount of $145,764.08 was a mutual mistake of the parties. The Defendant liability carrier argued that the mistake was not mutual, but a unilateral error on the part of the Plaintiff as Medicare beneficiary.  The liability carrier took the position that the Plaintiff failed to ensure that the conditional payment lien amount was correct. The court disagreed, finding that the mistake was mutual.

The significance of this decision is two-fold for primary payers. First, primary payers cannot rely on the total amount of the conditional payment lien stated in the Conditional Payment Letter at the time of settlement. Payers must obtain a final demand from the Centers for Medicare and Medicaid Services. This illustrates the importance of being vigilant in conditional payment research and response at every stage of the conditional payment recovery process.

Second, the Court refused to agree that the Plaintiff, as Medicare beneficiary, is solely responsible for conducting conditional payment research and resolving conditional payment demands. The Court specifically referenced, “the defendant’s potential liability with respect to Medicare liens,” as evidence supporting the argument that the error was mutual. Like the liability carrier in the Mayo Order, workers’ compensation carriers and self-insured employers are potentially liable for conditional payment reimbursement. Thus, they must research conditional payments and resolve reimbursement claims when settling claims with Medicare beneficiaries.

Conditional payment research has been part of the Hamberger & Weiss WCMSA process since inception. In addition, our Settlement Team has been actively engaged in resolving conditional payment reimbursement claims since the advent of CMS’ Commercial Repayment Center. To date, we have successfully challenged over $750,000 in conditional payment claims. For any questions concerning the Medicare conditional payment process, please contact our partner, Nicole Graci.

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