Medicare's Name on Check

Question:
We have a judgement on a  jury verdict for millions of dollars.  We know of a medicare lien for $9,000 but it may be higher because we do not have a final figure.  Defendant wants to tie up the whole check for millions by putting Medicare on it as a copayee.  We say we will refuse check and that interest will continue to run on the whole judgement.  Are we right?  Support for our position.  I am aware of Tomlinson decison out of MDFL 2009.

Illinois Attorney

Answer:
Our firm has been seeing this fact pattern more and more in recent weeks.  The reason for this increase is because those entities are misunderstanding their Medicare compliance obligations in light of the MMSEA.  They believe that, by putting Medicare’s (or Medicaid’s) name on the settlement check, Medicare’s interests (as well as themselves) have been fully protected.  This is neither the intent of the MMSEA nor is this the most effective way to protect Medicare’s interests. Putting Medicare's name on the settlement check does not equal absolute Medicare compliance.  In fact, there is no legal requirement to put Medicare’s name on the settlement check as a payee.  Medicare was not a party to the legal action, merely an entity entitled under the Medicare Secondary Payer Act to be repaid for conditional payments made from date of injury to date of settlement.

You have corrected noted Tomlinson as support for not putting Medicare's name on the check.  Tomlinson v. Landers, 2009 WL 1117399 (M.D.Fla.) involved an auto accident case which was being settled for the $100K policy limit where Medicare had made some conditional payments.  The defendant added Medicare’s name to the settlement check without discussing this prior with the plaintiff.  The plaintiff returned the check, asking that it be re-issued without Medicare’s name on the check. The defendant insisted that it had no choice under federal law (namely 42 CFR 411.24) but to put Medicare’s name on the check.  The plaintiff assured the defendant that Medicare would be reimbursed out of the settlement proceeds and agreed to indemnify defendant for any Medicare claims.  The defendant refused to remove Medicare as a payee on the check.

The court held that: 1) federal law does not mandate that a primary payer (i.e. the defendant) make payment directly to Medicare; 2) the defendant would not have violated federal law by omitting Medicare’s name from the check; and 3) a primary payer may be liable to Medicare if the beneficiary/payee does not reimburse Medicare for any amounts owed within 60 days.  In the end, plaintiff prevailed as the parties failed to reach a meeting of the minds with regard to this issue of reimbursing Medicare and the settlement was rejected.

As a practical matter, we know that Medicare prefers that settlement proceeds not be sent to them until the final claim determination (i.e. final demand) has been calculated.  The final demand is that conditional payment amount less procurement cost offset allowed by Medicare in that particular case.  This calculation cannot be performed until the final demand is requested from Medicare and this cannot be done until the settlement has been finalized.  Thus, putting Medicare’s name on the check is not only unnecessary, but impractical.  Tomlinson provides the case law behind the practical reasons for not putting Medicare's name on the settlement check.

John Cattie