Tuesday, July 5, 2011

More Pushback on Medicare Lien Issue With Settlements

In the case of Dailey-Console v. Barnwell, PICS Case No. 11-1115 (Monroe Co. May 18, 2011, Zulick, J.), Judge Arthur L. Zulick granted a Plaintiff’s Motion to Compel a Defendant to pay a settlement over the Defendants’ objection that Medicare lien issues were not yet resolved.

This matter arose out of a motor vehicle accident. The parties eventually agreed to settle the claims and the Plaintiffs signed a General Release. However, the Defendants did not tender payment of the settlement because they asserted that a Medicare lien existed that had to be satisfied prior to payment as the Defendants could potentially be liable for the lien.

The Plaintiffs argued that the terms of the Release executed by the parties governed the dispute and that, under the Release, they were entitled to payment of the settlement funds at once. The Court agreed.

Reviewing the Release between the parties, the court noted that, although the Release held the Defendants harmless from payments to third party as specifically stated that the Plaintiffs would be responsible for the satisfaction of any DPW lien from the settlement proceeds, the Release was silent as to any obligation by the Plaintiff to obtain clearance from Medicare.

Since the Court determined that the Release was valid as written and that the terms of the Release did not address any Medicare lien, the Medicare lien issue could not be relied upon as a roadblock to be enforcement of the Release terms, including the payment of the settlement amounts.

In so ruling, the Court pointed to the Pennsylvania Superior Court Decision in Zaleppa v. Seiwell, 9 A.3d 632 (Pa. Super. 2010), in which the Superior Court upheld an argument presented by the Scranton law firm of Lenahan & Dempsey that a defendant’s statutory obligation to reimburse Medicare was distinct from Medicare’s statutory right of reimbursement and that nothing under federal law or any provision of the Medicare Secondary Payor Act, “expressly authorizes a primary plan to assert Medicare’s right to reimbursement as a preemptive means of guarding against its own risk of liability.”

Rather, the Medicare Secondary Payor Act expressly provides that only the United States Government, and not any private entity, may file a lawsuit in which the rights to the government are asserted. For this additional reason, the Monroe County Court of Common Pleas denied the Defendant’s request to hold up the settlement in light of the Medicare issues presented in the Dailey-Console v. Barnwell case.


Anyone desiring a copy of the Dailey-Console v. Barnwell decision may contact the Pennsylvania Law Weekly Instant Case Service at 1-800-276-7427, provide the PICS Case No. noted above and pay a small fee to secure a copy.

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