US District Court: Adequacy of a Medicare Set-Aside in Liability Case

In Berry v. Toyota Motor, No. 1:11-CV-01611, 2015 U.S. Dist. LEXIS 3319, (W.D. La. January 10, 2015), a products-liability case, the United States District Court for the Western District of Louisiana was presented with a Joint Motion requesting a determination of whether Medicare's interests were adequately protected in the parties' settlement agreement and, specifically, whether a Medicare Set-aside (MSA) would be necessary. The plaintiff, Mr. Berry, was injured in a motor vehicle accident while driving his Toyota Corolla. The parties reached a confidential settlement agreement which was contingent upon the court finding that no MSA was required and that Medicare's interests were adequately protected.

In reaching its decision, the court considered affidavits from treating physicians confirming that treatment for the injuries related to the accident, had been completed and no future treatment was anticipated. The court also reviewed correspondence from Medicare confirming that all conditional payment claims paid by Medicare had been reimbursed. Based upon the evidence presented, the court held that an MSA was not necessary and Medicare's interests were adequately protected in the settlement.

Issues related to the Medicare Secondary Payer Act are typically handled through administrative remedies. However, the court validated its authority to rule on these issues by pointing out that the United States was not a party to the suit and it was not a dispute or appeal of any decision made by the Centers for Medicare and Medicaid Services (CMS). Additionally, the court noted that unlike workers' compensation cases, liability cases do not have clear-cut guidelines for parties to follow and review may not be available. Thus, without other means to establish that Medicare's interests are adequately protected in settlement, parties must look to the courts to hear motions like the one in this case.