My Big Fat Annual Conference: The Feds Bring Out Their Big Guns

My Big Fat Annual Conference: The Feds Bring Out Their Big Guns

Karen C. Yotis, Esq., the Feature Resident Columnist for the LexisNexis Workers’ Compensation eNewsletter, provides insights into workplace issues and the nuts and bolts of the workers’ comp world.

Building on offerings from prior years, the National Workers’ Compensation and Disability Conference & Expo once again presented a stand-out session on Medicare Secondary Payer Case Law Trends during its 2013 gathering in Las Vegas. In true NWCDC style, a top notch panel featuring MSP doyenne Jennifer C. Jordan, esteemed workers’ compensation attorney Vernon Sumwalt, and legal eagle James J. Kennedy, III, gave something different than what most conference audiences have come to expect. In Part 3 of this series, we focus on James. J. Kennedy’s presentation.


James J. Kennedy introduced the crowd to some very big federal guns during his explanation of why the United States is increasingly turning to the Federal False Claims Act of 1863, 31 U.S.C.S. § 3729, direct actions, and other methods of federal debt collection such as the Fraud Enforcement and Recovery Act of 2009 to pursue recovery of improper Medicare payments.

As the Justice Department’s AK-47, these Federal False Claims Act actions constitute the newest threat to the workers’ compensation industry because the increased focus on MSP enforcement and reporting requirements under MMSEA §111 is now being applied in the context of the Act. And because of Congressional amendments to President Lincoln’s original law, whistleblowers are able to receive a piece of the government’s Qui Tam recovery.

Kennedy described this newest federal government recovery strategy as a trifecta of sorts. The first blast comes from Congress’s establishment of a law to enforce Medicare as a secondary payer, a principle that has been reinforced through various amendments over a number of years. The second piece of the action derives from the immensely rich and robust kit of rules and regulations that Congress established to compel mandatory reporting of all claims involving Medicare eligible plaintiffs. The third hit is what Kennedy called the nuclear option of the federal government coming at an entity with all of its resources in a Federal False Claims Act suit, a claim that the government has every incentive to pursue.

The kicker is the list of potential defendants in such a claim. Anyone in the legal world who has touched a federal contract—and an MSA is a federal contract—may be open to this exposure. This means not only carriers, providers, and TPAs, but claimant’s attorneys who take their fees and lienholders who are reimbursed from the settlement proceeds under an MSA. Some very risky business indeed.

Adding teeth to this new channel of government recovery is the 2009 Congressional amendment that removed the intent requirement from the Federal False Claims Act cases. These cases have resulted in treble damages, payment of fines, and jail time.


The session ended with the following MSP take-aways:

> MSAs are a risk management tool to avoid workers’ compensation-related post-settlement Medicare payments

> MSP terms are contractual obligations

> Courts tend to literally read the Medicare statute

> State law governs compensability, therefore MSP applications should be confined to state limitations

> MSP-related debt is still merely federal debt

> Begin with the end in mind

As Vernon Sumwalt commented towards the conclusion of the session, “who knows what will happen in the next decade?” The individuals grappling with these issues will most assuredly be presenting at upcoming annual NWCDC events.

See Part 1 of this article: “My Big Fat Annual Conference: MSP Litigation Strategies to Manage Some Very Risky Business”.

See Part 2 of this article: “My Big Fat Annual Conference: Medicare Advantage Marches On”.

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