• Court Refuses to Permit Discount of Medicare Reimbursements Where Tort Plaintiff Settles Underlying Case for Less Than Actual Damages Sustained
  • October 26, 2012
  • Law Firm: Fineman Krekstein Harris P.C. - Philadelphia Office
  • In Mason v. Sebelius, No. 11-2370, 2012 U.S. Dist. LEXIS 106522 (D.N.J. Jul. 31, 2012), the court denied the plaintiff’s motion for reconsideration of its dismissal of his action to recover reimbursements made to Medicare. Plaintiff was injured in a slip-and-fall accident. He incurred medical expenses totaling $2,500, which were initially paid by Medicare. The tort action was settled for $40,000 and voluntarily dismissed. Thereafter, CMS sought reimbursement of a discounted portion of the medical care costs it paid on plaintiff’s behalf.

    In his motion for reconsideration, the plaintiff sought a determination that CMS was only entitled to reimbursement of a fraction of the medical costs as a proportionate share of his total recovery. Plaintiff argued that the court should apply Arkansas Dept. of Human Svcs. v. Ahlborn, 547 U.S. 268 (2006) to the MSP Act and hold that CMS is only entitled to seek a discounted amount of reimbursement. The court disagreed with plaintiff’s argument finding that the Ahlborn decision does not apply in the Medicare context. The court relied on the Sixth Circuit’s decision in Hadden v. United States, 661 F.3d 298 (6th Cir. 2011), which found that Ahlborn was based on the specific language of the Medicaid statute and, therefore, inapplicable in the Medicare context. Analyzing the language of 42 U.S.C. § 1395y(b)(2)(B)(ii), the court concluded that the scope of a beneficiary’s “responsibility” for payment of “items or services included” in a claim for reimbursement encompasses “all of his medical expenses.”

    Decisions by various courts continues to reinforce the position CMS is entitled to a full recovery of its conditional payment regardless of the fact that a beneficiary’s settlement can be significantly reduced to reflect the defendant’s exposure under tort liability concepts. Such a position hampers the settlement process because Medicare beneficiaries will fear that Medicare will claim the entire settlement award, and insurance carriers will be unwilling to pay any more than what they value settlement to be in order to cover the entire Medicare lien and potential future Medicare liens.