Managing Accident Claims: Avoiding Legal Disaster

Illinois AAHAM Fall Conference

Peoria, Illinois

August 20, 2014

DISCLAIMER - This publication is designed to provide general information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. Although prepared by individuals experienced in the medical reimbursement industry, this publication should not be utilized as a substitute for professional services in specific situations. Although the individuals who prepared the publication may be legal professionals individually, such individuals are not presenting the information covered herein as legal experts in the medical reimbursement industry. If legal advice or other assistance is required, the services of a professional should be sought.

Chad Powers, Esq. Vice President, General Counsel

Medical Reimbursements of America, Inc. 6840 Carothers Parkway, Suite 150 Franklin, TN 37067

Presentation Learning Objectives:

• To gain insights to avoid legal issues while optimizing the reimbursements available to hospitals for accident claims.

• To understand the challenges hospitals face in managing the unique financial class of Accident Claims.

• To study real-life examples of legal violations and damages incurred in recent years.

• To educate, enlighten, and engage Business and Financial professionals to consider and review their current processes and learn how to properly manage Accident Claims.

Presentation Overview

• Introduction

Types of insurance

• Not All Automobile Insurance is the Same

What is No-Fault insurance?

What is Liability insurance?

• Coordination of Payment – Why it is important to differentiate

Pitfalls of contract language and clauses

Review class action lawsuits

• Conclusion

• Q & A

Types of Insurance related to Accident Claims:

• Med Pay (No-Fault)

• PIP (No-Fault)

• Workers’ Compensation

• Commercial Health Insurance (e.g., BCBS, Cigna, UHC)

• Government Health Insurance (e.g., Medicare, Medicaid, TRICARE)

• Liability Insurance

• Under/Un-insured Motorist Coverage

Not all automobile insurance is treated the same: No-Fault vs. Liability

No-Fault Insurance

• No-Fault Insurance (e.g. Med Pay or PIP) is “first party” coverage;

• Pays regardless of fault;

• Pays the cost of necessary medical care received as a result of an accident

Automobile Med Pay- driver, family members, passengers

Homeowners’ Med Pay- guests, not homeowners/residents

Premises Med Pay- guests, patrons, members

No-Fault Insurance:

Anyone with No-Fault insurance injured in an automobile related accident. For example:

• Driver

• Passengers – related or unrelated – in the insured driver’s vehicle

• A person driving the insured driver’s vehicle

• Pedestrians with Med Pay in their car insurance policy

State No-Fault Insurance Requirements:

ILLINOIS: • No-fault insurance is not required. • Commonly purchased coverage: $5,000

• http://www.allstate.com/auto-insurance/Illinois-auto-insurance-coverages.aspx

Liability Insurance

• Liability insurance protects the insured from damage the insured does to others or to property in an accident.

• May cover: medical expenses, lost wages, pain and suffering, and attorney’s fees.

• If Patient is found “at-fault” or if fault cannot be determined, liability will not cover Patient’s medical expenses

Liability (At-Fault insurance):

• Insures the “injuring” party from…

• … the “injured” party’s damages claim.

Who does liability cover?

State Liability Insurance Requirements:

ILLINOIS: • Compulsory Coverage (20/40/15):

• Bodily injury: $20,000 per person and $40,000 per accident. • Property: $15,000.

No-Fault vs. Liability Coverage:

• Liability insurance differs from other insurance policies or plans . . .

• In the case of other types of insurance . . ., i.e. no-fault insurance, group health plans and workers’ compensation, the insurance has a contractual obligation to pay for medical services provided to the covered person.

• Liability insurance, however, has a contractual obligation to compensate the alleged tortfeasor for any damages the alleged tortfeasor must pay to an injured party.

LIABILITY INSURANCE

PATIENT HOSPITAL

LIABLE 3rd PARTY

NO-FAULT

Assignment of Benefits

Hospital Lien From

Patient

Reimbursement – 3 ways:

• Notice: • Providers must serve notice before funds are disbursed.

• Distribution formula (no single Category can receive > 1/3 of available funds): • If total health care liens > 40%,

• Health care Professional liens share 20% • Health care Provider liens share 20%

• Examination of health care records: • Provider must respond to a request for records w/in 20 days, or

lien is void • Payment pursuant to lien law is not payment in full. • Stanton v. Rea

ILLINOIS Health Care Services Lien Act (770 ILCS 23/1 et seq.):

Coordination of Payment: Billing No-Fault Primary to Health

2012 NAIC COB Model Regulation: Section 3, sub. (K)(3): • “Plan” includes . . . The medical benefits coverage in automobile “no

fault” . . . type contracts. Section 6, sub. (B)(1): • When a person is covered by two (2) or more plans, the rules for

determining the order of benefit payments are as follows . . . • . . . A plan that does not contain order of benefit determination

provisions that are consistent with this regulation is always the primary plan unless the provisions of both plans, regardless of the provisions of this paragraph, state that the complying plan is primary.

Ill. Admin. Code tit. 50 § 2009.20(f)(4)(F): • “Plan may include . . . [t]he medical benefits coverage in group automobile

contracts, in group or individual automobile ‘no fault’ contracts, and in traditional automobile "fault" type contracts to the extent that such contracts are Primary Plans. . .”

Ill. Admin. Code tit. 50 § 2009.40(a)(1) : • “A Plan that does not include a coordination of benefits provision may not take

the benefits of another Plan into account when it determines its benefits.”

ILL. ADMIN. CODE TITLE 50:

Coordination of Payment: Billing Liability Primary to Health

Recent News:

• D

• D

• D

Express Contract: No-Fault insurance has a

contractual obligation to pay for medical services provided to

Patient.

Express Contract: Liability Insurance has

a contractual obligation to

compensate 3rd Party for damages 3rd Party must pay to Patient.

Quasi-contract : Hospital has rendered services and Patient is

obligated to pay for them.

Express Contract: Health Insurance has

a contract with Patient and Hospital.

NO-FAULT INSURANCE

LIABILITY INSURANCE

PATIENT HOSPITAL

LIABLE 3rd PARTY

HEALTH INSURANCE

LIABILITY INSURANCE

Contract Relationships:

HEALTH INSURANCE

PATIENT HOSPITAL

NO-FAULT INSURANCE

› Patient agrees to join insurance “network” Insurance company

agrees to pay for medical treatment.

› Hospital agrees to accept payment from Insurance company as payment in full and agrees to only bill Insurance for payment Insurance company

agrees to direct patients to Hospital.

Contract Language – Health Insurance:

PATIENT HOSPITAL

LIABILITY INSURANCE

Neither Patient nor Hospital have a

contractual relationship with Liability Insurance.

Contract Language – Health Insurance:

Hold Harmless: Providers hereby agree that in no event, including, but not limited to nonpayment by Plan, Plan insolvency or breach of this Agreement, shall Provider bill, charge, collect a deposit from, seek compensation, remuneration or reimbursement from, or have any other recourse against Member or persons other than Plan acting on their behalf

for services provided pursuant to this Agreement. http://www.anthem.com/provider/nv/f5/s5/t1/pw_b130897.pdf

Sample Contract Language – BCBS:

• Recently, MRA has encountered a number of attorneys nationwide citing this case. The attorneys argue that Dorr prohibits contracted providers from pursuing the patient’s liability action when the patient has commercial insurance.

Attorneys argue its application to HMO and PPO contracts.

• In Dorr, a Wisconsin appellate court held that a hospital lien was unenforceable even though the hospital elected not to bill the patient’s HMO insurer. Both the HMO statute and the provider agreement prohibited the hospital from charging its patients for services covered by the terms of the group contract. As such, there was no debt owed by the patient to which a hospital lien could attach.

Wisconsin – Dorr v. Sacred Heart Hospital

• In 2009, a provider health system was named in a class action alleging that providers within the health system were filing liens against the patients’ liability claims rather than billing the patients’ commercial health insurance for the medical care provided to the patients.

• The parties ultimately settled the litigation. However, pursuant to the settlement, the defendant health system agreed to cease pursuing liens against liability claims for patients with commercial health insurance – unless expressly allowed by the terms of the commercial health insurance provider agreement – and to pay damages and attorneys’ fees.

Oklahoma – Confidential Parties:

• The California Supreme Court held that a hospital seeking to assert a lien under the state's Hospital Lien Act (“HLA”) can only do so if the patient owes an underlying debt to the hospital. In this case, the patients provided "payment in full" to the hospitals, via payment from the patients’ commercial health insurance plan, thus the hospitals could not assert its lien.

• The Court acknowledged that its decision would cause hardship to hospitals that have discounted rate agreements with payors, but noted that the hospitals could always contract to preserve their right to assert liens to recover the difference between negotiated rates and the actual cost of treatment.

California - Parnell et al. v. Adventist Health System West et al.:

• Plaintiffs’ complaint alleged that the provider breached its contracts with commercial health insurers “by attempting to collect and/or collecting from [insured patients] more than [insured patients] were legally liable.”

• The complaint also alleged violation of Louisiana’s “hold harmless” statute (LSA R.S. § 22:1874 et seq.) by “failing to file claims with [the commercial health insurers], by failing to accept payments from health insurers, by attempting to collect and collecting from patients amounts in excess of those legally owed by those patients.”

• In December 2012, the trial court ruled in favor of the plaintiffs and ordered a judgment in the amount of $17 million be paid by the provider.

Louisiana – Desselle v. Acadian Ambulance Service:

• St. Luke’s Hospital refused to accept the health insurance of 930 patients injured in auto accidents. It instead went after higher payments from car insurance settlements intended for the patients. The St. Luke’s settlement is thought to be one of the first court settlements to put an explicit stop to the repayment method.

• Per the settlement agreement: 1. The hospital is prohibited from filing liens against an

insurance settlement or seeking payment directly from the patient and instead must accept a patient’s valid health insurance. The hospital can still file a lien/bill for any patient responsibility.

2. St. Luke’s will forgive any liens not paid or collected. 3. A payout fund will be established for the benefit of patients

impacted by St. Luke’s practices. 4. Total settlement valued at over $4 million.

Missouri – Welschmeyer v. St. Luke's et al.:

• In late January 2013, Mr. Falls filed a complaint alleging that Silver Cross refused to bill the plaintiffs’ health insurance – or in some cases refused to accept payment from the plaintiffs’ health insurance carriers – and instead filed health care liens for payment from allegedly liable third parties and/or the third parties’ insurance. Notably, the case sought to include patients that were treated at Silver Cross as far back as 2002.

• In a scathing memorandum order following Silver Cross’s motion to dismiss, the court mocked Silver Cross’s argument that filing a lien on settlement proceeds is not the same as billing the patient directly. The order concluded, “This Court will not indulge the fiction advanced by Silver Cross and its counsel.”

• The plaintiff voluntarily dismissed the case in July 2013.

Illinois – Falls v. Silver Cross Hospital and Med. Centers:

The Lifecycle of a Commercial Health Claim

Third Party Liability

Patient Gets Injured

Hospital Treats Patient

Med Pay | PIP Commercial

Health Insurance

ACCOUNT INVESTIGATION: The billing office staff will communicate with

patients, employers, insurance agents, adjusters, and health insurance carriers, to identify all

payers and then bill/coordinate claims as the obtained information dictates.

For all remaining balances and/or claims without primary insurance coverage(s) the billing office staff will investigate litigated claims by gathering information from the patient’s attorney, billing any applicable insurance carriers, or filing hospital liens.

Bills are submitted to the carrier with a written notice of an assignment of benefits and/or lien so as to ensure that payments are directed to

the hospital.

The business office staff will submit claims to

the health insurance carrier. Claims are submitted with accident details, subrogation

information, and exhaust documentation from all primary insurances.

Medicare Secondary Payer

• Medicare is secondary to no-fault insurance even if State law or a private contract of insurance stipulates that its benefits are secondary to Medicare benefits or otherwise limits its payments to Medicare beneficiaries.

• If services are covered under no-fault insurance, that insurance must be billed first. If the insurance does not pay all of the charges, a claim for secondary Medicare benefits can be submitted.

• Medicare can pay for services related to an accident if benefits are not available under the individual's no-fault insurance coverage because that insurance has paid maximum benefits for the accident on items or services not covered by Medicare or on non-medical items such as lost wages.

• Primary Medicare benefits cannot be paid merely because the beneficiary wants to save insurance benefits to pay for future services or for non-covered medical services or non-medical services. Since no-fault insurance benefits would be available in that situation, they must be used before Medicare can be billed.

Medicare Secondary Payer: Medicare Secondary Payer Manual, Ch. 2, Sec. 60.

• Generally, providers, physicians, and other suppliers must bill liability insurance prior to the expiration of the promptly period rather than bill Medicare.

• Promptly means payment within 120 days after the earlier of: 1) the date the claim is filed with an insurer or a lien is filed against a potential liability settlement; or 2) the date the service was furnished or, in the case of inpatient hospital services, the date of discharge) rather than bill Medicare.

• Following expiration of the promptly period, or if demonstrated (e.g., a bill/claim that had been submitted but not paid) that liability insurance will not pay during the promptly period, a provider, physician, or other supplier may either:

• bill Medicare for payment and withdraw all claims/liens against the liability insurance/beneficiary’s liability insurance settlement (liens may be maintained for services not covered by Medicare and for Medicare deductibles and coinsurance); or

• maintain all claims/liens against the liability insurance/beneficiary’s liability insurance settlement.

Medicare Secondary Payer: Medicare Secondary Payer Manual, Ch. 2, Sec. 40.

The Lifecycle of a Medicare Claim

Third Party Liability

Patient Gets Injured

Hospital Treats Patient

Med Pay | PIP Medicare

ACCOUNT IDENTIFICATION: Registration staff identifies the account as accident related; Patient completes MSP

Questionnaire.

The billing office staff must bill claims for which auto insurance med-pay, workers’ comp, and premises med-pay benefits are available to those carriers prior to submitting to Medicare.

The billing office staff will work claims involved in litigation to gather information needed to bill any liability insurance carriers or file hospital liens if necessary. Liability coverage MUST be billed prior to submitting claim to Medicare.

Bill submitted to Medicare as secondary payer using proper 2-part

explanation code

Putting it Together: The Lifecycle of a Claim

Third Party Liability

Patient Gets Injured

Hospital Treats Patient

Med Pay | PIP Commercial

Health Insurance

Third Party Liability

Patient Gets Injured

Hospital Treats Patient

Med Pay | PIP Medicare

Commercial Health:

Medicare:

Conclusion

Conclusion: • Distinctions

No-Fault = First party insurance; pays regardless of fault Liability = Fault based insurance; Covers the liable party; only

pays if 3rd Party at fault • Relationships

No direct contract between hospital and No-Fault No direct contract between hospital and Liability

• Hospital cannot pursue liability when patient is a commercial health plan enrollee; Hospital must pursue liability when patient is a Medicare beneficiary.

• Recent litigation trends indicate that courts are likely to side with insured patients when hospitals pursue liability primary to health.

QUESTIONS?

Disclaimer: This information is confidential and proprietary in nature, and may not be reproduced in whole or in part without the authorized written consent of Medical Reimbursements of America, Inc.

Chad Powers, Esq. Vice President, General Counsel Phone: (615) 850-5891 / Email: cpowers@mraresults.com

Medical Reimbursements of America (MRA): • Founded in 1999 & based in Brentwood, Tennessee • Process over $1 Billion annually in complex accident claims • Serving over 300 Hospitals across the nation • AcciClaim HFMA Peer Review Certified February 2013

Contact Information:

THANK YOU!