Cribb vs. Sulzer Metco (US) Inc. – 2012 – U.S. Dist. Court for Eastern Dist. of NC
Facts: Plaintiff, a Medicare beneficiary, settled his claim with Defendant. Concerned over how to protect Medicare’s interest, Plaintiff filed a Motion in U.S. District court seeking Approval of Settlement and Determination of Need for and Amount of Medicare Set Aside. Notice was provided to Defendant as well as the Centers for Medicare & Medicaid Services (CMS) and U.S. Attorney for the Eastern District of North Carolina. Defendant did not oppose the Motion, and neither – CMS nor the U.S. Attorney responded. The Court ruled to establish a Medicare Set Aside Account in the amount of $4,500. In doing so, the court made the following Findings of Fact:
- CMS does not currently have a policy or procedure in effect for reviewing or providing an opinion regarding the adequacy of the future medical aspect of liability settlement;
- Plaintiff is a Medicare beneficiary and will incur future medical , payable by Medicare related to the settled claim;
- Plaintiff has submitted medical evidence supported by his treating oncologist that future care for surveillance of his health condition is $4,330. Further, such evidence was consistent with the medical evidence presented in the underlying case;
- That the estimate of future medical costs set forth in the proposed MSA to be both reasonable and reliable as wells as adequately protects Medicare’s interest; and
- No evidence that Plaintiff or any other Party attempted to maximize the settlement to Medicare’s detriment.
Issue: Will a U.S. District Court entertain a Motion to determine future medical aspect related to a liability claim?
Outcome: Yes. This is an interesting case in that jurisdiction to hear the motion was based on the Court have underlying jurisdiction of the claim under 28 U.S.C. §1332. The diversity of citizenship and amount in controversy had been met. As an issue had developed between the parties (“actual controversy”) over the distribution of the settlement, the Court felt compelled to hear that controversy under 28 U.S.C. §2201 and on its inherent authority to control its docket.
Franco Signor Commentary: There are two important points for Parties considering this route to protect Medicare’s interest. First, it’s helpful if the case litigation is already on file with the U.S. District Court. Where jurisdiction is established then the Court has a vested interest to bring finality over any settlement. Of course the defendant has to raise the issue. If no controversy is raised and the case is settled, the U.S. District Court may not be as vested to re-open matters that are to be managed by the four corners of the settlement agreement. Once the controversy is raised, the Court will act to protect its docket. The second point is even more important because it relates to how the Court will act in terms of establishing a number for the Medicare Set Aside. In this case, the medical evidence presented from Dr. Cho was no different than what the Parties understood to be the state of the medical evidence at time of settlement. The Court was quick to point out that neither Party maximized their recovery to the detriment of Medicare. This is an important point as it is clear that attempts to claim “kitchen sink” medical care injuries and treatment at time of settlement, and then to present to Medicare a completely different picture will not be tolerated. As long as Parties are honest in protecting Medicare’s interest, Courts will help to bring finality.
At Franco Signor we have always taken the position that allocations without evidence of approval are meaningless. CMS has gone on record that it will not accept any allocation by the Parties, and that result does not change if the allocation is done by a Party’s agent. The best approval of course is from CMS. Absent such an approval, reaching out to the U.S. Attorney’s office or to the Court may be the best alternative. Doing nothing or having opinions from third parties that an allocation is not necessary based on formulas without legal basis is potentially dangerous.