Sunday, August 5, 2012

More Decisions Regarding Impact of Medicare Liens on Finalization of Settlements

Below are summaries of two recent federal court decisions regarding the impact of potential Medicare liens on the finalization of a settlement of a third party action:

Carty v. Clark, Civil Action No. 11-6083 (E.D.Pa. June 14, 2012 Rueter, Mag. Judge)(Order by Robreno, J.)

In Carty, the Plaintiff agreed in a Release that defense counsel could hold settlement amount in escrow until Plaintiff produced Final Demand Letter from the Centers for Medicare and Medicaid Services.

The Plaintiff thereafter produced a Final Demand Letter and the defense counsel refused to release settlement amount citing fears that an unpaid medical bill might be paid by Medicare in the future and would have to be added to the lien.

The Court granted Plaintiff's Motion to Enforce settlement citing the clear terms of the Release which stated that, once the Final Demand Letter was produced by the Plaintiff from Medicare, the settlement proceeds were to be released to the Plaintiff. 

The Plaintiff's request for sanctions were denied as it did not appear to the court that the defense had acted in bad faith.

To view Federal Magistrate Rueter's Report and Recommendation, click HERE.

To view the Eastern District Court Order issued by Judge Eduardo C. Robreno adopting Judge Rueter's Report and Recommendation, click HERE.

I send thanks to Attorney Bill Mabius of the Pennsylvania Association of Justice for bringing this case to my attention.

Sipler v. Trans AM Trucking, Inc., et al, No. 10-3550(DRD)(D.N.J. July 24, 2012 DeBevoise, S.J.)

Although the Sipler case is a Federal District Court of New Jersey decision that was marked by that court as "NOT FOR PUBLICATION," a number of Pennsylvania litigators are pointing to the case for its persuasive authority on the issue of the impact (or more appropriately, the non-impact) of Medicare issues on personal injury settlements.

In the District of New Jersey case of Sipler, the parties settled a personal injury action arising out of a motor vehicle accident.  The parties were unable to finalize the settlement due to disagreements over the terms of the Release, which dispute included issues over release terms pertaining to Medicare matters.  The Plaintiff brought the matter before the court by way of a Motion to Enforce Settlement.

After thoroughly reviewing the applicable law pertaining to Medicare and the potential for Medicare liens, the court in Sipler noted that, while the Plaintiff was Medicare eligible, there was no evidence that Medicare had paid for any of the Plaintiff's accident-related treatment.

Based on the demands of the defense in this matter in terms of the requested provisions of the release, one of the issues in this case became whether the Medicare Secondary Payer statute required language in the release provisions of the plaintiff's settlement agreement specifying (1) the plaintiff's obligation not to seek such payments from Medicare, and (2) that a portion of the settlement amount would be set aside for future medical expenses arising out of the accident.

The court in Sipler noted that, while set-aside agreements were common in workers' compensation matters, "no federal law requires set-aside arrangements in personal injury settlements for future medical expenses."  Op. at p. 6.

The court went on to note that personal injury settlements should not be required to have such set-aside agreements because "to require personal injury settlements to specifically apportion future medical expenses would prove burdensone to the settlement process and, in turn, discourage personal injury settlements."  Id. at p. 7.

In a footnote, Judge DeBevoise also stated "Indeed, it would be particularly discouraging if litigants were required to obtain Medicare's approval of a settlement."  Id. at p. 7, n. 1.

Accordingly, the court held that "the parties in this case need not include language in the settlement documents noting [the Plaintiff's] obligations to Medicare or fashion a Medicare set-aside for future medical expenses."  Id. at p. 7.

To view the Sipler decision online, click this LINK.

I thank several attorneys for pointing this decision out to me including, but not limited to, Attorney Andrew Bigda of the Wilkes-Barre, PA law firm of Rosenn, Jenkins & Greenwald, and Attorney Thomas Foley, Jr. of the Scranton, PA Foley Law Firm.

To review, other Tort Talk posts (as well as my July of 2012 Pennsylvania Law Weekly article) on this issue of the interaction of Medicare lien issues and personal injury settlements,
click this LINK.

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