Another Wrongful Death Claim Settled with a Three-Party Check Gone Bad

Medicare Set-Aside Blog on August 24, 2011
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On August 22, 2011, the US District Court for the Southern District of Illinois dismissed a dec action in which the court was asked to “declare the legal rights and interests of parties and determine that [the MSPRC] need not be included as payee on any settlement draft at issue,” and “order [State Farm] to . . . re-issue drafts in the amount of $100,000.00 and $5,000.00 made payable” only to Plaintiff and his counsel.  State Farm served the Secretary with an interpleader claim, who then removed the case to this court where it was dismissed for subject matter jurisdiction because the plaintiff failed to exhaust his administrative remedies – no big surprise.

What piqued my interest with this case was the fact pattern. Once again we are faced with the Illinois wrongful death statute permitting the estate a claim for medical damages and a policy limits settlement of $5,000 for medical coverage, and another $100,000 of liability coverage. Medicare had yet to make a demand; however we know that the decedent died as a result of the auto accident therefore it is a given that the conditional payments exceeded $5,000. Should Medicare only be entitled to recover from the $5,000 medical coverage? That would have been a much more interesting case. Instead we have yet another total waste of time for the parties, the court and the federal government.

I understand not wanting to spend the time exhausting administrative remedies when we know the outcome: Medicare wants it all (minus procurement costs), plaintiff doesn’t want to part with any of it (Defense being stuck in the middle not wanting to write a check until it knows for sure that by doing so, it will be done with the case forever but also facing bad faith accusations for not writing the check in a timely manner). Yet rather than cooperate with one another and try to resolve the issue through the proper channels, we continually run to court as if this case will be the special one that won’t need to exhaust administrative remedies to be heard on its merits. Had the plaintiff and his attorney just endorsed the checks and mailed them to Medicare, this issue would have been resolved long ago or else they would be well through the administrative process and on their way to court to legitimately to be heard on the issue.

I hope we see more cases like this in the future, but brought as the final step of the Medicare appeal process and not in an attempt to circumvent the system. We need resolution of the apportionment issue and the sooner these cases reach federal court appropriately, the sooner we will either find relief or push the issue to the Supreme Court.

INSURANCE COMPANY, Defendant/Counter-Plaintiff, v. TIMOTHY STANTON
and KATHLEEN SEBELIUS, Secretary, Department of Health and Human Services, Counter-Defendants.
No. 11-cv-282-JPG-DGW
2011 U.S. Dist. LEXIS 93599
August 22, 2011, Decided