Medicare recovery from wrongful death settlement depends on state law
Case name: Bradley v. Department of Health and Human Services, No. 09-13765 (11th Cir. 09/29/10).
The 11th U.S. Circuit Court of Appeals held that the Department of Health and Human Services was entitled to recover $800 in medical expenses from a wrongful death settlement. A dissenting judge stated that the department's field manual was entitled to some deference.
What it means: According to 11th Circuit, Medicare must defer to state law in asserting its right to recover medical payments under the Medicare Secondary Payer Act.
Summary: A man resided in a nursing home. He was removed from the home and admitted to a hospital, where he died. Medicare paid $38,875 for the man's medical care. His children presented a wrongful death claim against the nursing home, which was settled for $52,500 without filing a lawsuit. The probate court determined that the Department of Health and Human Services could only recover about $800. The department did not take part in the probate litigation. The 11th U.S. Circuit Court of Appeals held that the department was entitled to a recovery of $800 in medical costs.
The children argued that Florida law controlled. Florida courts have repeatedly held that the proceeds from a wrongful death action are for the benefit of the survivors and not the estate. HHS relied on the Medicare Secondary Payer manual, which stated that it would only recognize the allocations of liability payments to nonmedical losses when the payment is based on a court order. The court stated that the Supreme Court has said that "agency interpretations contained in policy statements, manuals, and enforcement guidelines are not entitled to the force of law."
The court noted that if the language of the manual applied it would lead to absurd results. The department's position would also "have a chilling effect on settlement" and burden the court system.
A dissenting judge stated that the manual was entitled to some deference by the court.
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January 6, 2011
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