Are You Ready For Mandatory Medicare Reporting?

New Law Requires Insurers To Report Payments To Medicare

In 2007, President Bush signed the Medicare, Medicaid and SCHIP Extension Act of 2007 into law. Section 111 of the Act adds new mandatory reporting requirements for liability insurance (including self-insurance), no-fault insurance, and workers' compensation, as well as group health plan arrangements.

Insurers are required to report certain identifying information for every claimant to the Center for Medicare and Medicaid Services (CMS), including the claimant's legal name, date of birth, gender and social security number. The purpose of the Section 111 reporting requirement is to identify Medicare eligible claimants and ultimately aid CMS in the coordination of benefits. If a claimant is determined to be Medicare eligible, insurers will then be required to report the resolution of his or her claim, whether through a settlement, judgment, award, or other payment (regardless of whether or not there is a determination or admission of liability).

The new law is clearly designed to assist CMS with its efforts to subrogate claims, obtain reimbursement for benefits already paid, and deny payment when insurers are primary. Failure to report the appropriate information could result in fines of up to $1,000.00 per day per unreported claimant. Reporting will be quarterly and in an electronic format approved by CMS.

Everyone involved with the handling of claims and settlements should be familiar with the new law. Insurance carriers and insurance professionals will need to adapt their claims and settlement procedures to ensure compliance with the new law. The appropriate software will also have to be integrated into information technology systems.

CMS has created a web page with information regarding the Section 111 reporting requirements. 

Click Here For The CMS Web Page

The web page includes links to all CMS press releases and publications.

Click Here For The Official User Guide Published By CMS

On March 20, 2009, CMS issued an alert notifying liability, no fault, and workers' compensation carriers of the extension of certain deadlines.

Click Here For The Alert From CMS

Once you register with CMS, you are assigned a representative to provide you assistance with the reporting process. If you have any further questions regarding the applicability of the new law to your company, the mandatory reporting requirements, and the penalties for non-compliance, please feel free to submit a written inquiry to Joseph M. Powell, Esq. at jpowell@lawppl.com.

Pro-Rata Other Insurance Clause In Building Owner's Policy Makes Snow Removal Company's Policy Excess

The New Jersey Appellate Division recently tackled the question of allocating coverage among liability insurers where two policies have different "other-insurance clauses."  The court correctly noted that this is an area of law that is "substantially unresolved in New Jersey."
 
The case, W9/PHC Real Estate LP v. Farm Family Casualty Ins. Co., arose from a personal injury claim presented by a man who slipped on ice in a commercial parking lot. The property owner hired a snow removal company to clear the parking lot of snow and ice. The contract required that the snow removal company name the owner as an additional insured on its liability policy.  The owner was, in fact, named as an additional insured.
 
The owner tendered its defense and a demand for indemnification to Farm Family Casualty Ins. Co., the insurer for the snow removal company.  Farm Family declined.  The owner, which received defense and indemnification from Zurich North American, then settled the personal injury claim. 
 
A declaratory judgment action was then filed against Farm Family. That action was resolved through motions for summary judgment, and the trial court ruled that Farm Family was required to contribute to the defense costs and settlement of the personal injury claim on a pro-rata basis. The trial court also required Farm Family to pay all of the costs incurred in prosecuting the declaratory judgment action.
 
The matter was appealed and the Appellate Division reversed the trial court's decision on all counts.  The court noted that pro-rata contributions are required when the "other-insurance clauses" both purport to be "excess" over each other.  In that common situation, New Jersey courts have consistently disregarded both clauses and required a pro-rata contribution.  
 
The court explained that this case required a different result because the Zurich policy specifically contemplated the possibility of a pro-rata contribution with other carriers, (even setting forth a formula to use), while the Farm Family policy purported to be excess over other policies.  The appellate court discussed how this issue has been addressed in other states, then declared that it was adopting the "majority rule" for New Jersey.  The court held:
 
     We adopt the majority rule.  Where one policy has a

     pro-rata other insurance clause and another policy contains 

     an excess other insurance clause, the former policy is

     primary and the latter policy is excess.  This rule

     recognizes and considers the language in both policies.  

     In the absence of controlling precedent, the specific

     language of the policies should be applied, and given its

     ordinary meaning.  By adopting such an approach, neither

     insurance company is getting "stuck" for anything more that

     it contracted to provide for its insured.  
 
It should be noted that the snow removal company was a defendant in the underlying personal injury case.  It is unclear whether Farm Family made any contribution to the settlement in that case on behalf of the snow remval company.  In the end Zurich paid $115,000.00 to the plaintiff, $15,302.82 in defense costs, and $59,817.80 to prosecute the declaratory judgment action.

In late May, the New Jersey Appellate Division had the opportunity to weigh-in on a hot button issue. When is it permissible to ask a plaintiff whether he is in the country legally? First, it is important to note that it is well-settled law that illegal immigrants may file lawsuits in New Jersey courts. The tricky issue for defense attorneys is when and how this information may be used to attack the plaintiff's case.
 
In Serrano v. Underground Utilities Corp., the Appellate Division became the first court in New Jersey to address these issues in a published opinion. That case involved a lawsuit by multiple plaintiffs seeking to become certified as a "class action" against their former employer. The employees claimed that the employer (a construction company involved in government financed public works projects) failed to pay overtime, as well as the prevailing wage required by New Jersey law.
 
During the course of discovery, the attorney for the employer aggressively sought information regarding the immigration status of two plaintiffs. Counsel for the plaintiffs objected to these requests and the issue was ultimately brought to the attention of the trial court. The trial judge ordered depositions to go forward, but that any objectionable questions should be brought before the court by post-deposition application. The trial judge would then determine which questions had to be answered and issue a "protective order."
 
During depositions, the defense attorney established that certain false information, including false social security numbers, had been provided to the employer. The trial court then approved a list of twenty of the questions, including questions directly addressing the plaintiffs immigration status. Counsel for the plaintiffs immediately filed an appeal. The defendant employer also cross-appealed, arguing that the questions should have been answered at the depositions and that the protective order was unnecessary.
 
The appellate court first noted that the New Jersey Court Rules allow for a protective order to protect a party from annoyance, embarrassment, oppression or undue burden or expense, but that these considerations must be balanced against the broad scope of discovery that is authorized in civil cases. The court discussed how the issue has been addressed in other states, and ultimately rejected the defendant employer's arguments. The court stated that "we categorically reject defendants' position that the discovery of any immigration-related information that bears upon plaintiffs' credibility is, as a per se matter, fair game." In fact, in a footnote referencing a member of the panel's concurring opinion, the court stated: "The entire panel joins in his suggestion that a presumption against discovery of plaintiffs' immigration status should be applied on remand, and that defendants should bear the burden of overcoming that presumption."  The court held that the defendant may overcome the presumption against discovery only if it presents a "specific and compelling" proffer of the admissibility of the requested information.
 
The appellate court went so far as to specifically strike the first two questions that were allowed by the trial court's protective order. They read as follows:
 
     1. Are you a legal resident or citizen of the United States?
     2. Are you currently present in the United States legally?
 
Although the court concluded its opinion with a "cautionary note" that its opinion only addressed a "discreet" protective order on a discreet case, the tone of the opinion makes it quite clear that discovery on the issue of immigration status will only be allowed in limited situations or under exceptional circumstances.  In fact, the court suggested that it gave as much indulgence as it did to the defendant only because it concerned an employment matter. The court explained that: 
 

     If the present litigation were, for instance, a routine

     personal injury case or a malpractice action involving

     the medical treatment of a plaintiff at a hospital, we

     would have no trouble in concluding that the probative

     value of discovery inquiries relating to a subject such as

     a plaintiff's immigration status is at best negligible,

     unless the plaintiff is seeking future lost wages

     (contingent upon his or her legal ability to work) as part

     of his or her claimed damages.

It would certainly appear that questions regarding a plaintiff's immigration status will not be allowed absent a unique set of circumstances or a direct claim for future lost wage.

Click Here For A Copy Of The Court's Opinion