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USA v. Stricker

Posted date in MSP Compliance

Stricker is a recent lawsuit filed by the U.S. Department of Justice on behalf of the Secretary of Health and Human Services.  The claim is to recover conditional payments under the Medicare Secondary Payer Act (42 USC §1395y(b)(2)) from a liability claims settlement that took place back in 2003.   

This lawsuit is the first one that I am aware of that includes as defendants the insurance carriers that contributed to the underlying settlement.  The allegation of the U.S. against those defendants is that they were required under 42 CFR §411.25 to notify Medicare of any settlement, award, judgment or other payment that was made when the case was resolved, but did not.  The U.S. seeks reimbursement against these defendants under the recovery action section of the Medicare Secondary Payer Act (42 USC §1395y(b)(2)(B)(iii)) as well as double damages for any conditional payments that are owed.  According to the complaint it did not matter that these defendants paid out the settlement proceeds as 42 CFR §411.24(i) allows Medicare to seek payment from the liability insurance carrier, regardless of whether payment has already been made to the Medicare beneficiary.

It is precisely this type of lawsuit that will cause insurance carriers and self insureds to be careful in how they distribute funds when resolving a case.  Prior to this lawsuit being filed, it was unclear whether Medicare would file such actions. Now we know the answer.  Another important point about this lawsuit is that the plaintiff attorneys in the underlying settlement are also named defendants.  When you add these types of lawsuits to the new reporting requirements you get very nervous insurance carriers worried about liability as it relates to liens.  It also shows the government is getting more aggressive about going after parties that fail to address conditional payments.