Medicare Entitled to Reimbursement in Wrongful Death Case When Medical Expenses Recoverable Under State Law

In Weinstein v. Sebelius, 2013 U.S. Dist. LEXIS 41594 (E.D. Pa. Feb. 13, 2013), the plaintiff sought judicial review of the CMS formal demand of $58,393.57 after the plaintiff had reached a medical malpractice settlement for $425,000.00. The plaintiff alleged that the decision upholding the demand by the Administrative Law Judge (ALJ) erred by failing to impose the burden of proof on CMS and by failing to accept a court order limiting the amount of the formal demand. The district court ruled that the ALJ’s decision was supported by substantial evidence.

At the time of settlement, the plaintiff conditioned her release on a court order that limited CMS’s right to recovery to $2,922.34, which represented Medicare payments for her late husband’s stroke-related care from April 10, 2005, to April 16, 2005. April 10 was the date of the alleged malpractice and April 16, the date of his second stroke. The plaintiff’s husband died from stroke complications on September 4, 2005.

Upon receipt of the $58,393.57 demand letter, the plaintiff filed an administrative appeal arguing that CMS was bound by the court order and that CMS did not prove that all of the expenses included in the demand were related to the medical malpractice. The ALJ determined that the state court had no jurisdiction over a federal authority such as CMS. The ALJ also found that CMS had based its demand letter on the plaintiff’s own wrongful death and survival claims, which involved services up to the point of her husband’s death in September.

The district court noted that according to the 2003 amendments to the Medicare Secondary Payer statute, CMS can satisfy its burden of showing that a primary payer is responsible for medical expenses through the presence of a settlement of a claim that sought recovery of medical expenses. The court quoted Hadden v. United States, 661 F.3d 298 (6th Cir. 2011), as support, "‘[t]he scope of . . . responsibility for a beneficiary’s medical expenses–and thus of his own obligation to reimburse Medicare–is ultimately defined by the scope of his claim against [the medical malpractice defendants],’ even if the beneficiary settles for less than the original claim." Weinstein, at *14, quoting Hadden 661 F.3d at 302. Because the plaintiff sought damages related to her husband’s alleged wrongful death and for all damages recognized by law, which in Pennsylvania includes medical expenses associated with wrongful death claims, the district court concluded that CMS was therefore entitled to reimbursement for medical expenses paid for the period from the alleged malpractice until the date of death.