167 F. Supp. 3d 887
E.D. Mich.2016Background
- Decedent Barbara Anderson died Sept. 20, 2006; her son Roland H. Anderson, Jr. sued physicians for malpractice/wrongful death seeking “any and all damages” under Michigan law (which includes medical expenses).
- Plaintiff settled with the defendants for $140,000 and executed releases that broadly covered medical care from Aug. 11–Sept. 20, 2006 and acknowledged responsibility to satisfy Medicare liens from settlement proceeds.
- CMS/MSPRC issued conditional payment notices: an initial $41,340.46 (Nov. 2009), a later incomplete $1,713.77 listing (Jan. 2011) that warned it was not final, and a final demand of $22,668.01 (July 1, 2011) covering services Sept. 11–20, 2006.
- Plaintiff obtained state-court approval of the settlement and a distribution order that referenced $1,713.77 as the Medicare lien; Plaintiff distributed funds relying on that figure and reserved only $1,713.77 for Medicare.
- Medicare sought reimbursement of $22,668.01; administrative reviewers (MSPRC, QIC, ALJ, MAC) found Medicare entitled to full recovery because the settlement released claims for medical expenses and the state-court order was not an on-the-merits allocation limiting Medicare’s recovery.
- District court reviewed the MAC decision under the substantial-evidence standard and granted summary judgment for the Secretary, upholding Medicare’s recovery of $22,668.01.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Medicare may recover conditional payments from the malpractice settlement | Anderson: Settlement resolved liability but Medicare’s listed lien should be limited (claimed reliance on $1,713.77); some charges unrelated to negligence | Secretary: Settlement and releases demonstrate tortfeasor responsibility for medical expenses; Medicare may recover conditional payments included in released claims | Held: Medicare may recover $22,668.01; settlement releasing all claims including medical expenses demonstrates responsibility for reimbursement |
| Whether plaintiff’s reliance on MSPRC’s earlier $1,713.77 estimate binds Medicare | Anderson: Relied on the MSPRC correspondence and state-court approval referring to $1,713.77 when allocating funds | Secretary: MSPRC letters expressly warned amounts were preliminary and subject to change; plaintiff assumed the risk | Held: Reliance was misplaced; MSPRC warned amount was not final, so plaintiff cannot bind Medicare by that estimate |
| Whether the state-court order allocating $1,713.77 is a binding, on-the-merits allocation limiting Medicare’s recovery | Anderson: State court took testimony and entered an order listing $1,713.77, so MSPM §50.4.4 requires Medicare to accept that allocation | Secretary: Court’s order merely reflected the parties’ stipulation and a pre-final estimate; record lacks evidence state court made an on-the-merits allocation of non-medical losses | Held: Not binding on Medicare; the order did not make an on-the-merits allocation specially designating non-medical losses |
| Whether Medicare can be required to forego recovery because the services would have been Medicare-covered regardless of negligence | Anderson: Charges would have been incurred by Medicare even absent malpractice, so Medicare shouldn’t recover from settlement | Secretary: Whether Medicare might have paid later is irrelevant; settlement/ release demonstrates primary payer responsibility for those services | Held: Irrelevant whether Medicare ultimately would have paid; release/settlement demonstrating primary-payer responsibility controls recovery |
Key Cases Cited
- Hadden v. United States, 661 F.3d 298 (6th Cir. 2011) (settlement/release of claims defines primary plan’s responsibility for Medicare reimbursement)
- Taransky v. Secretary of Health & Human Services, 760 F.3d 307 (3d Cir. 2014) (settlement that releases claims is sufficient to establish responsibility; court allocations must be on-the-merits to limit recovery)
- Mathis v. Leavitt, 554 F.3d 731 (8th Cir. 2009) (wrongful-death claim for all damages permits Medicare recovery from settlement proceeds covering medical expenses)
- Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010) (state-court on-the-merits allocation that designates nonmedical portions can bind Medicare)
- Heckler v. Ringer, 466 U.S. 602 (U.S. 1984) (Medicare Appeals Council decision is the Secretary’s final agency decision for judicial review)