Posted by Matthew Garretson and Elizabeth Vish Schad
Scenario: A mother was killed by negligent driver, survived by minor child. Minimum Insurance Policy only. Mother had Medicare, unknown whether A,B,C,D. Liens may use up entire settlement for mother. Can we collect liability settlement only under minor child's claim to maximize benefit?
-Recent Seminar Attendee
There are several factors to consider. Most importantly Medicare’s policies on allocations in settlements and Medicare’s policies on wrongful death claims.
With respect to allocations in the settlement, Medicare is not bound by an allocation that has not 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.
Thus, Medicare will not be bound by the terms of a private settlement agreement, and may still seek recovery from such a settlement, regardless of its terms.
With respect to Medicare, in a wrongful death/survivorship action, it can only recover from the survivorship portion. Medicare Secondary Payor rules (42 USC § 1395y(b)(2), 42 CFR §§ 411.24, 28) limit recovery to medical expenses incurred by the decedent. Medicare recovery does not extend to state-created rights for the decedent’s family to recover for his or her wrongful death, unless the state statutes provide that medical expenses are recoverable by the beneficiaries as part of their claims under the state’s wrongful death statute. While Medicare does not expressly limit its right of recovery to exclude wrongful death portions of an award, Medicare is only recovering for medical expenses paid. To that extent, Medicare’s recovery right will follow the estate within which those same medical expenses are claimed as a measure of damages. To the extent that the state statutes provide for the measure of damages in both a survival action and a wrongful death action, Medicare will follow the state’s law.