Medicare Advantage Plan’s Conditional Payments Limited by New York Laws

by P. Czuprynski

In Claims v. Merchs. Mut. Ins. Co.^[1], the Court partially denied Medicare Advantage Plan’s suit over conditional payment reimbursements and highlights a possible defense for carrier/self-insureds to use in defending conditional payments.

In this case, the Medicare Advantage Plan assigned its rights to reimbursement to MSP Recovery Claims Series. MSP Recovery argued that there is a set of conditional payments under no-fault insurance policies that require reimbursement and argued that conditional payments required reimbursement under Ongoing Responsibility for Medicare (ORM).

No-fault insurance policies are specific policies that automatically pay for certain expenses when a “proper claim” is filed and accepted by an insurance company. This form of insurance is required in many states to operate a motor vehicle and will usually include a set amount that can be paid associated with medical expenses. No fault is also sometimes known as Personal Injury Protection (PIP).

If a no-fault claim involves a Medicare beneficiary, the no-fault insurance may have to report to Medicare that they have accepted responsibility for medical benefits, called ORM, for a certain period.

Separately, MSP Recovery argued that a set of liability settlements with the insurance carrier, which involved Medicare beneficiaries, also had associated conditional payments that required reimbursement.

In motor vehicle accidents, there may also be a separate liability claim that is related to potential negligence by the other driver, property owner, etc. These separate liability claims may have a settlement that is outside of the no-fault policy. The Magistrate recommended that these claims based on settlement should move forward in the suit.

However, the Magistrate recommended dismissal of the set of claims that were being asserted specifically under ORM. This dismissal was confirmed by the District Court Judge on 1/23/26.

The US District Court (Western District of New York) found that New York’s no-fault laws and policy terms applied to the ORM asserted claims. In New York, and under the policy documents, there are specific requirements that need to be met for payment of medical expenses to be issued from the no-fault policy.

For example, the claimant must “submit written proof of claim to the Company, including full particulars of the nature and extent of the injuries and treatment received and contemplated” as soon as reasonably practicable but, in no event later than 45 days after the date services are rendered”.^[2]

The Court held that the complaint by MSP Recovery failed to allege that the requirements of New York laws and policy were met with respect to the ORM claims. The Magistrate recommended the claim for reimbursement under the ORM claims should be dismissed, without leave to amend.

It is important to understand that the Magistrate’s dismissal was specific to the ORM claims asserted by MSP but had a caveat: The Magistrate identified that if a claimant or provider did not file a proper claim or exhaust appeals with the no-fault insurance, Medicare may have a right to seek reimbursement from claimant or provider.   

This also means that these charges, while not payable under ORM, may find their way into Medicare’s recovery based on settlement.

Key Takeaways

Medicare’s reimbursement based on ORM should be limited by the policy or state law governing the claim. This means defenses that apply to your workers’ compensation, no-fault, or PIP claim, may also limit Medicare’s reimbursement request against a carrier/self-insured.

If the Commercial Repayment Center (CRC) or Medicare Advantage Plan is seeking reimbursement based on ORM, these defenses should be compared to the charges listed by Medicare. If the charges are not payable under the policy or state law, Medicare should also not require reimbursement.

Cases in these circumstances that also settle may have to face a second reimbursement request of charges when settlement is reported. Careful consideration may be needed to determine who will be responsible for the charges.

Understanding the differences between ORM and settlement reporting is a key factor in minimizing reimbursement of conditional payments. We are happy to discuss the best approaches for resolving conditional payments, so please contact us at [email protected] with any questions.

[1] 2026 U.S. Dist. LEXIS 3688
[2] 11 N.Y.C.R.R. §65-1.1(d)