Medicare does not pre-empt state workers compensation laws thatestablish rules dealing with the handling of medical claims, the5th U.S. Circuit Court of Appeals has ruled.

The case dealt with whether claimants in a workers compensationcase could bypass Texas workers compensation provisions mandatingpreauthorization of medical by filing a claim first withMedicare.

The case deals with the Medicare Secondary Payer Act, a lawfirst enacted in 1980 and amended several times since then.

It forces claimants in insurance cases of all kinds that useMedicare to pay the initial claims but are also later reimbursed byinsurers, to repay Medicare what the federal plan paid out.

“With this holding, the 5th Circuit prevents workers'compensation claimants who are also Medicare beneficiaries fromrecovering double damages from workers' compensation carriers when Medicare pays for medical services that were neversubmitted pursuant to workers' compensation statutes and rules,”according to Dana M. Gannon, a partner at Smith & Carr, P.C.,in Houston.

She argued the case on behalf of the Insurance Company of theState of the Pennsylvania, an AIG company.

Gannon said the case is important because the court held thatthe Medicare Secondary Payer Act does not preempt state workers'compensation law requirements.

“Rather, there is a “harmonious relationship” between the MSPand state workers' compensation law, Gannon said.

“The 5th Circuit further held that Medicare's determination thatmedical services are reasonable and necessary does not curtail thestate workers' compensation process,” Gannon said.

The case is Guadalupe Caldera v. the Insurance Company ofthe State of Pennsylvania, 2-11-C.V.-321.

In this case, Caldera's doctor bypassed Texas rigid rules onpreauthorization of medical claims to get the go-ahead to dosurgery on Caldera's back.

The fee was $66,000.

Caldera then sued, seeking double compensation from theinsurance company so he could pay off Medicare and also provide afee to his lawyer in the case.

His lawyer argued that once Medicare pays for a medical service,“the workers' compensation claimant is absolved of anyresponsibility to adhere to any state workers' compensationrequirements.”

In a brief to the court, Gannon argued that, “In this caseCaldera is asking this court to … find that the reimbursementextends beyond what he was entitled to recover as a workers'compensation claimant 'by the operation of state law'.”

Gannon argued on behalf of the insurance company that “Thisassertion is contrary to the language in the MSP, the regulationsconcerning the MSP, and congressional intent.”

The court said that under the MSP, neither state law nor aprivate insurance contract, for example, reduce an insured'spayments by the amount of his eligibility for Medicare.

“The MSP and its implementing regulations do not, however,extend so far as to eviscerate all state-laws limitations onpayment, as Caldera suggests,” the court said in its opinion.

“To the contrary, the plain language of the MSP illustrates itsharmoniums relationship with state workers compensation law: aworkers compensation carrier is 'primary' only if 'payment has beenmade or can reasonably be expected to be made under a workerscompensation law or plan of the U.S. or a state,” the court said inciting the MSP law.

“Indeed, numerous MSP regulations presuppose the application ofstate workers' compensation laws,” the decision said.

An expert in MSP compliance, an esoteric area, who asked not tobe quoted by name or affiliation, said the case is importantbecause “it is quite firm in stating that the MSP does notnecessarily expand coverage under other compensation programs.”

This person said the decision, which the source said is also“well-written and does not bog down the reader in jargon,” statesclearly that the MSP doesn't exempt injured people seekingcompensation from following procedures established by laws, rules,contracts or policies established under various compensationprograms.

Moreover, this source points out, as the opinion states, thatinterpretation of MSP has only been courts in New York, Tennesseeand Michigan.