Bradley v. Sebelius: Medicare Not Entitled

On September 29, 2010, the 11th Circuit Federal Court ruled that Medicare is not entitled to the proceeds of a wrongful death settlement paid to the surviving children of a Medicare recipient.  This news is a welcome addition to the personal injury world, where Tort reform has put caps on many death case recoveries.  Could this change the Medicare Lien Resolution process?

First, some background on the case courtesy of the American Association for Justice, Trial Magazine:

In 2005, Charles Burke died while under the care of a nursing home in Gainesville, Florida. His daughter, Carvondella Bradley, presented a wrongful death claim to the nursing home on behalf of Burke’s estate and his 10 surviving children.

The case settled for the facility’s insurance limits of $52,500 before a lawsuit was filed, and Bradley notified the Department of Health and Human Services (HHS)—which administers Medicare—of the settlement. In response, HHS claimed that it was entitled to $22,481.89 of the settlement proceeds as reimbursement for its share of Burke’s nursing home medical expenses.

A Florida probate court hearing to adjudicate the matter was set. Bradley notified HHS of the hearing, but no agency representative attended. The probate court awarded $787.50 to HHS. The rest was allocated to Burke’s children for their nonmedical losses

The Court rejected HHS’s claim that $22,481.89 be paid to resolve the Medicare lien, stating, “In essence, [HHS] is asserting that its field manual is entitled to deference … [but] the Supreme Court has stated that ‘agency interpretations contained in policy statements, manuals, and enforcement guidelines are not entitled to the force of law.’ ”  It then specifically stated HHS’s deference to the field manual is misplaced.

Finally, the Court added this powerful statement:

Without citing any statutory authority, regulatory authority, or case law authority, the Secretary and the district court’s reliance upon language in a field manual is unpersuasive.  The Secretary is not entitled to any share of the [plaintiff’s] surviving children’s loss of parental companionship claims.

So what does Bradley v. Sebelius mean for Medicare liens?  For one, challenging them might be getting easier.  However, the plaintiff only made it as far as the 11th Circuit because it exhausted all of its administrative remedies (see: The Five Levels of Medicare Appeals).

This could strengthen your Medicare appeal arguments where any court has provided a distribution or allocation less than the Final Demand claimed by the MSPRC.  One caveat: the Bradley case involved a very specific situation with a very specific non-medical loss claim.

Nonetheless, this holding is hugely important to the future of Medicare lien resolution.  Medicare has potentially lost all of its leverage for recovering payments in death cases.  Regardless of whether you are a plaintiff’s attorney or defense attorney, this case could have enormous implications.  It seems if a judge allocates no funds to the estate itself, the heirs’ distributions cannot be touched by Medicare.

In the end, both Plaintiffs and Defendants can benefit from court-ordered allocations where Medicare’s interests are accounted for.  At worst, the MSPRC will reject the allocations in ignorance of Bradley forcing you to utilize the Medicare appeals processes and eventually to file suit.  At best, the MSPRC will accept the allocation in full.  Either way, the Plaintiff cannot be hurt by an allocation attempt.

With the good news may come bad news though.  We can only speculate, but if Medicare loses its ability to recover funds in death cases, it will want to recoup that ability elsewhere: Medicare Set-Asides (MSAs) could become a requirement for non-death liability cases.  But for now, that is just speculation.

Remember, this was the 11th Circuit, it is not binding to a large percentage of the nation; but you can bet HHS will appeal.  The Supreme Court will soon be involved.

Please contact us for any lien resolution needs.  In addition to Medicare lien resolution, we can assist you with Medicaid lien resolution, ERISA subrogation, private insurance companies’ liens, and more.

Ryan J. Weiner

Co-Founder Lien Resolution Services

www.lienresolutionusa.com

https://lienblog.wordpress.com

rweiner@lienresolutionusa.com

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