Managing Accident Claims: Avoiding Legal Disaster

Managing Accident Claims: Avoiding Legal Disaster 2014 AAHAM Annual National Institute San Diego, California October 15-17, 2014

Chad Powers, Esq. Vice President, General Counsel Medical Reimbursements of America, Inc. 6840 Carothers Parkway, Suite 150 Franklin, TN 37067 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.

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 Medicare Secondary Payer as it pertains to Accident Claims Conclusion Q & A

RECENT NEWS:

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: 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

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

Types of No-Fault Insurance: Medical Payments Insurance ( Med Pay ): An optional coverage under most automobile insurance policies. This coverage pays for health care costs regardless of who has been assigned fault. Personal Injury Protection ( PIP ): A compulsory coverage in true No Fault States. This coverage may pay for medical expenses, lost wages, and more.

Florida Hawaii Kansas Kentucky Massachusetts Michigan Minnesota New Jersey New York North Dakota Pennsylvania South Carolina Texas Utah

Liability Insurance

Liability (At-Fault 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

Who does liability cover? Insures the injuring party from the injured party s damages claim.

State Liability Insurance Requirements: Most states require minimum liability coverage. TENNESSEE: Compulsory Coverage (25/50/15): Bodily injury: $25,000 per person and $50,000 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.

Reimbursement 3 ways: PATIENT HOSPITAL Assignment Hospital From of Patient Benefits Lien* NO-FAULT LIABILITY INSURANCE LIABLE 3rd PARTY * Where applicable

Coordination of Payment: Billing No-Fault Primary to Health

Florida Hawaii Kansas Kentucky Massachusetts Michigan Minnesota New Jersey New York North Dakota Pennsylvania Utah

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.

Tennessee Rules and Regulations, Chapter 0780-01: Tenn. Comp. R. & Regs. 0780-01-53-.02(1)(e): Plan may include the medical benefits coverage in group-type, and individual automobile nofault and traditional automobile fault type contracts. Tenn. Comp. R. & Regs. 0780-01-53-.03(4): General. When there is a basis for a claim under This Plan and another Plan, This Plan is a Secondary Plan which has its benefits determined after those of the other Plan, unless: (i) the other plan has rules coordinating its benefits with those of This Plan; and (ii) both those rules and This Plan's rules, in subparagraph (2) below, require that This Plan's benefits be determined before those of the other Plan.

Coordination of Payment: Billing Liability Primary to Health

RECENT NEWS:

Contract Relationships: PATIENT Express Contract: Liability Insurance has a contractual Express NO-FAULT Contract: obligation to Health INSURANCE Insurance has compensate 3rd Party a contract with for damages 3rd Party Patient and Hospital. must pay to Patient. HOSPITAL Quasi-contract : Hospital has rendered services and Patient is obligated to pay for them. Express Contract: No-Fault insurance has a LIABILITY HEALTH contractual obligation LIABILITY to LIABLE pay 3rd PARTY for medical services provided to Patient. 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 INSURANCE to only bill Insurance for payment.

Contract Language Health Insurance: PATIENT HOSPITAL Neither Patient nor Hospital have a contractual relationship with Liability Insurance. LIABILITY INSURANCE

Sample Contract Language BCBS: 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

Additional Arguments: Third Party Beneficiary : Patient is a Third Party Beneficiary ( TPB ) of the contract between Hospital and Patient s commercial health insurance ( Payer ). A TPB of such a contract is entitled to enforce the contract and sue for damages for its breach. By refusing to submit his medical bills to Payer, Hospital is depriving Patient of the benefits of the discounts and other provisions of the negotiated agreement between Hospital and Payer. Interference with Contract : Refusing to submit billed charges to Payer for payment may constitute tortious interference with Patient s contract with Payer. Patient had the foresight to purchase health insurance coverage to protect him in the event he was injured or became ill with the expectation that Payer would cover his medical expenses. Patient has paid premiums to obtain that insurance coverage. By refusing to submit billed charges to Payer, Hospital is depriving Patient of the benefits of his contract with Payer.

Wisconsin Dorr v. Sacred Heart Hospital 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.

Oklahoma Confidential Parties: 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.

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

Louisiana Desselle v. Acadian Ambulance Service: 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.

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

Missouri Welschmeyer v. St. Luke's: 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.

The Lifecycle of a Commercial Health Claim

Patient Gets Injured Hospital Treats Patient Med Pay PIP Commercial Health Insurance Third Party Liability ACCOUNT INVESTIGATION: Bills are submitted to the carrier The with business a written office staff will submit claims to The billing office staff will communicate with notice of an assignment of benefits the and/or health lien insurance carrier. For all remaining Claims are balances and/or claims patients, employers, insurance agents, adjusters, so as to ensure that payments are submitted directed with to accident without details, primary subrogation insurance coverage(s) the and health insurance carriers, to identify all the hospital. information, and exhaust billing documentation office staff from will investigate litigated payers and then bill/coordinate claims as the all primary insurances. claims by gathering information from the obtained information dictates. patient s attorney, billing any applicable insurance carriers, or filing hospital liens.

Medicare Secondary Payer

Medicare Secondary Payer: Medicare Secondary Payer Manual, Ch. 2, Sec. 60. 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 nonmedical 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. 40. 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.

The Lifecycle of a Medicare Claim

Patient Gets Injured Hospital Treats Patient Med Pay PIP Third Party Liability Medicare ACCOUNT IDENTIFICATION: The billing office staff must bill The claims billing for office which staff will work claims involved Bill submitted to Medicare as Registration staff identifies the auto account insurance as med-pay, workers in litigation comp, and to gather information needed secondary to bill payer using proper 2-part accident related; Patient completes premises MSP med-pay benefits are any available liability to insurance carriers or file hospital explanation code Questionnaire. those carriers prior to submitting liens to if Medicare. necessary. Liability coverage MUST be billed prior to submitting claim to Medicare.

Putting it Together: The Lifecycle of a Claim

Commercial Health: Patient Gets Injured Hospital Treats Patient Med Pay PIP Commercial Health Insurance Third Party Liability Medicare: Patient Gets Injured Hospital Treats Patient Med Pay PIP Third Party Liability Medicare

Conclusion

Conclusion: No-Fault insurance vs. Liability insurance: No-Fault: o Depending on the state, an optional or compulsory coverage that pays for health care costs regardless of who has been assigned fault. Liability: o Generally, a compulsory coverage to compensate the at-fault party for any damages he/she must pay to an injured party. The relationship or lack thereof between HOSPITAL, PATIENT, and PAYER will control the proper order of payment. Hospital cannot pursue liability primary when patient is a commercial health plan enrollee; Hospital must pursue liability primary 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.

Contact Information: 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

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