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Monthly Archives: October 2010

Medicare rebuked by Appeals Court on settlement

The Center for Constitutional Litigation (CCL) recently won a landmark decision that affects tort claims of clients who may have received Medicare benefits. The U.S. Court of Appeals for the Eleventh Circuit emphatically rebuked Medicare over the way the agency treats settlements and held that Medicare does not have the right to claim full reimbursement from an undifferentiated settlement, as it has for years. Instead, Medicare must participate in any state-authorized process to prorate its lien claim or accept the result when it refuses to participate. The decision is the first by a federal circuit court on the issue.

A Florida nursing home resident died from complications of bed sores and received a settlement of $50,000. Since Medicare had paid for the deceased’s medical expenses, the 11 surviving children, who sued for loss of consortium, invited Medicare to participate in an allotment of the settlement. Medicare claimed the entire amount citing its manual and later refused to take part in a probate hearing to allot the settlement. The family’s lawyer went to federal court seeking recognition of the probate court’s decision. The court deferred to Medicare’s interpretation of the 1980 Medicare Secondary Payer Act.

The family then appealed the case to the Eleventh Circuit Court of Appeal. That court adopted the argument that the Medicare Manual lacked the force and affect of law, that the statute did not authorize Medicare’s position, and that, having chosen not to participate in the allocation; Medicare must accept the probate court’s decision that Medicare’s proportionate share of the settlement was only $787.50.

This is a tremendous victory for injured plaintiffs. The American Association of Justice was instrumental in guiding the family through the appeal process.

To view the decision in the case, click here.