With the preseason underway and the regular season right around the corner, football fans are gathering in front of their TVs and crowding stadiums across the country with copious amounts of food and drink watching the big game.  Legal observers will have their own action to watch although this is likely to last several seasons.    

In 2011, several former players suffering a variety of neurological disorders sued the NFL for negligence and fraud relating to whether the NFL knew and withheld that knowledge that concussions and other head injuries incurred during the playing of football could lead to long term brain damage and related side effects (no comment).  Many of these suits received class action status and were removed to the United States District Court for the Eastern District of Pennsylvania. 

On August 13, 2012, the roster of players on this legal gridiron expanded to include the NFL’s insurance companies.  Alterra America Insurance Company, an excess insurance provider, filed suit in New York State Supreme Court in Manhattan seeking a declaratory judgment stating that Alterra
1) does not have a duty to defend the NFL against player lawsuits
2) does not have a duty to indemnify the NFL against player lawsuits

Two days later, the NFL and NFL Properties filed suit against 32 insurance companies (or nearly every major insurer in the country as reported by Reuters)  including Alterra asking the Court to require these insurers to defend and indemnify the NFL from the players’ suits.  Why so many insurers?  Because the NFL sued nearly every insurer that it has ever had regardless if a current business relationship currently exists.  This is mostly a dispute about when duty to defend triggers.  The NFL in its papers argues it’s when the injury occurs. National Football League v. Fireman’s Fund Insurance, BC490342, California Superior Court, Los Angeles County at 12.  This becomes a bit of problem because different insurers insured the NFL at different times going back to 1963. Determining which injury (if only one) caused the long term damage, when that particular injury occurred and which policy was in effect at that particular time is going to be messy to say the least. 

However, the more interesting story here takes place nearly a week later.  On August 21, Travelers’ Insurance followed “suit” and filed its own action against the NFL and the other insurance companies seeking a declaratory judgment with roughly the same arguments as Alterra.  What makes this interesting is the fine distinction that Travelers’ makes in its papers which is how the other insurance companies become involved.  

Travelers' argues that its only obligation is to NFL Properties and not to the NFL itself (both the NFL and NFL Properties have been parties to these suits).   Travelers’ argues that it never insured the NFL (whom we guess Travelers’ believes is going to take the brunt of any payout either in the form of a judgment or settlement) and therefore shouldn’t have to bear any of the NFL’s costs. Traveler’s suit against the other insurance companies is a pre-emptive strike against its peers who “may dispute Travelers’ position with respect to some or all of the foregoing matters, and make seek contribution from Travelers’ with respect to defense costs and/or indemnity paid under the policies they issued to the NFL and/or NFL Properties with respect [to the players’ law suits].” Discovery Property & Casualty Co. v. National Football League, 652933/2012, New York State Supreme Court, New York County (Manhattan) at 19.

It looks like all the players are in their respective formations… and there’s the kickoff.

[1] Ben Berkowitz, “NFL Sues Dozens of Insurers Over Player Injury Claims.“ Reuters.  08/16/12.  Accessed on 08/28/12.  Available at: http://mobile.reuters.com/article/sportsNews/idUSBRE87F0UB20120816?irpc=932.

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The issue of whether CGL policies cover junk fax liabilities under the federal Telephone Consumer Protection Act (TCPA) has largely faded from view.  During the 2004-2010 period, insurers won several key victories in federal courts only to lose much of this ground through adverse state supreme court rulings on the key issue of whether a consumer's receipt of a fax constituted a covered "personal injury" as involving the publication of material that invaded a person's right of privacy.  At the same time, however, the widespread use of TCPA exclusions after 2007 and the growing awareness of most business concerning TCPA exposures substantially reduced the number of coverage disputes.

Although the junk fax wars are no longer on page 1 of the coverage news, a number of recent decisions make clear that the wars continue and, indeed, are being fought on several different fronts.  In particular, insurers have recently argued with success that the $500 statutory damages allowed under the Act are a type of penalty or punitive damages for which coverage is unavailable as a matter of public policy.

In Illinois, where the state supreme court ruled in Valley Forge Ins. Co. v. Swiderski Electronics, Inc., 860 N.E.2d 307 (Ill. 2006) that TCPA claims trigger "personal injury" coverage, the intermediate appellate court ruled last month that there is no duty to indemnify such claims because the $500 statutory penalty for sending unauthorized telefaxes is a form of punitive damages and thus uninsurable under Illinois law.  

In Standard Mut. Ins. Co. v. Lay, No. 4-11-0527 (Ill. App. April 20, 2012), the insurer agreed to defend TCPA claims under a reservation of rights.  The insured insisted on Peppers counsel, however, who negotiated a settlement with class action claim representative for the full amount demanded ($1,739,000) in consideration of an agreement to only pursue recovery from Standard Mutual's policy proceeds.  In affirming a lower court's ruling in favor of Standard Mutual, the Appellate Court noted that actual cost in loss of paper, toner and ink caused by receiving a fax is far less than $500, the purpose of this award must be one of deterrence and not compensation.  It ruled, therefore, that these damages were in the nature of a penalty that, as with punitive damages, is uninsurable as a matter of public policy in Illinois.

More recently, a divided panel of the Missouri Court of Appeals (Eastern District) took a slightly different approach in reaching the same result.  In Olsen v. Siddiqi, No. ED 97455 (Mo. App. May 9, 2012), a class of TCPA claims pursued a garnishment demand for $4.9 million against a telemarketer's liability insurer (American Family) that the plaintiffs had obtained by way of a consent judgment that could only be satisfied through the policy proceeds without risk to the insured.  Although a trial court found coverage, American Family appealed on the grounds that the claims were not for "property damage."

In reversing and finding no coverage, the Missouri appellate court ruled 2-1 that the claims were not "damages" on account of "property damage."  The court distinguished the Eighth Circuit's Missouri ruling in Universal Underwriters Ins. Co. v. Lou Fusz Automotive Network, 401 F.3d 876 (8th Cir. 2005), noting that the policy at issue in that case had expressly defined damages as including punitive damages (where insurable by law).  The Missouri Supreme Court has ruled that fines and penalties are not insurable "damages" unless the policy expressly provides to the contrary.  In this case, the majority declared that the option of recovering statutory damages under the TCPA had a penal purpose and that $500 damages are therefore not insurable.  (The court also rejected the insured's claim for "personal injury" coverage, noting that he had expressly given up this coverage by endorsement).  A minority opinion argued that the loss of toner and fax paper is clearly "property damage."  Justice Mooney also claimed that a $500 award is, in fact, remedial and that it only the provision for trebled damages in the event of intentional TCPA violations that has a penal purpose.

TCPA claims also remain a source of tension between state and federal courts.

In Illinois, state and federal courts have reached conflicting conclusions as to whether the "personal injury" requirement that a "person's right of privacy be invaded precludes CGL coverage for business interests that receive junk faxes.  In Maxum Ind. Co. v. Eclipse Mfg. Co., No. 06 C 4946 (N.D. Ill. June 13, 2011) Judge Lefkow ruled that businesses have no right of privacy and therefore cannot claim coverage, Swiderski notwithstanding.  By contrast, the First Division of the Appellate Court ruled a few months later in Pekin Ins. Co. v. Xdata Solutions, Inc., 958 N.E.2d 397 (Ill. App. Ct. 2011) that a corporation can be a "person" whether the issue is presented under Illinois or Indiana law.

In Massachusetts, where the Supreme Judicial Court followed the Swiderski court's lead in finding CGL coverage for TCPA claims presented under ISO forms in Terra Nova Ins. Co. v. Evan Fray-Witzer, 869 N.E.2d 565 (Mass. 2007), the First Circuit took a different view under different language in the St. Paul general liability policies which required that the insured "make known" material that invades privacy interests.  In Cynosure, Inc. v. St. Paul Fire & Marine Ins. Co., 645 F.3d 1 (1st Cir. 2011), the First the reference to "makes known" clearly requires that the privacy interest be invaded by the content of the communicated materials, not the means of communication consistent with the holdings of the U.S. Courts of Appeal for the Third and Fourth Circuits construing similar wordings.  Writing for the court, former U.S. Supreme Court Justice David Souter declared that "what logic and definition require, syntax confirms."

Finally, disputes persist with respect to the scope of TCPA exclusions that have been a mandatory endorsement to CGL forms since 2007.  This exclusion was upheld by a federal district in a recent Houston case.

A federal judge in Houston ruled in Rick's Cabaret International, Inc. v. Indemnity Ins. Co., No. H-11-3716 (S.D. Tex. January 24, 2012)(insurer was relieved of any duty to defend TCPA claims against its insured by reason of an exclusion in its policy for claims arising out of or relating to "actual or alleged violation of United States Federal Communications Commission rules, regulations, interpretations, policies, statutes, laws or codes").  Even so, insureds and garnishment claimants are succeeding to avoid these exclusions by claiming recovery on common law grounds.

Additionally, the ubiquity of TCPA exclusions in CGL policies is forcing claimants to broaden the scope of their coverage search, exploring claims under E&O or D&O policy that may lack such exclusions.  For instance, in Landmark American  Ins. Co. v. NIP Group, Inc., No. 1-10-1155 (Ill. App. December 5, 2011), the Illinois Appellate Court ruled that that an insurance agency's use of junk faxes to market its services potentially involve the rendering of or failure to render "professional services" so as to trigger its E&O policy.  The First Division noted that as the Landmark policy provided coverage for "advertising liability," the insurer could not argue that advertising could never involve a professional service.

Apart from these coverage issues, the key factor driving insurer exposures to TCPA claims is the risk of class certification.  It remains to be seen how much the U.S. Supreme Court's 2011 Walmart opinion and other opinions addressing Rule 26 certification will create larger roadblocks to class certification of these claims.  In the interim, the Georgia Supreme Court is now considering an appeal that present the novel issue of how such damages should be calculated.

In A Fast Sign v. American Home Services Co., a Georgia trial court determined that the insured had intentionally violated the TCPA by issuing 306,000 junk faxes.  Accordingly, the court awarded damages to the certified class totaling $459 million.  The Georgia Court of Appeals ruled on May 29, 2011 that TCPA liability hinged on a consumer's receipt of a fax and that it was therefore error to award damages based on the number of faxes issued.   The plaintiff's appeal was argued before the Georgia Supreme Court on May 21, 2012.

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The release of this audio recording raises numerous issues.  Williams' career was already in serious jeopardy prior to the release of this recording, but now, he is virtually un-employable.  His rhetoric and tone exceed that which would be considered normal locker room speak, and leaves little doubt that bounties were indeed taking place.  Williams called for specific injuries to numerous San Francisco players, even suggesting players should attempt to go for the head of concussion-prone wide receiver Kyle Williams.  With the multitude of lawsuits already filed against the NFL related to concussion issues, this is pretty damning for Williams, the Saints, and the League as a whole.  It is possible, and perhaps even likely, that Commissioner Goodell could turn Williams' current indefinite suspension into a lifetime ban.  It seems as though Goodell has ample evidence to do so at this point, and he may need to take such a step to remain consistent with the NFL's present crusade in support of player safety.  

To that end, Goodell clearly has authority to discipline Williams, consistent with the NFL's Standard of Conduct: 


Standard of Conduct

While criminal activity is clearly outside the scope of permissible conduct, and persons who engage in criminal activity will be subject to discipline, the standard of conduct for persons employed in the NFL is considerably higher. It is not enough simply to avoid being found guilty of a crime.


Discipline may be imposed in any of the following circumstances:

  • Conduct that imposes inherent danger to the safety and well being of another person; and
  • Conduct that undermines or puts at risk the integrity and reputation of the NFL, NFL clubs, or NFL players.

It will also be interesting to see if this audio recording affects the ongoing appeal of Head Coach Sean Payton.  Payton's chances of succeeding on appeal of his year-long suspension were probably slim before this recording, but in light of the public outcry, it seems certain that Goodell will uphold Payton's suspension. If Payton was in the room during this speech (it appears that he was not at this point), and knew of the bounties (which he has admitted), he had a duty to report Williams and others involved, even if he did not partake in the scheme himself.  Goodell can fall back on the NFL's Standard of Conduct in this regard as well: 

Reporting of Incidents: The League must be advised promptly of any incident that may be a violation of this policy, and particularly when any conduct results in an arrest or other criminal charge.  Players and club employees must report any such incident to the club, which must then report it to NFL Security at (800) NFL-1099. Failure to report an incident will constitute conduct detrimental and will be taken into consideration in making disciplinary determination under this policy. Clubs are also required to report incidents that come to their attention.

Another interesting issue that could trigger litigation is the fact that this audio recording was allegedly not authorized for release.  This recording was captured during filmmaker Sean Pamphilon's work on an ESPN documentary entitled, "Run Ricky Run," which chronicled former Saints player Steve Gleason's fight with Lou Gehrig's disease.  However, Gleason, who expressed regret and disappointment over the release of the recording, apparently owns the rights to all recordings compiled during the filming.  Gleason conceivably could bring an action against Pamphilon for the unauthorized release, though it could be difficult for Gleason to prove damages, given the circumstances. 

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As mandated by Section 212 of the Consumer Product Safety Improvement Act of 2008, the Consumer Product Safety Commission created a publicly accessible and searchable database allowing consumers to submit reports about various products as of March 11, 201l.  This database, found at www.saferproducts.gov, supplements the Commission’s existing publicly accessible and searchable databases – the National Electronic Injury Surveillance System (NEISS) database, which collects data from hospitals on injuries associated with particular consumer products.

The new database, though intended to provide consumers timely information about potentially unsafe products, has been widely criticized for its accuracy issues and the burden it places on manufacturers.  No evidence or proof is even required for a consumer to submit a complaint about a product.  Rather, the consumer must merely click a button stating his or her belief that the information reported is true and accurate to the best of the consumer’s knowledge.  After the report is posted, manufacturers have 10 days to respond.  

The hearsay and reliability issues on the admissibility of such information contained in this database are apparent.  However, judging by how plaintiffs currently use the NEISS database to advance lawsuits and given the courts' leniency in allowing such information to be admitted in one form or another, there is no doubt that manufacturers will face an uphill battle keeping such purported “evidence” out of the courtroom.  

Just recently, the federal district court in Jenks v. New Hampshire Motor Speedway, D.N.H., 1:09-cv-00205, 1/31/12, held that NEISS data was admissible in a product liability action involving a golf cart.  In that case, the plaintiff sued the defendant manufacturer of the golf cart, alleging failure to warn and other claims, when her husband was thrown from the rear of the cart and sustained serious head injuries.  The court denied the manufacturer’s pretrial motion to exclude the NEISS data, finding the database to be a public record as defined in an exception to the hearsay rule. The court also found that the information in the database met the exception’s trustworthiness requirement and that it was further admissible to show notice to the manufacturer of the danger of falling from golf carts. 

Though plaintiffs will surely attempt to draw parallels between the NEISS data and the contents of the new CPSC database, the accuracy issues inherent in the new database should warrant its exclusion from the courtroom.  Unlike the hospital reports which form the basis of the NEISS data, the reports in the new database can be submitted by anyone, including competitors, advocacy groups, and even attorneys attempting to advance their lawsuit by generating evidence.  Moreover, the CPSC explicitly disclaims the accuracy and completeness of the information contained in the new database.  Accordingly, this information is not only replete with hearsay, but it can be and should be considered inherently untrustworthy.

Another problem faced by manufacturers is that, unlike the NEISS data, they cannot claim lack of knowledge of the information contained in the new database. The CPSC is required to notify manufacturers every time a report is submitted about its product.  Therefore, any such defense will likely fail.  
 
Manufacturers are advised to keep themselves informed by registering  to receive reports submitted to the new database and to carefully consider how to respond to any inaccurate information, knowing that such information has the potential to end up in the courtroom.

William F. Auther is a partner in the Phoenix, Arizona office of Bowman and Brooke LLP where he has an active trial practice in product liability and business litigation and Mary M. Kranzow is a former associate at Bowman and Brooke LLP.

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Many people will not be shocked by the title of this post.  However, a new report issued by an advocacy group for the U.S. Chamber of Commerce was recently released that was entitled, “The Plaintiffs’ Bar Goes Digital, an Analysis of the Digital Marketing Efforts of Plaintiffs’ Attorneys and Litigation Firms.”  The report found that marketing efforts were being camouflaged as forums or support group sites.   The report estimated that law firms had spent more than $50,000,000 on Google advertising in 2011.  The overwhelming majority of that was spent by Plaintiff’s firms.  However, despite the fact that the amount of spending does not rank with large corporations, it is disproportionate for the size of the industry.  The report is critical of the Plaintiffs’ Bar because of a lack of transparency that many of their sites were actually marketing for law firms.  

As social networking, blogs, and other methods of disseminating information grow, they will become an increasingly prominent part of Plaintiff’s attorneys networking and marketing strategies.  To a lesser extent, we can expect the same on the defense side.  As we expand our internet marketing footprint, we need to be ever vigilant to ensure that our marketing is done truthfully and ethically.  Advertisement by legal professionals should be transparent and truthful.  Various bar associations will most likely weigh in on specific examples in the near future.  We should all make diligent efforts to make sure we are on the right side of whatever precedent is set.  

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A Deterrent to Insurance Fraud

Posted on November 1, 2011 05:59 by Barry Zalma

Insurance fraud has been estimated to take between $80 billion and $300 billion a year from the insurance industry in the United States. Every state has a statute making insurance fraud a crime including the federal crimes of mail and wire fraud and the Racketeer Influenced and Corrupt Organization Act (RICO). RICO can also be a civil action which allows for treble damages or punitive damages.

Some insurer victims of insurance fraud have become proactive. In State Farm Mutual Automobile Insurance Company; State Farm Fire and v. Arnold Lincow, D.O.; Richard Mintz, D.O.; Steven Hirsh; 7622 Medical, No. 10-3087 (3d Cir. 09/16/2011) the Third Circuit dealt with an appeal from State Farm’s successful trial against some doctors and clinics who defrauded it and those it insured.

Facts

After a four-week jury trial plaintiff State Farm successfully convinced the jury that defendants, a number of health care providers (“Defendants”), engaged in various schemes to defraud State Farm by billing it for medical services that were either not provided or provided unnecessarily, and were illegal under RICO, fraud statutes, and common law fraud. Following trial, Defendants filed motions for judgment as a matter of law or, in the alternative, for a new trial or, in the alternative, to alter or amend the judgment. The District Court denied Defendants’ motions in their entirety.

Plaintiff alleged that Defendants were members of a conspiracy that sharply inflated the costs of medical care for car accident victims by prescribing tests and treatments, as well as prescriptions and medical equipment – whether medically necessary or not – and then routinely billed State Farm for additional treatments that were never provided. At trial, State Farm’s proof of Defendants’ fraud consisted of State Farm’s claim files and testimony of patients, physicians at Defendants’ medical facilities, Defendant physicians, and experts.
After a four-week trial, the jury awarded Plaintiff over $4 million against all Defendants jointly and severally, and individual Defendants were found liable for punitive damages totaling $11.4 million

Analysis

The Third Circuit’s reviews a district court’s order granting or denying a motion for a new trial for abuse of discretion unless the court’s denial of the motion is based on the application of a legal precept, in which case the review is plenary. A new trial may be granted on the basis that a verdict was against the weight of the evidence only if a miscarriage of justice would occur if the verdict were to stand.

State Farm noted that RICO is distinct because the members of the association-in-fact enterprise include all the defendants, there is a complete identity between the enterprise and the defendants and, therefore, no distinctiveness among the defendants.  As the District Court noted and State Farm urged, the intracorporate conspiracy doctrine is not universally accepted, and it is questionable whether the Defendant’s version is completely accurate.

The defendants argued that State Farm failed to prove: (1) the elements of an association-in-fact enterprise; (2) that defendant Mintz conspired with the other Defendants to defraud, as § 1962(d) requires; (3) that Mintz’s actions proximately caused State Farm’s injuries; (4) that Mintz’s conduct fulfilled the elements of common law fraud; and (5) that Mintz’s conduct fulfilled the elements of statutory fraud under Pennsylvania law. The Third Circuit rejected all of Mintz’s claims to the contrary and held that the weight of the evidence supports the jury’s finding against Mintz and the other defendants. Therefore, the Third Circuit concluded that to let the verdict stand would not result in a miscarriage of justice.

The Third Circuit agreed with State Farm’s assertion that a violation of the Insurance Fraud statute is a civil tort and that, as the jury found and the District Court upheld, the Defendants together contributed to State Farm’s injuries and are thus jointly and severally liable. Moreover, as the District Court correctly noted, there is no requirement for district courts to instruct juries to award damages against each defendant separately and individually. Because State Farm elected to receive treble damages the Third Circuit had no reason to address the contention that the punitive damages award should be reduced.

Lesson

Insurers who are the victims of fraud cannot rely on police agencies to investigate and prosecute perpetrators of insurance fraud. Prosecutions are few and far between. As readers of Zalma’s Insurance Fraud Letter, available FREE at http://www.zalma.com/ZIFL-CURRENT.htm, know prosecutions are increasing but are still anemic and those who are prosecuted and convicted usually receive minor punishments. By being proactive insurers can recover from the fraud perpetrators, like the doctors involved in this case, the insurer can recover what it lost, a bonus of three times the compensatory damages, and actually deter insurance fraud by hitting the perpetrators where it hurts them most, in their wallet.

It is time that insurers emulate the actions of State Farm and the few other insurers who are using civil suits to defeat insurance fraud by taking the profit out of the crime.

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Must a beneficiary have his/her hands or feet at least partially "cut off" to qualify for Accidental Death and Dismemberment benefits?  What does the term "dismemberment by severance" in an ERISA plan mean?   Isn't paralysis enough?  No.
 
Here's the case of Fier v. UNUM Life Insurance Co., F.3d (9th Cir. January 4, 2011) (paralysis resulting from "severance of spine" insufficient to qualify for AD&D benefit).
 
FACTS: Fier was a beneficiary under the employer's Long Term Disability (LTD) and Accidental Death and Dismemberment (AD&D) benefits. An accident in 1992 severed his spinal cord and he became a quadriplegic; the company tailored a new position for him, paying him the same salary. His salary was reduced $20,000 in 1997.  UNUM paid benefits from 1997-2004.
 
In 2004 UNUM informed Fier he had not been eligible for disability payments (since 1998) because he earned greater than 80% of his pre-disability earnings. 
 
Fier sued, seeking benefits from 1993-1997 and a continuation of benefits. Fier contended, among other things: although his hands and feet remain physically attached to his body, he has lost them from a functional standpoint due to "severance" of his spinal cord.
 
TRIAL COURT: Applied de novo review and affirmed UNUM's decision to end benefits.
 
NINTH CIRCUIT:  AFFIRMS with the following rationale.
 
"'Dismemberment by severance' has to mean some actual, physical separation."  This is "unambiguous draftsmanship by an abundantly cautious lawyer." The court relied on the holding involving nearly identical facts in Cunninghame v. Equitable Life Assurance Society of the United States, 652 F.2d 306, 307 (2nd. Cir. 1981).

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It seems that the duties of a premises owner may be expanding rapidly.  The Michigan Supreme Court recently held that a restaurant may have a duty to inspect things such as the toilet paper dispenser in a bathroom stall when employees do restroom checks, to make sure the dispenser is not in an unreasonably dangerous condition. Both the Wall Street Journal Law Blog and Above the Law have a field day with the facts in this case in which a woman injured her hand (and claims it is not yet healed so she cannot work, but can still bowl three years later) when the toilet paper dispenser landed on her hand in the bathroom stall.  Given that the Court held that the dispenser might be considered unreasonably dangerous, it seems the manufacturers of toilet paper dispensers might also now be on notice of this potential hazard.

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Many defense attorneys have asked how their personal injury cases might be affected by last week's CMS announcement that Medicare is postponing some aspects of the Mandatory Insurer Reporting requirements under § 111 of the MMSEA.  The reporting extension announced by CMS is a big deal to settling insurance companies and self-insureds who have the burdensome reporting obligations under § 111 of the MMSEA.  Lawyers who defend personal injury claims are less affected by the § 111 implementation delay, because although they are called upon to help identify Medicare beneficiaries and gather some of the data which CMS requires insurers/self-insured to report, the defense lawyers themselves do not do the reporting under § 111 of the MMSEA.
 
That said there has been a good deal of misinformation and generalizing about the § 111 reporting extensions.  Here are a few of the most troublesome bits of misinformation we've heard recently:

1. Some have suggested (incorrectly) that the reporting extensions mean parties do not have to notify Medicare of settlements which occur, and we've heard some suggest that  Medicare will suspend its collection efforts until the § 111 reporting is in full swing.  The § 111 reporting deferral does not affect or change the need for all parties to ensure Medicare's interests are being protected and Medicare is reimbursed from the settlement proceeds in accordance with the MSP statutes and regulations.
 
2. Some believe (incorrectly) that the recent CMS announcement had the effect of postponing ALL of the mandatory insurer reporting required under § 111 of the MMSEA.   Not so.   The recent extensions apply to only one aspect of the § 111 reporting:  reporting of TPOC settlements.  TPOC is Medicare-speak for "Total Payment Obligation to Claimant" and most liability settlements are considered TPOCs.   Under the extended § 111 deadlines, TPOC settlements which occur on or after October 1, 2011 will be "reportable" and must be reported no later than the first quarter of 2012.  Before the recent extension all TPOCS after October 1, 2010 were reportable, and had to be reported no later than the first quarter of 2011.  But while the reporting timeline for TPOCS has been extended, the reporting timeline for ORMs HAS NOT BEEN EXTENDED.  ORM is Medicare-speak for "Ongoing Responsibility for Medicals" and most med pay, no-fault and PIP claims are ORMs.  As such, the recent reporting extension does NOT change existing § 111 reporting requirements for workers' compensation or liability cases that include ORM—all ORMs since January 1, 2010 have been "reportable" and STILL must be reported by insurers/self-insureds during the first quarter of 2011.
 
3. Many insurers have already completed the required testing period and have gone "live" with their § 111 reporting obligations.  As such, some insurers/self-insureds with which you work may continue to report all TPOCs and ORMs under the § 111 of the MMSEA even though the implementation deadline for TPOCs has been postponed.    The recent CMS Alert states that if the reporting entity wishes to report TPOC settlements prior to the first quarter of 2012 they are allowed to do so.
 
4. Extension of Current Dollar Thresholds: The CMS Alert also extended, by one year, the interim reporting thresholds set out in Section 11.4 of Version 3.1 of the User Guide.  These low-dollar § 111 reporting thresholds are designed to eliminate the burden of § 111 reporting for smaller settlements while everyone is learning the new system.  The thresholds are temporary and staged to expire altogether after 2014.  The new timeline on the temporary thresholds is:

• Settlements prior to January 1, 2013: those $5,000 or less need not be reported
• Settlements during 2013:  those $2,000 or less need not be reported
• Settlements during 2014: those $600 or less need not be reported

Remember that the duty to report under § 111 is separate and distinct from the duty to reimburse the MSPRC under the MSP statutes and regulations.  As such, even if a settlement is small enough that it need not be reported under § 111, the obligation STILL EXISTS to fully reimburse Medicare from the settlement proceeds.   While there is a low-dollar threshold for § 111 reporting, there is NO low-dollar threshold for reimbursing Medicare.

So, bottom line is the § 111 reporting delays provide an additional twelve months for CMS and the insures/self-insureds to gear up for the mandatory reporting of TPOC settlements.  This § 111 implementation delay does not, however, change the present need for all parties in personal injury cases involving Medicare beneficiaries to ensure that Medicare's interests are being protected (and Medicare's past conditional payments are being reimbursed from all settlements).  The penalties under the MSP statutes for failing to reimburse Medicare are steep for settling insurers, and this aspect of Medicare compliance is completely unaffected by the § 111 reporting postponement. 

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The DRI LinkedIn Group Can Work For You

Posted on February 16, 2010 04:50 by Kelly A. Williams

I am a lawyer at Picadio Sneath Miller & Norton in Pittsburgh, Pennsylvania, and I have been a member of DRI for approximately three years.  I recently joined DRI’s group on Linked in, and I received my first discussion group email last week.  One discussion was started by Dennis Bailey who asked if anyone had success subpoenaing Facebook to obtain information about a plaintiff in a personal injury case.  I just happened to be facing a similar question in a personal injury case we are defending, and the responses were very informative and helpful.  Also, there was a discussion group started by Matthew Marrone regarding a recent Pennsylvania Supreme Court ruling which may have a big impact on the attorney-client privilege in Pennsylvania—also a very important and relevant topic to my practice.   I strongly recommend that all members of DRI join the DRI group on Linked in.  It is a great way to share valuable information with lawyers from across the country and improve your practice.

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