Wisconsin Court Rules That a Hospital Can Enforce a Lien Against Tort Claims Even After Medicare Billing Period Has Expired

Recently in Laska v. General Casualty Company of Wisconsin, 2013 Wisc. App. LEXIS 234 (Wis. Ct. App. 2013), the Wisconsin Court of Appeals reviewed the decision of a circuit court that allowed the defendant, University of Wisconsin Hospital, to assert a lien against the tort claims of its patient, plaintiff J. Conrad Laska, after expiration of the time period within which the hospital could have billed Medicare for treatment. The plaintiff was eligible for Medicare when he was injured in an automobile accident. The plaintiff was treated by the defendant hospital for those injuries. Instead of billing Medicare for its treatment of Mr. Laska, the hospital filed a statutory lien against “any tort claims” and “any settlement or judgment resulting from those claims.” Id. at *P1. Subsequently, the deadline for billing Medicare passed, and the plaintiff sought to have the hospital’s lien removed. The circuit court held that the hospital was not required to withdraw its lien.

On appeal, the plaintiff argued that the circuit court erred in interpreting federal Medicare laws to allow the hospital to enforce a lien after the expiration of the time period within which the hospital could have billed Medicare for treatment. The plaintiff also argued that Dorr v. Sacred Heart Hospital, 228 Wis. 2d 425 (Wis. Ct. App. 1999), bars enforcement of the lien.

As to the interpretation of Medicare laws, the plaintiff argued that a federal Department of Health and Human Services memorandum, published in 2000, prohibits providers from enforcing liens against third parties once the time has elapsed in which to bill Medicare. The 2000 HHS memo attempted to clarify the Medicare Provider Agreement Statute, 42 U.S.C. § 1395cc, which aims to ensure that no Medicare beneficiary or other person is charged for services if a beneficiary is entitled to have Medicare pay for those services. The Wisconsin Court of Appeals held, however, that a person is not “entitled” to Medicare when Medicare is a secondary payer and when the primary payer can be reasonably expected to pay. Therefore, the court reasoned, the 2000 memo misconstrued federal law when it prohibited providers from maintaining liens against tort claims after the Medicare billing deadline when Medicare is a secondary payer so long as the primary payer can be reasonably expected to pay.

In its reasoning, the court relied upon 1995 and 1996 HHS memoranda, which established that a provider may, subject to certain restrictions, bill either Medicare or an insurance settlement—even by lien—as long as it does not pursue payment from both Medicare and the liability settlement. The court noted that these memos do not require that all liens be satisfied prior to the Medicare billing deadline.

As to the 2000 memoranda, the court noted that it was not bound to follow the interpretations of the federal law as set out in the memo given that there was an “obvious disconnect between the language of the Provider Agreement Statute and the 2000 Memorandum’s interpretation of that statute.” Laska at *P46. The court further reasoned that previous court decisions, including Oregon Association of Hospitals v. Bowen, 708 F. Supp. 1135 (D. Or. 1989), and American Hospital Association v. Sullivan, 1990 U.S. Dist. LEXIS 6306 (D.D.C. May 24, 1990), support the view that a person is not “entitled” to Medicare payments under the Provider Agreement Statutes “as long a liability insurer can be reasonably expected to pay.” Laska at *P38. Finally the court notes that the cost-shifting purpose of the Medicare Secondary Payer Act would be defeated given that providers would never pursue claims against non-Medicare insurers unless they could be certain that all claims would settle prior to the Medicare billing deadline.

In Laska, the Wisconsin court also addressed the plaintiff’s argument that another Wisconsin case, Dorr v. Sacred Heart Hospital, 228 Wis. 2d 425 (Wis. Ct. App. 1999), bars enforcement of the lien against the plaintiff’s tort claims. The court noted that the Dorr case was factually distinct from Laska in that it involved an HMO and did not address the Medicare statutes.