Court Holds Providers Cannot Recover Payments from Third Parties After Accepting Payments from Medicaid

In Anthony Gist v. Atlas Staffing, Inc. and Meadowbrook Claim Services and Fresenius Medical Care, Respondent Gist was diagnosed with kidney failure after his job with Atlas exposed him to silica, a known cause of kidney failure. Gist sought workers’ compensation benefits from Appellants Atlas and its insurer, Meadowbrook Claims Services. Appellants denied coverage. Gist began receiving treatment from Fresenius Medical Care. Fresenius billed Medicaid, Medicare, and private insurer Medica for the costs of Gist’s treatment, and received payments from each. After a hearing, the compensation judge found Gist’s silica exposure was a substantial contributing factor to his kidney disease, and ordered Appellants to pay workers’ compensation benefits. After dismissing Fresenius’s cross-appeal as untimely, The Workers’ Compensation Court of Appeals upheld the compensation judge’s decision.

While the parties raise several issues on appeal to the Minnesota Supreme Court, most notably, the Court addressed whether Appellants are liable for the difference between the cost of the services that Fresenius billed to Medicaid and what Medicaid paid for those services. Appellants argue that, under a federal Medicaid regulation, Fresenius may not obtain from them the amounts billed to, but not paid by, Medicaid. The Court determined the Medicaid regulation at issue, 42 C.F.R. § 447.15, was unambiguous. It imposes a bright-line rule: when a provider participates in Medicaid, bills services to Medicaid, and accepts Medicaid payments for those services, it accepts the amount paid as “payment in full,” and thus cannot recover from third parties any unpaid amounts. Accordingly, after accepting a payment from Medicaid for services provided, a provider is barred from recovering any additional amounts for those services from a liable employer. The Court declined to extend the Spaeth-balance rule to the Medicaid context, as requested by Fresenius. The Court noted extending the Spaeth-balance rule to the Medicaid context would conflict with the federal regulation.

Additionally, Fresenius argues the compensation judge erred by concluding that the Minnesota workers’ compensation fee schedules applied to its medical bills for treatment incurred prior to the finding that Appellants were liable. Because the WCCA has special expertise in this area of law, the Court declined to consider this issue and remanded it for consideration by the WCCA.

The Minnesota Supreme Court affirmed the WCCA decision in part, reverse in part, and remand to that court for further proceedings.

Please click here to download a copy of the Court’s decision.

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