DRI Files Amicus Brief in U.S. Supreme Court Case Hadden v. United States of America
DRI – The Voice of the Defense Bar filed an amicus curiae brief today in the case of Hadden v. United States of America. Petition for Writ of Certiorari to review the Sixth Circuit Court of Appeals’ decision in the case was filed on March 30, 2012. In its brief, DRI argues against the decision of the Sixth Circuit, which affirmed the Government’s interpretation of the Medicare Secondary Payer (MSP) Act permitting Medicare to collect 100% of an outstanding MSP reimbursement obligation, even where the Medicare beneficiary is settling his case for cents on the dollar. The Sixth Circuit’s decision, if upheld, will chill the claim settlement process nationwide while eroding judicial efficiency and penalizing parties by forcing them to reimburse an unfair and inequitable amount of an outstanding MSP reimbursement obligation to the Government.
The dispute in this case involves whether the MSP Act mandates full reimbursement of conditional payments made by Medicare from a beneficiary’s discounted settlement. The plaintiff, Vernon Hadden, had been severely injured when a public utility vehicle struck him in a traffic circle. That vehicle had swerved to avoid a car that had entered the traffic circle after running a stop sign. While the driver of the car running the stop sign was never located, Hadden sued the truck company. The truck company invoked Kentucky’s proportionate fault principles, and the parties’ resolved the claim for $125,000 plus $10,000 paid for Kentucky basic reparations benefits.
Medicare asserted a reimbursement right under the MSP Act for $64,252.37, which Hadden paid in full. Hadden later made a timely request for a complete waiver of any Medicare subrogation claim. Hadden asserted that the defendant truck company was only ten percent at fault, and the driver of the car which ran the stop sign was ninety percent at fault. Hadden later argued that Medicare should only collect ten percent of any reimbursement claim arising under the MSP Act to align with the equitable allocation of fault in the matter. Medicare disagreed, and Hadden ultimately exhausted all appeals and avenues of relief within the agency. Hadden then filed an action in federal court.
The United States District Court for the Western District of Kentucky upheld the Government’s administrative determination that the Government properly collected 100% of the existing MSP reimbursement obligation. Hadden appealed the decision. The Sixth Circuit Court of Appeals determined that the MSP Act allowed the Government to collect 100% of its MSP reimbursement obligation, even though the matter was resolved for approximately 10 cents on the dollar. The court held that the parties’ obligation to reimburse Medicare arises when a primary plan accepts responsibility for a claimant’s medical expenses, and that responsibility is evidenced by a settlement, judgment or award. Ultimately, the court found that the scope of that “responsibility” was defined by the scope of Hadden’s claim against the third party.
The Sixth Circuit’s ruling puts many clients of DRI’s members at risk of not being able to resolve claims due to the Government’s unwillingness to calculate and apportion fault under the MSP Act for reimbursement purposes. This chilling effect on the settlement continuum contradicts the well-established notion that claim resolution via settlement increases judicial efficiency, as well as the potential that the failure to promote claim resolution, by insisting on 100% reimbursement, may ultimately result in the exponential draining of the Medicare Trust Funds by virtue of the Government’s failure to promote reimbursement policies which encourage claim resolution.
Bruce A. Cranner, Esq., a partner with Frilot LLC in New Orleans, Louisiana and the Chair of the DRI’s Medicare Secondary Payer Task Force, stated: “The Sixth Circuit’s ruling runs contrary to the goal of most parties in litigation; to reach a fair and efficient result by settlement and provide all concerned, including Medicare, with a fair equitable amount of every settlement no matter how large or small.”