Trial of the liability case involving a Medicare Beneficiary
Jeff Signor
June 30, 2010

Our office regularly provides consulting advice on the issue of how to steer the Medicare component of a liability claim, involving a Medicare beneficiary, which is destined for trial.   When working with the defense, we recommend that a pleading be filed with the court and served upon plaintiff’s counsel wherein the medical treatment and Medicare expense are methodically set forth.  This pleading serves as notice to the judge about the Medicare Secondary Payer Statute and the obligations to comply with it.

We also recommend additional lines on the verdict sheet with respect to past and future medical expenses.  This recommendation stems from the Medicare Secondary Payer Manual which contains the following:

50.4.4 – Designations in Settlements

In general, Medicare policy requires recovering payments from liability awards or settlements, whether the settlement arises from a personal injury action or a survivor action, without regard to how the settlement agreement stipulates disbursement should be made. That includes situations in which the settlements do not expressly include damages for medical expenses. Since liability payments are usually based on the injured or deceased person’s medical expenses, liability payments are considered to have been made “with respect to” medical services related to the injury even when the settlement does not expressly include an amount for medical expenses. To the extent that Medicare has paid for such services, the law obligates Medicare to seek recovery of its payments. The only situation in which Medicare recognizes allocations of liability payments to nonmedical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designate amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court’s designation. Medicare does not seek recovery from portions of court awards that are designated as payment for losses other than medical services.

The last two sentences of this section of the MSP Manual are critical.  These sentences signify to us that, although allocations of liability payments to non-medical losses will not be recognized if such allocation is accomplished through a release, Medicare will honor court adjudication on the merits.  Thus, it is important to allow the judge, jury or arbitrator to rule upon past and future medical expenses.

Once a case goes to the jury and an award is issued, whether reduced to a judgment or otherwise, the defense must pay the judgment over to the claimant with clear and unambiguous language in the cover letter setting forth plaintiff’s and plaintiff’s counsel’s obligations under the MSP Statute.  Most state jurisdictions have statutory interest that runs on a judgment, so the defense has little choice on the issue.  We recommend the following language:

Enclosed please find a draft made payable to plaintiff and your firm in the amount of $__________.  This sum represents the judgment that was entered and it is full and complete payment with respect to plaintiff’s claim against Safeway Inc.  The plaintiff, ___________ (HIC# __________) is a beneficiary of Medicare.  As set forth below, it is important that your firm re-pay Medicare’s conditional payments related to this claim.

42 USC §1395y (b)(2)(B)(ii) requires that anyone who receives judgment monies, in a claim involving a Medicare beneficiary, must reimburse Medicare for items and services previously paid for by Medicare.  The provision is absolute.  No legal action is required and interest accrues starting 60 days from the date of notice given by Medicare.  Consistent with 42 C.F.R. 411.25(i), we are notifying Medicare of the judgment and payment.

We also refer you to U.S. vs. Harris, Civ. A., 5:08 CV102, 2009 WL 891931 (N.D. W. Va. 2009).  In Harris, the government commenced suit against a settling plaintiffs’ attorney to recover a portion of the Medicare reimbursement amount.  The U.S. government’s motion for summary judgment was successful and judgment was entered in the amount of $ 11,367.78 plus the amount of interest thereon.   In the event payment is not made to Medicare within 60 days, and Medicare files suit to recover payment, it could seek double damages against both your firm and your client.

We have sent letters like the above with a copy to the MSPRC.   This area of the law is a moving target, and it is likely that other processes will evolve.  In the meantime, it is a best practice to follow this procedure.

If anyone is interested in learning more about specific language contained in the Notice of Medicare Involvement, or other recommended thoughts on this topic, then do not hesitate to contact Roy Franco or Jeff Signor.  Our book, “Medicare Secondary Payer Compliance: How to Mitigate Exposure in the Medicare Beneficiary Personal Injury Case,” is now avialbel for sale at and Juris Publishing’s website.   The book addresses a myriad of issues that flow from the topic.

—– Jeff Signor