Finke v. Hunter’s View, 2009 U.S. dist. LEXIS 126830 (U.S. Dist. Court for Dist. of Minnesota, 5th Division)
Facts: Claimant was paralyzed when he fell from a ladder. He sued the manufacturer (including the purported retailer) for defective design. The case settled for $1.5M. Prior to settlement, Claimant was dual eligible for benefits under Medicaid and Medicare. Claimant lost his Medicaid (and Medicare) because the combined family income exceeded the threshold limit for Medical Assistance under Minnesota law. Claimant’s wife was employed at the time of settlement, and her employer provided a Group Health Plan (Grand Itasca Clinic and Hospital Health Plan) which has primarily paid for Claimant’s ongoing treatment.
Issue: Are Medicare’s interests protected when a Group Health Plan provides primary coverage?
Opinion: Yes. The Court made several findings based on the evidence that was presented. 1) Medicare must be paid back its outstanding conditional payments from the settlement of $18, 448.18; 2) Although Claimant was a Medicare beneficiary at some point in time after the accident, he had lost his Medicare status at time of settlement, because he was no longer eligible for Medicaid which supported his grant of Medicare status; 3) Claimant had Group Health Plan coverage that would exist into the foreseeable future; and 4) Medicare does not have a formal policy in place to follow, necessitating action by the Court to bring finality. Taking all of this into consideration, the Court felt compelled because of the severe injuries and relative low settlement amount to find Medicare’s interest was protected because of the Group Health Plan.
Franco Signor Commentary: This case was recently cited in an ABA magazine article to support the premise that a Liability Medicare Set Aside (LMSA) was not necessary. While the Court did not Order that Medicare’s interests be protected by establishing a LMSA, the Court also did not make any finding on whether or not such vehicle was appropriate or not for liability cases. There are a few unique factors that led to the Court’s conclusion, as outlined above. We regularly recommend to our clients that a LMSA is not necessary when there is an applicable exception such as: 1) Claim is exempt because settlement was $300 or less; 2) Claim was resolved through the MSPRC Fixed Percentage Option; 3) No future medical as attested to by claimant for settlement values up to $25K (and self calculation option is used); 4) No future medical as attested by Claimant’s treating Doctor consistent with CMS Memorandum dated 9/29/2011 dealing with Liability Settlement and Future Medicals; and 5) Where another primary plan exists.
When an exception is identified it is important that it is documented. Generally an acceptable primary plan is program that will provide lifetime medical benefits such as state workers’ compensation claim. Group Health Plans have no such mandate and can change in one of two ways when the employment relationship ends, or the benefits change in the next enrollment period. Also, lifetime caps for medical payments would also apply. The Parties were wise to seek approval from the Court given these nuances, so the evidence of the long term nature of the Group Health Plan could be reviewed and ruled on by the Court. Absent a Group Health Plan, a LMSA, approved by the Court would have been appropriate.
Protecting Medicare’s interest in a liability case can be challenging and difficult to navigate. Before you settle, consider speaking to our legal and clinical specialist about the best steps to Protect or otherwise consider Medicare’s interest that fits the claim.