Under the federal Medicare Secondary Payer law, Medicare is not responsible for the payment of an individual’s medical expenses caused by personal injury if a “primary plan” is available for payment. The “primary plan” can be an insurance policy or a third party wrongdoer that caused the personal injury. However, Medicare can and often does pay medical expenses when the primary plan is not likely to pay promptly.
In such a case, the law provides Medicare with the right to obtain reimbursement from the primary plan for the Medicare paid expenses. Medicare may also seek reimbursement of the Medicare paid expenses from the Medicare beneficiary if the beneficiary receives payment from the primary plan. The rule applies regardless of whether the recovery is realized through a judgment or a settlement.
Medicare’s right to be reimbursed the medical expenses it paid is not applicable, however, where the judgment or settlement is designated as payment for wrongful death, and the wrongful death statute of the relevant state does not permit the recovery of medical expenses. In Maryland, the Wrongful Death Act does not specifically permit the recovery of medical expenses.
Therefore, in Maryland, it is in the interest of any Medicare beneficiary (or their personal representative) to allocate a personal injury award as a wrongful death award. Whether Medicare is then bound by such an allocation made by a Maryland state court was the issue recently addressed in Weiss v. Azar.
In Weiss v. Azar, the estate of an injured man was paid $600,000 in a settlement of claims brought in a Maryland state court for wrongful death, as well as for medical malpractice and other claims. Medicare sought $26,000 of the settlement representing the amount Medicare paid for the decedent’s medical expenses. The estate and the decedent’s wife contested Medicare’s claim, because a state court had entered an order that allocated the entire $600,000 settlement to the wrongful death claim.
Medicare argued that it was not bound by the order because the order was not based on the merits of the claim, since the order was uncontested and signed without any hearing or evidence. Basically, Medicare argued that it was not bound by a “rubber stamp” order.
On appeal, the federal District Court with jurisdiction for Maryland held that Medicare was not bound by a state court’s order allocating the settlement because the order did not decide the merits of the claim. The court also declined to make its own “equitable allocation” of the settlement. As a result, Medicare was entitled to be paid its $26,000 of expenses from the settlement recovery.
As a result of the Weiss decision, a person making a wrongful death claim in Maryland together with other claims will be unable to avoid having to reimburse Medicare for the medical expenses it has paid unless an allocation of the entire award to the wrongful death claim is made as part of a decision on the merits of the claim.
Lawrence D. Coppel
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