Monday, June 16, 2008

Product Liability, Medicare Reimbursement

Posted by Matthew Garretson

A severely injured client (left side paralysis, brain damage) has been offered all available insurance. In Massachusetts for consortium actions the spouse's consortium damages are not reduced by any negligence of the injured, so sometimes when there is significant comparative negligence, the spouse has a better liability case than the injured person. Also, Massachusetts' law requires adult children to help support destitute parents. In my client's case it was a fall down, so by definition there is comparative negligence. Also, an adult daughter has been paying about $60,000.00 a year of home health care bills for her mother. I want to structure the settlement 40% to husband spouse (who has no negligence and very considerable consortium loss), 40% to daughter who has already spent more than that in home health and other related bills for injured mother, and 20% to injured wife and mother. What is your reaction? What do you think Medicare will do with this allocation?

-Massachusetts Attorney

Medicare's manual state's that Medicare is bound by an allocation that has been designated by a court on the merits of the case.... "The only situation in which Medicare recognizes allocations of liability payments to non-medical 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 designates 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 Intermediary Manual, § 3418.7.

Recently, we have seen Medicare challenge any allocation they believe was done after the fact in an effort to avoid any reimbursement claims - They really want to see that it was done based upon a fact-finding on the merits of the case. I believe, however, that you allocation below includes some payment for the injured party, which always is a good starting point in demonstrating that you are not allocating after the fact to avoid Medicare.