Are Medicare Advantage plans entitled to reimbursement for settlement proceeds pegged to a loss of consortium?
Question: I recently settled a medical malpractice case in South Carolina, for less than its total value. The action included a separate consortium claim, which under SC law, is independent and not derivative. The settlement allocated 50 percent to the husband for his consortium claim. Medicare (through Humana) is claiming a big chunk of the proceeds. I have read the recent federal appellate decision in Bradley v. Sebelius and think this might help my position. What do you think?
Answer: On the allocation issue there are a couple alternatives which may or may not be available to you. First, assuming that the loss of consortium claim was originally pled, you could have your clients execute two separate releases. The husband would sign a separate release for his consortium claim in exchange for 50% of the proceeds. If this was executed you could take the position that only the Humana beneficiary’s settlement need be reported to Humana. Second, you could have the court approve the settlement allocation based on the merits of the case. If you were dealing with traditional fee-for-service Medicare (A/B) this alternative would be ideal in handling the conditional payment claim in light of the Bradley decision and more recent cases involving Medicare and allocation issues. Treating this Humana Medicare Advantage Plan like Medicare is the most appropriate means of handling the matter, as Humana is likely claiming Medicare’s rights under the Medicare Secondary Payer Act. (Medicare Advantage plans, also referred to as Part C plans, were established under Part C of Title XVIII of the Social Security Act as an alternative to traditional Medicare. These plans allow Medicare entitled individuals to receive healthcare services through a non-governmental organization. As a replacement to traditional fee-for-service Medicare, Part C plans must cover all of the services that traditional Medicare cover. Assuming the recent trend in case law continues, Part C plans will continue to assert they are endowed with the superior lien rights of Medicare. In resolving a claim based on this assertion, the resolution protocol should reflect the same Medicare considerations.)
In sum, yes we believe that the Bradley decision could be helpful especially if the allocation is accomplished through the methods described above.
Additionally, you could base an argument on Humana’s status as a private insurer and its written policy with your client (Evidence of Coverage). The Evidence of Coverage will have subrogation/reimbursement language, which could help you determine the scope of the contractual obligation for loss of consortium. For a good discussion of this topic take a look at ACS v. Griffin, 676 F.3d 512, 520 (5th Cir.2012). While under the context of ERISA, this case held that a spouse’s loss of consortium proceeds were not compensation for the medical injury and absent specific language in the plan and the spouse as a party to the plan, the plan could not maintain a claim.