Injured Elderly and Disabled Not Worthy of Supreme Court Attention

Medicare Set-Aside Blog on October 4, 2012 | Posted by



In an order issued on October 1, 2012, the Supreme Court of the United States denied certiorari in Hadden v. United States and with this order died the hopes of insurers nationwide that we would finally have resolution of the equitable apportionment issue in Medicare reimbursements. If you are not familiar, Vernon Hadden was a pedestrian struck by a utility truck that swerved to avoid being hit by another vehicle that fled the scene. The utility truck became the convenient defendant given that the at-fault driver was unknown; however, since Tennessee is a comparative negligence state, it had rather minimal liability even if the issue had gone to trial. The claim was settled for $125,000 from which Medicare made claim to over $68,000. Mr. Hadden filed for a hardship waiver and was denied basically because he wasn’t destitute prior to the accident; therefore, his minimal recovery was not going to make him any worse off. He exhausted his administrative remedies, and Medicare’s denial was supported by both the district court and the 6th Circuit Court of Appeals. With the Supreme Court’s denial of cert, the message is that Medicare is entitled to 100% recovery of all conditional payments made related to an insurance settlement regardless of the underlying issues driving the settlement.

So the lingering question is why? Do the Supremes not care about the elderly and disabled who have sustained a bodily injury, possibly due to the negligence of others? They’ve resolved the issue for Medicaid beneficiaries (Arkansas Department of HHS v. Ahlborn) and will decide the issue on behalf of those receiving ERISA benefits this term (US Airways v. McCuthchen). Even those receiving VA benefits have the benefit of equitable apportionment (Cockerham v. Garvin). Even though Medicare Advantage plans now have an appellate ruling demonstrating that the Medicare Part C plans have a right to bring a private cause of action in federal court to recover under the MSP, in practice the plans are run by private insurance companies that recognize the benefits of compromising their recoveries in lieu of participating in costly trials. So why not Medicare?

Does the Court just not care that Medicare Part A & B beneficiaries are not being treated equally with those who possess other forms of medical insurance? It is not exactly like Medicare is free. Beneficiaries paid into the system throughout their entire work history and continue to pay in the form of premiums, coinsurance and deductibles. In exchange, it seems their valid legal claims to other damages such as lost wages/earning capacity, property damage, physical pain, mental suffering, emotional distress, loss of consortium/companionship, etc. are essentially disregarded by the federal government. At least no court disputes the fact that the government is obligated to reduce its recovery for attorneys’ fees and expenses. Apparently everyone but the injured individual is guaranteed payment from the available insurance.

So what is the Court looking at instead? Well there’s affirmative action, gay marriage, voting rights, and the Alien Tort Statute. The life of the get away car driver sentenced to death for felony murder will be decided when the court looks at whether the dismissal of the hung juror at her trial violated her 6th amendment rights. Most importantly, I can’t wait to find out if a floating boat is a home or a vessel. I guess we would be surprised how often a city like that of Riviera Beach, Florida rolls into a marina that it want to turn over to a developer and destroys peoples’ home/boat during the eviction. The Census Bureau reports that 33,808,000 were killed and another 2,217,000 people merely injured in motor vehicle accidents in 2009 and, in that year, 46,600,000 people were enrolled in Medicare. Clearly the boat issue affects far more people than the annoying little MSP issue.

Seriously though, I can’t blame the Court for not taking the issue up yet. We have exactly two circuits in conflict and Bradley can be distinguished from Hadden. Despite amazing dicta with regard to public policy and misplaced deference to CMS, Bradley turned on the fact that the Florida probate court had jurisdiction to decide how the policy limits settlement was distributed across all valid legal claims by the estate and beneficiaries. Hadden was a pure judicial review of Medicare’s refusal to compromise its recovery as permitted by federal law. The McCutchen case that the Court did grant cert in has apparently come to court on several occasions and there are at least six circuits in conflict there. At the end of the day, we must acknowledge that the reason the MSP doesn’t have enough attention is because the insurance industry is far too quick to pay rather than fight, hence why we don’t have more case law to generate more conflicting results. While the issue may make it to the big show one day, perhaps we should be considering addressing it in the 113th Congress.




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