April 02, 2019

TORT TRIAL AND INSURANCE PRACTICE: Protecting Wrongful Death Settlements from Medicare

Where a person dies as a result of another’s negligence or fault, and that person received Medicare-subsidized health care related to the cause of the death, the Secretary of the Department of Health and Human Services (HHS), acting on behalf of the Medicare program, may seek reimbursement for the medical expenses from the decedent’s estate. In reality, this could mean depleting settlement funds that are rightfully the property of survivors who have no obligation or connection to Medicare. However, recent case law has clarified the rights of survivors and provided guidance on how to protect wrongful death settlements from the reach of Medicare.

Medicare’s shift from first to second payer. As originally enacted, Medicare was a primary payer in most cases. It “generally paid for medical services, even when a recipient was also covered by another health plan or insurer.” Walters v. Leavitt, 376 F. Supp. 2d 746, 750 (E.D. Mich. 2005). However, in 1980, Congress enacted the Medicare Secondary Payer (MSP) statute. Under the MSP, Medicare became a secondary payer to other sources of payment, meaning that “if payment for covered services has been or is reasonably expected to be made by someone else, Medicare does not have to pay. In order to accommodate its beneficiaries, however, Medicare does make conditional payments, even when another source may be obligated to pay. . . .” Chochran v. U.S. Health Care Fin. Admin., 291 F.3d 775, 777 (11th Cir. 2002) (citing 42 U.S.C. § 1395y(b)(2)(A)(ii). When it does so, Medicare is entitled to reimbursement for these conditional payments from other sources.

Medicare’s priority cannot be taken lightly by personal injury litigators. In tort actions, Medicare may seek reimbursement of liens from the entire settlement amount. However, in the context of wrongful death cases, careful front-end planning in certain jurisdictions can protect settlements from Medicare claims.

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