March 15, 2013 – A car accident victim argued that a hospital should have billed Medicare for treatment and thus could not enforce a statutory lien against his tort claims. Recently, a state appeals court ruled in favor of the hospital.

In 2007, Conrad Laska received medical care at a cost of $19,423 from the University of Wisconsin Hospital and Clinics (U.W. Hospital). He was eligible for Medicare coverage.

However, U.W. Hospital did not bill Medicare. Instead, it filed a lien under the state’s hospital lien statute, Wis. Stat. section 779.80, which allows hospitals to file liens against potential tort judgments or settlements to recoup medical treatment costs.

Laska’s lawsuit relied on a federal Medicare statute, 42 U.S.C. § 1395cc, known as the “provider agreement statute.” It states that health care providers cannot charge individuals for medical care if the person is “entitled to” payment by Medicare.

In addition, Laska argued that a 2000 memorandum from the U.S. Department of Health and Human Services (DHHS) interpreted this Medicare provision as barring hospitals from enforcing liens after the period for billing Medicare has expired.

Indeed, the memo concludes that liens may not be enforced after expiration of the Medicare billing period, which is generally one year from the date of service.

The circuit court granted summary judgment to U.W. Hospital, concluding that Medicare law does not require hospitals to withdraw liens after expiration of the billing period.

In Laska v. U.W. Hospitals and Clinics Authority, 2010AP2410 (March 14, 2013), a three-judge panel for the District IV Wisconsin Court of Appeals affirmed that decision.

The appeals court explained that Medicare is a “secondary payer” under 42 U.S.C. § 1395y(b)(2)(A)(ii), known as the “secondary payer statute.” This provision makes Medicare a secondary payer if there’s expected third-party liability.

“Enacted in 1980, the Secondary Payer Statute was intended to lower the costs of the Medicare program and to shift those costs to responsible third parties, including but not limited to tortfeasors and their liability insurers,” Judge Brian Blanchard explained.

Further, the appeals court ruled that federal Medicare law does not force hospitals to withdraw hospital liens after the Medicare billing period expires. The DHHS memo, the panel explained, does not provide a reasonable interpretation of federal law.

“Laska fails to point to any other federal authority that would bar the Hospital’s lien after the Medicare billing period expired,” Judge Blanchard wrote.

It also noted that Laska’s bottom line would not change if the U.W. Hospital billed Medicare, since Medicare could seek reimbursement from Laska for any tort claim recovery.

The court also rejected Laska’s claim that Dorr v. Sacred Heart Hospital, 228 Wis. 2d 425, 597 N.W.2d 462 (Ct. App. 1999), barred enforcement of the hospital lien. In Dorr, the patient had private insurance through a health maintenance organization (HMO).

The court determined that the hospital could not enforce a lien against the patient’s tort claim, because the patient had statutory and contractual immunity as an HMO patient.

“Gister limits Dorr to the HMO context,” wrote Judge Blanchard, referring to Gister v. American Family Mutual Insurance Co., 2012 WI 86, 342 Wis. 2d 496, 818 N.W.2d 880.

In Gister, the court allowed a hospital to pursue liens against tort claims instead of billing Medicaid, which the patients were eligible to receive.

“It may be true that, after Gister, non-HMO patients remain free to argue that there is some statute or contract that makes them directly analogous to the patient in Dorr. However, Laska has not developed such an argument here,” Blanchard wrote.