Benson v. Sebelius – Medicare’s Rights in a Wrongful Death Action

Medicare Set-Aside Blog on March 29, 2011
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Some of the oldest MSP case law long ago established that CMS was not entitled to recover from a plaintiff’s wrongful death settlement. [See Denekas v. Shalala, 943 F. Supp. 1073 (S.D. Iowa 1996)]. More recently, the 11th Circuit Court of Appeals again reiterated that point by not allowing CMS to recover from the portion of the settlement allocated to the surviving children’s loss of companionship claims. [See Bradley v. Sebelius,  621 F.3d 1330 (11th Cir. 2010)].  However it is painfully apparent that the legal community needs to be reminded that you really cannot take that one fact out of context and attempt to exploit it to the detriment of Medicare.

On March 24, 2011, the U.S. District Court for the District of Columbia granted CMS’ motion for summary judgment in Benson v. Sebilius [2011 U.S. Dist. LEXIS 30438]. The case involved a woman who fell in her home and died ten days later after incurring $40,213.74 in medical expenses, which were paid by Medicare. There was some argument that some of the hospital expenses claimed by CMS included treatment for medical not related to the fall, however they ultimately paid under protest the $25,868.58 demand in order to avoid interest while pursuing the appeal. CMS’ recovery right was upheld and the matter finally brought before the District Court for judicial review. The plaintiff’s entire argument appeared to hinge on the fact that Denekas and Bradley said no reimbursement from a wrongful death claim and that by being forced under threat of penalty to pay CMS funds it was not entitled to, plaintiff’s 5th amendment due process rights were violated. The District Court upheld Medicare’s right to full reimbursement from the settlement proceeds, which in turn demonstrated that the plaintiff had no property interest in the funds sent to CMS in satisfaction of its demand and therefore was not a due process violation.

Now what grabbed my attention in this case was not the predictable outcome, but the manner in which the court distinguished Denekas and Bradley. Denekas was precluded from claiming medical costs by the Iowa wrongful death statute and therefore the settlement did not include any funds from which Medicare was entitled to recover from. In Bradley, the settlement included all claims of all ten surviving children and the estate and prorated the total of all claims over the policy limits payout, allocating only a small fraction of the insurance payment from which Medicare could recover its payments as it could not recover from the surviving children’s recoveries. In Benson, the plaintiff made a demand for medical expenses and released defendant from responsibility from all liens, inferring that all medical expenses were contemplated, a point of negotiation in the settlement and that medical liens would be satisfied. The key here is that medical reimbursement was demanded, paid and needed to be sent to Medicare.

Please do not take this decision to mean you just shouldn’t make a demand for medical expenses any more so reimbursement isn’t an issue any longer. The more reasonable you are with CMS, the less likely you are to agitate them. The fact that the woman only fractured her arm in the fall does not negate the fact that but for the fall she would not have been in the hospital at all, so to allege that Medicare’s recovery should have been limited to $2,368.58, representing only treatment of the fractured arm, is ridiculous. If that’s the case and all that other treatment was unrelated, then I’m also guessing that the fall isn’t what resulted in the woman’s death and the landlord not actually at fault or should have only considered the $2,368.58 and not $40,213.74 when determining its settlement value?  A much more reasonable approach would have been to evaluate the value of all claims and apportion them over the total settlement money available, much like took place in Bradley. Not saying that it would have had a better outcome with CMS or the Medicare Appeal Board, but the court may have seen it as an equitable distribution in accordance with the 8th circuit evaluation. As it stands, pursuing cases in which no recovery for Medicare is the goal continues to provide CMS the ammunition it needs to continue to made full recovery demands. It is decades of ignoring Medicare’s interests that bought us to where we are today.

In conclusion, in wrongful death actions involving the MSP, besides evaluating the entire scope of all claims when making apportionment arguments, pay careful attention to the state law and what it permits recovery for and to whom the recovery right belongs. It may have the greatest impact on the outcome of your dealings with CMS.

GLEN N. BENSON, Plaintiff, v. KATHLEEN SEBELIUS, Secretary of the Department of Health and Human Services, Defendant.
Civil Action No.: 09-1931 (RMU)
2011 U.S. Dist. LEXIS 30438
March 24, 2011, Decided