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Lawsuit alleges auto carriers not paying medical costs

On Behalf of | Aug 25, 2021 | Insurance defense, Legal News

Three hundred and fifteen insurance companies are named in one of the most significant qui tam cases in U.S. history. The multi-billion-dollar lawsuit filed on behalf of the federal government, California and several other states alleges that auto insurance carriers did not reimburse Medicaid and Medicare for money paid out when drivers needed medical care after motor vehicle accidents.

The 215-page lawsuit lists no damages, but it claims that companies owe billions because the entire industry was part of a systematic effort not to pay Medicaid and Medicare back the money from millions of injury claims. The suit also alleges that the carriers choose not to pay despite being well aware of the obligation outlined in its policies.

In addition, it asserted that government health plans should be a last resort and not at all if there is primary or private coverage. Moreover, if Medicare and Medicaid did pay for medical care, auto carriers should pay within 60 days.

The basis of the claim

Attorneys who filed the qui tam supported their allegations by using data specialists who examined:

  • Number of accident reports
  • Number of Medicare and Medicaid claims
  • Reimbursement data
  • Hospital reports

MMSEA Section 111 at the heart of the claim

Congress enacted Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA). MMSEA Section 111 outlines that insurance companies should notify Centers of Medicare & Medicaid Services when paying the medical bills for one of the auto carriers’ clients. It avoids wrongful payment of expenses and leads to additional expenses. The extra expenditure would then get taken out of the Medicare Trust Fund, which taxpayers underwrite. In essence, the reports filed by carriers failed to detail insurers’ actual obligations.

The lawsuit was unsealed on August 12 but was filed two years ago. Now, this lawsuit will likely be a major issue for the auto insurance industry to address in the coming weeks and months.