1. Strictly Private and Confidential 1 Presented By: Mark Popolizio, Esquire Crowe Paradis Services Corporation mpopolizio@cpscmsa.com Copyright 2012. Crowe Paradis Services Corporation retains sole ownership and copyright rights to this presentation. Any use or reproduction of this presentation without prior written consent and approval of Crowe Paradis is prohibited. Medicare Case Law Update & SMART Act Reform Proposals

2. Strictly Private and Confidential SMART Act : Background & Current Status 2 ©2012 Crowe Paradis Services Corp.

3. Strictly Private and Confidential Background Strengthening Medicare and Repaying Taxpayers Act of 2011 (SMART Act) General Objectives The SMART Act proposes to reform several aspect of MSP compliance regarding Section 111, conditional payments and other aspects of the MSP. History: Created and spearheaded by the MARC Coalition – Medicare Advocacy Recovery Coalition. March 2011: House (H.R. 1063) by Tim Murphy (R-PA) and Ron Kind (D-WI). October 2011: Senate (S. 1718) by Rob Portman (R-OH) and Ron Wyden (D-OR). 3 ©2012 Crowe Paradis Services Corp.

4. Strictly Private and Confidential Background SMART Act Current Status 102 bipartisan co-sponsors in the House. 15 bipartisan co-sponsors in the Senate. Referred to several Congressional committees including: House Ways and Means House Energy and Commerce Senate Finance Broad based support from various stakeholders -- o ver 80 endorsements from a broad range of industry interests. 4 ©2012 Crowe Paradis Services Corp.

5. Strictly Private and Confidential SMART Act Proposals 5 ©2012 Crowe Paradis Services Corp.

6. Strictly Private and Confidential Current Issue: Inability to obtain (in most instances) Medicare’s “final” conditional payment figure prior to settlement. Difficult to assess potential exposure. Delays in settlement/closing cases. Can delay disbursement of settlements funds. Pinning the obligation to reimburse the ultimate conditional payment amount on the plaintiff may not provide total protection from liability. See e.g., 42 C.F.R. 411.24(h) and (i). How would the SMART Act change this situation? 6 ©2012 Crowe Paradis Services Corp.

7. Strictly Private and Confidential SMART Act Proposal #1 Parties would be able to obtain Medicare’s “final” reimbursable conditional payment amount PRIOR to a settlement, judgment, award, or other payment. Request “statement of reimbursement amount” from CMS at any point starting 120 days prior to the reasonably expected date of the S, J, A, or OP. CMS would then have 65 days from receipt of this request to provide the requested information. If CMS responds w/in 65 days, then the issued statement “shall constitute the conditional payment subject to recovery.” 30 day “cure period.” If no response w/in 30 days, the conditional payment claim would essentially be waived unless CMS could demonstrate “exceptional circumstances” -- defined to be “in a manner so that not more than 1% of the repayment obligations … would qualify as exceptional circumstances.” 7 ©2012 Crowe Paradis Services Corp.

8. Strictly Private and Confidential Current Issue: Appealing/challenging CMS determinations. Particularly relevant and problematic regarding conditional payments. MSP largely interpreted as only providing claimants with formal appeal rights to challenge CMS determinations through the administrative appeals process and into federal court. Questionable primary payer access to these venues despite having liability under the MSP. How would the SMART Act change this situation? 8 ©2012 Crowe Paradis Services Corp.

9. Strictly Private and Confidential SMART Act Proposal #2 Formal appeal rights would be extended to challenge MSP claims. As proposed, this appeal right would include: Review through and administrative law judge and administrative review board, and access to the judicial review in the district court of the United States. 9 ©2012 Crowe Paradis Services Corp. Right of Appeal. [CMS] shall promulgate regulations establishing a right of appeal and appeals process, with respect to any determination under this subsection for a payment made under this title for an item or service under a primary plan, under which the applicable plan involved, or an attorney, agent or TPA on behalf of such applicable plan, may appeal such determination. (Emphasis Added).

10. Strictly Private and Confidential Current Issue: Concerns about Section 111’s strict penalty of $1,000 a day, per claim. Issues of compliance remain re: certain areas of Section Problems may arise re: determining Medicare status Disputes may arise re: file submission, timely submission, substantial compliance, etc. How would the SMART Act change this situation? 10 ©2012 Crowe Paradis Services Corp.

11. Strictly Private and Confidential SMART Act Proposal #3 SMART Act would modify and soften Section 111’s penalty. SMART Act would inject “discretionary” element into Section 111 penalty in terms of application and amount. As currently stated under the Section 111, the RRE “shall be subject to a civil money penalty of $1,000 for each day of noncompliance.” (Emphasis added). SMART Act would modify this language: “…may be subject to a civil money penalty of up to $1,000 for each day of noncompliance.” “…the severity of each such penalty shall be based on the knowing, willful, and repeated nature of the violation.” 11 ©2012 Crowe Paradis Services Corp.

12. Strictly Private and Confidential Current Issue: Lack of “safe harbor” provisions re: Section 111 reporting Issues of compliance remain re: certain areas of Section Problems may arise re: determining Medicare status Disputes may arise re: file submission, timely submission, substantial compliance, etc. How would the SMART Act change this situation? 12 ©2012 Crowe Paradis Services Corp.

13. Strictly Private and Confidential SMART Act Proposal #4 SMART Act would establish Section 111 “safe harbors.” When RREs are unable determine a claimant’s Medicare status despite “good faith” efforts Other “safe harbors” to be developed per CMS and industry working together. SMART Act Proposal #5 Required use of SSNs and HICNs would be eliminated. 13 ©2012 Crowe Paradis Services Corp.

14. Strictly Private and Confidential Current Issue: Determining applicable statute of limitations (SOL) for MSP purposes. SOL remains unclear and confusing. Recent example – U.S. v. Stricker Court noted that MSP statute did not contain a SOL. Court stated that MSP was a “model of unclarity.” Parties and court agreed to use the SOL from another federal statute. How would the SMART Act change this situation? 14 ©2012 Crowe Paradis Services Corp.

15. Strictly Private and Confidential SMART Act Proposal #6 SMART Act would establish a 3 year SOL for MSP claims. 15 ©2012 Crowe Paradis Services Corp. An action may not be brought by the United States under this clause with respect to payment owed unless the complaint is filed not later than 3 years after the date of the receipt of notice of a settlement, judgment, award, or other payment made pursuant to [Section 111] relating to such payment owed.

16. Strictly Private and Confidential Current Issue: Dealing with MSP issues on low dollar and nuisance settlements. Current version of MSP does not contain “nuisance value” or small settlement exception. Claimant’s may request a “waiver” There are certain dollar thresholds from Section 111, but even if reporting is exempted under one of the Section 111 thresholds other MSP compliance obligations must still be addressed. Claim settlement can be delayed. Questions raised re: use of administrative resources and taxpayer money to pursue MSP recovery on smaller claims. How would the SMART Act change this situation? 16 ©2012 Crowe Paradis Services Corp.

17. Strictly Private and Confidential SMART Act Proposal #7 CMS would be required to set an annual MSP compliance threshold amount. MSP compliance would not be required for claims falling below this amount. To be set by CMS’ Chief Actuary each year by November 15 th in accordance with specific parameters set forth in the SMART Act. Information regarding how this figure was derived, including “a summary of the methodology used … in computing the threshold amount and such average cost collection” would be required to be published. 17 ©2012 Crowe Paradis Services Corp.

18. Strictly Private and Confidential SMART Act Resources: marccoalition.com www.thomas.gov www.govtrack.us 18 ©2012 Crowe Paradis Services Corp.

19. Strictly Private and Confidential MSP Case Law Update: Background & Current Status 19 ©2012 Crowe Paradis Services Corp.

20. Strictly Private and Confidential Section 111 Cases What are the issues? How are the court’s ruling? Why? Seger v. Tank Connection, 2010 WL 16652353 (D. NE., April 22, 2010) Hackley v. Garofano, 2010 WL 3025597 (Ct. Sup. Ct., July 1, 2010) Smith v. Sound Breeze of Groton Condo Ass’n, 2011 WL 803067 (Ct. Sup. Ct., Feb. 3, 2011) Torres v. Hirsch Park, 91 A.D. 3d 942 Supreme Court, Appellate Division, Second Department, New York (Jan. 31, 2012.) Oregon State Bar Professional Liability Fund v. United States Department of Health and Human Services & Kathleen Sebelius, 2012 WL 1071127 (D. Oregon, March 29, 2012) 20 ©2012 Crowe Paradis Services Corp.

21. Strictly Private and Confidential Conditional Payments What are the issues? How are the court’s ruling? Why? Hadden v. U.S., 661 F.3d 298 (6 th Cir. Nov. 21, 2011) Salveson v. Sebelius, 2012 WL 1665424 (D. SD May 11, 2012) Mason v. Sebelius, et. al., 2012 WL 1019131 (D. NJ March 23, 2012) Hearn v. Dollar Rent A Car, 2012 WL 987546 (Court of Appeals of Georgia,March 26, 2012). 21 ©2012 Crowe Paradis Services Corp.

22. Strictly Private and Confidential WC_MSA In re Marriage of Washkowiak, 2012 WL 736627 (Ill. App. 3 Dist., March 7, 2012) L-MSAs Big R. Towing v. Benoit, 2011 WL 43219 (W.D. La. Jan. 5, 2011) Schexynder v. Scottsdale Insurance, 2011 WL 3273547 (W.D. La. July 29, 2011) Smith v. Marine Terminals of Arkansas, 2011 WL 2489806 (E.D. Ark Aug. 9, 2011) Guidry v. Chevron USA, 2011 WL 6815626 (W.D. La. Dec. 28, 2011) Frank v. Gateway Insurance Co., 2012 WL 868872 (W.D. La. March 13, 2012) 22 ©2012 Crowe Paradis Services Corp.

23. Strictly Private and Confidential ©2012 Crowe Paradis Services Corp. 23 Contact Information: Mark Popolizio, Esquire (786) 459-9117 mpopolizio@cpscmsa.com www.cpscmsa.com