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New Developments In The Case Of CIGA v. Burwell

In January 2017, we posted an article concerning a recent case, Cali. Ins. Guar. Ass’n v. Burwell, No. 2:15-cv-01113-ODW (FFMx), 2017 U.S. Dist. Ct. LEXIS 1681. As you may recall, the Defendant (CMS) paid medical benefits on the behalf of three individuals who were also covered under workers’ compensations policies administered by the Plaintiff (California Insurance Guaranty Association (CIGA)). CMS sought reimbursement from CIGA for the payments issued and CIGA argued that the demands for repayment were over-inclusive. Reviewing relevant regulations and the use of the terms “item and service” in the Medicare Secondary Payer Act (MSP), the Court found that just because various medical treatments are lumped together in one charge does not mean that they are one “item or service”. Rather, one provider charge can contain a number of items and services for which a carrier may only have partial primary payment responsibility. The Court did not rule on the appropriate relief for CIGA in that decision.

In the present decision, Cali. Ins. Guar. Ass’n v. Price, No. 2:15-cv-01113-ODW (FFMx), 2017 U.S. Dist. Ct. LEXIS 67589, the Court considered the proper relief for CIGA. CIGA requested (1) an order vacating and setting aside CMS’ demands, (2) a judicial declaration that CMS’ three demands to CIGA were unlawful as well as CMS' current billing practice and (3) a permanent injunction prohibiting CMS from sending future reimbursement demands to CIGA based on the unlawful billing practice. The Defendant contended that the Court should not award any of the requested relief, arguing in large part that it is unnecessary since CMS has already withdrawn the demands at issue. The Court disagreed with Defendant’s argument and issued an order vacating and setting aside the three reimbursement demands.

The Court also agreed to issue a judicial declaration that “One ‘item or service,’ as used in the Medicare Secondary Payer statute…does not as a matter of law equate to any medical items, devices, supplies, or services that appear…in a single line-item charge on a payment summary form.” The Court’s decision to issue this declaration was based in part on CIGA’s presentation of evidence that CMS continued to send conditional payment demands in other cases requiring the reimbursement of an entire charge even though it contained unrelated diagnosis codes. The Court refused to make any further ruling, however, noting that the parties failed to provide enough evidence concerning the types of treatment which would be contained in each charge.

Finally, the Court considered CIGA’s request for a permanent injunction. In considering the law controlling the matter, the Court notes that the harm caused to CIGA by not issuing the injunction is not irreparable, the hardship that issuing an injunction would cause would be much greater for CMS than for CIGA, and there is a not a stronger public interest in granting or not granting the injunction. The Court ruled that the equitable factors do not favor the issuance of an injunction.

This matter has been set for a bench trial in September to consider the remaining relief requested by CIGA once the factual record is more fully developed. We will continue to keep you apprised of any new developments.

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