I don’t normally post about legal opinions because I generally think my readers don’t care about the details of claims. But last week, personal injury victims who have Medicare won a huge victory in a federal court.
If you read this blog or follow me on Facebook or Twitter, you’ve heard my gripes about Medicare. When our clients who have Medicare settle cases, we have to reimburse Medicare for the amounts that they paid for our clients’ treatment that was related to the wreck, defective product, on-the-job injury, etc.
This is a problem for two reasons. First, it slows the case down. Medicare has a huge backlog, and despite continually trying to improve things, they just can’t seem to break through. So if we settle a case, we may not be able to finalize it for months because Medicare won’t tell us how much they think we owe.
The second issue is that sometimes Medicare tries to take all the settlement proceeds. We often find ourselves with cases where the settlement isn’t for the full value of the case. Most of these situations arise when the defendant doesn’t have enough insurance to cover the losses. While the case is worth more, we are forced to settle for the amount of what insurance is available. In many of these cases, the amount of insurance isn’t even enough to pay back Medicare for what they’re owed, much less any provide additional funds to our clients. And that’s what this victory remedies.
The case at hand involved a patient at a nursing home. The patient developed a wound in the nursing home. The wound eventually became infected because of inadequate treatment, and the patient was take to a hospital, where he died after a three month stay. Medicare paid approximately $40,000.00 for the patient’s hospital stay.
The nursing home only had $52,500.00 in insurance (which is ridiculous, I know). Because that was all the insurance, the case settled for the $52,500.00.
Medicare claimed that it was entitled to its full $40,000.00 (less a pro-rata share of attorneys’ fees and expenses), which would have left the decedent’s family almost nothing from the suit.
The family argued that the suit didn’t settle for its full value. Because it didn’t settle for its full value then the all of the parties, including Medicare, had to take their proportionate hit on the reduction. Medicare didn’t agree.
The family eventually filed suit against Medicare. A hearing was held, and the Court determined that the true value of the case (had there been enough insurance) was $2,538,875.08. Thus, because of the lack of insurance, the case settled for about 2% of its actual value.
The big decision from the Court was that everyone had to bare the loss. First, the Court said that Florida law, like Texas law, allows some survivors of a deceased to make their own claims. Thus, the recovery for those survivors belongs to the survivors and Medicare has no claim to it. Second, the Court said that Medicare has to bear its share of the reduction.
The long and short of it was that instead of paying Medicare the amount Medicare wanted, the Court awarded Medicare $787.50. This is savings that will directly go to the patient’s family. As the Court also noted, this decision will help settle claims. When Medicare is taking all the money, injured persons don’t have much reason to settle cases. When the insured persons get something, then they have something to lose, and settlement becomes a more distinct possibility.
The entire opinion is here.