Sorrell vs. Lakeview Regional Medical Center- New MSP Case Decision Regarding Primary Plan
Roy Franco
May 24, 2012

Sorrell vs. Lakeview Regional Medical Center 2012 U.S. Dist. LEXIS 70519 (U.S. Dist. Court for the Eastern Dist. of Louisiana)

Facts:  Plaintiffs are the children of Joanne Sykes who died while a patient at Lakeview Regional Medical Center.  They filed a claim against the facility for negligent treatment and received a settlement of $15,000.  Joanne Sykes was a Medicare beneficiary at the time of her death, and her children filed a concursus action in state court to adjudicate competing claims against the settlement amount.  The petition named Medicare, amongst other parties.  Medicare removed the concursus to Federal District Court on jurisdictional grounds.  It then moved for partial summary judgment that it was owed $10,757.44 for conditional benefits it paid over all other parties.

Issue:  Is Medicare entitled to a priority right of claim for conditional payments made over competing lien claimants and non-Medicare beneficiary claimants seeking compensation for the loss of their mother?

Opinion:  The U.S. District Court never reaches the issue.  Rather, it rules against Medicare because of an issue of fact with regard to whether Lakeview Regional Medical Center is a Primary Plan, and the lack of Medicare’s witness, Sally J. Stalcup to establish that fact.  The Court cites Thompson v. Goetzman, 337 F.3d 489 (5th Cir. 2003) to support the ruling.  In that decision, a self insured is not an insurance company and therefore was not subject to the Medicare Secondary Payer Act.  The result is that Medicare must go to trial to prove their case or appeal.

Franco Signor LLC Commentary:  This decision highlights the lengths a court will go to arrive at an equitable result.  The plaintiffs lost their mother and received what is tantamount to a nuisance value settlement for their loss.  After settlement, they do the right thing by requesting the court’s intervention to properly allocate the limited settlement amount between competing interests.  Rather than negotiate this sensitive situation, Medicare decides to litigate, causing further expense.  Under Medicare’s own rules it could have negotiated a lower figure if it felt it was not in its best interests to pursue the loss.  Given the relatively low settlement amount, it probably spent more in fees to remove the case and file for partial summary judgment than what the ultimate value was worth.   The Court ignored amendments to the Medicare Secondary Payer Act in 2003 which were designed by Congress to include self insurance as a “primary plan”.  The law was amended specifically because of the Thompson case and to codify the decision reached in U.S. v. Baxter International, 345 F.3d 866 (11th Cir. 2003) which identified a self insured as a primary plan.  Bottom line: The decision reached in this case is an anomaly.  It would not be persuasive authority for a self insured to use to support non-compliance with the Medicare Secondary Payer Act.