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Glen N. Benson v. Kathleen Sebelius

March 24, 2011


The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Re Document Nos.: 12, 13




The plaintiff, as the survivor and administrator of his mother's estate, received a $90,000 settlement for a wrongful death and survival action that he had previously commenced in a Pennsylvania state court. Before her death, the plaintiff's mother's medical care was paid for by Medicare, a federal program administered by the Centers for Medicare and Medicaid Services ("CMS") of the Department of Health and Human Services ("HHS"). Under protest by the plaintiff, CMS collected a sum from the wrongful death and survival action settlement as reimbursement for the portion of his mother's medical costs incurred by Medicare.

The plaintiff commenced this action, seeking review of the reimbursement amount collected by CMS and asserting that he was deprived of his settlement funds without due process. The matter is now before the court on the parties' cross-motions for summary judgment. Because the amount collected by CMS is in accordance with the applicable laws regulating the reimbursements given to Medicare from a wrongful death settlement and because the plaintiff was not denied due process, the court denies the plaintiff's motion for summary judgment and grants the defendant's cross-motion for summary judgment.


A. The Medicare Secondary Payer Provision

Medicare provides health insurance to the elderly and disabled by entitling eligible beneficiaries to have payments made on their behalf for care and services rendered by health care providers. See generally 42 U.S.C. §§ 1395 et seq. CMS is responsible for administering the Medicare program. See id. § 1395h.

In 1980, Congress enacted the Medicare Secondary Payer Provision ("MSP") which made Medicare a secondary payer plan. See 42 U.S.C. § 1395y(b). As a secondary payer plan, any payment made by CMS on behalf of a Medicare beneficiary is conditional and subject to reimbursement by any party that receives a "primary payment." Id. § 1395y(b)(2)(B)(i). A primary payment is any payment made by a non-Medicare entity for the medical expenses of a Medicare beneficiary based on that entity's obligation to pay for those medical services. 42 C.F.R. § 411.21. For instance, if Medicare's coverage overlaps with that of another insurer, CMS may seek reimbursement from that insurer for the medical expenses that were already paid through Medicare. 42 U.S.C. § 1395y(b)(2)(B)(ii); 42 C.F.R. § 411.21.

Similarly, and of particular relevance here, CMS may seek reimbursement for Medicare-disbursements from the recipient of a judicial settlement. 42 C.F.R. § 411.22(a)-(b)(3). When the primary payer is the recipient of a settlement, however, CMS's reimbursement is reduced by its portion of the legal fees and costs that were incurred in obtaining the settlement ("the procurement costs"). Id. § 411.37(a). Moreover, if a settlement covers both medical and non-medical costs, CMS's reimbursement may be apportioned so as to reach only the portion of the settlement allocated to cover medical costs. See Cox v. Shalala, 112 F.3d 151, 154-55 (4th Cir. 1997); Denekas v. Shalala, 943 F.Supp 1073, 1080 (S.D. Iowa 1996).

In order to collect its reimbursement pursuant to the MSP, CMS may intervene in an action involving the medical costs of a Medicare beneficiary but also has a right of subgrogation.

42 U.S.C. §§ 1395y(b)(2)(B)(iii)-(iv). The selection of one avenue over another does not affect CMS's right of recovery. Zinman v. Shalala, 67 F.3d 841, 844-45 (9th Cir. 1995).

B. Factual & Procedural Background

In May 2003, the plaintiff's elderly mother suffered various injuries after falling in her home. Compl. ¶ 7. As a result, the plaintiff's mother was hospitalized and treated for a fracture of her right radius, a radial periorbital hematoma and a contusion. Id. ¶ 8. During her hospital stay, however, she was also treated for medical conditions not directly related to these injuries. Id. ¶ 9. In total, the plaintiff's mother received thirty-eight medical treatments, only one of which, the plaintiff claims, was related to the fall -- the "fracture of the surgical neck humerous [sic]." Id. The plaintiff's mother died ten days after the accident. Id. ¶ 10.

In July 2005, the plaintiff, in his capacity as survivor and administrator of his mother's estate, filed a wrongful death and survival action against his mother's landlord in the Court of Common Pleas of Pennsylvania. Id. ¶ 11; A.R. at 591. In pursuing that action, the plaintiff expressly included his mother's medical costs in his wrongful death claim. A.R. at 595. There is no indication, however, that the plaintiff paid any of his mother's medical expenses.

Because the plaintiff's mother was a Medicare beneficiary at the time of her injury, CMS had paid for her hospital costs, which totaled $40,213.74. Pl.'s Mot. at 3. In December 2006, CMS notified the plaintiff of this amount, informing him that Medicare's initial payment of his mother's medical expenses was conditional to reimbursement from any potential settlement award. A.R. at 708. CMS also explained to the plaintiff and his counsel that they had an opportunity to contest the charges prior to payment. Id.

The parties in the wrongful death and survival action eventually settled for $90,000, with 80% of that amount allocated in settlement for the wrongful death claim ("wrongful death settlement award") and 20% allocated in settlement for the survival claim ("survival settlement award"). Compl. ΒΆ 11. Although the settlement did not specify a precise numerical value allocated for medical costs, it did release the landlord from "[a]ll ...

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