September 29, 2020

Volume X, Number 273

September 29, 2020

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September 28, 2020

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Payment of Medicare Liens After Settlement of Wrongful Death Action

You just settled a wrongful death action, must the decedent’s Medicare lien be satisfied out of the proceeds? It depends on whether survival damages are claimed and on the damages recoverable under the applicable state’s wrongful death statute. If the claim is one brought for survival damages or the wrongful death claim or statute allows for recovery of medical expenses, then the Medicare lien must be satisfied out of any settlement proceeds. See Mathis v. Leavitt, 554 F.3d 731 (8th Cir. 2008) (applying Missouri law). However, if the plaintiff’s claim is one solely for the decedent’s wrongful death without the right to recover medical expenses, as in Illinois, then the Medicare lien need not be satisfied out of the wrongful death proceeds. See Hall v. United Security, 2012 IL App (1st) 112158-U (unpublished decision applying Illinois law).

The Medicare program is administered by the Department of Health and Human Services and is designed to pay the medical expenses of certain individuals. If a third party is responsible for injuring a Medicare recipient, any payment by Medicare for the recipient’s medical expenses is considered conditional and repayment to Medicare is required if the responsible party’s liability insurer later makes a payment for those expenses. See 42 U.S.C. § 1395y(b)(2)(B). Medicare may seek reimbursement from any entity that receives such a payment. Id.

In Hall, the defendants filed a motion to include Medicare as a payee on the check settling a wrongful death action filed under Illinois law. The lawsuit did not include a claim under the Illinois Survival Act. The trial court denied the motion. On appeal, the defendants argued that the failure to include Medicare on the settlement draft left them vulnerable to a suit from the federal government for sums paid by Medicare for the decedent’s medical care. The Appellate Court rejected the defendants’ argument. Initially, the court acknowledged the distinction between a Survival Act claim and a Wrongful Death Act claim – finding that the Illinois Wrongful Death Act allows for recovery of damages suffered by only the next of kin while the Illinois Survival Act allows for recovery of damages sustained by the decedent up until his time of death. Stating that the plaintiff’s complaint contained only claims for wrongful death, the court then explained that the recoverable damages were only those based on the pecuniary loss to the decedent’s survivors. Since the claims at issue were not ones for pecuniary losses, damages and pain and suffering of the decedent, there were no claims to which the Medicare lien could attach. The court emphatically held that “Medicare liens do not apply to actions under the Wrongful Death Act.” Thus, when a plaintiff files a complaint for damages solely for the decedent’s wrongful death, the defendants are not required to include Medicare as a payee on the settlement draft. See also Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010) (finding that under Florida law, there was a difference between a survival act claim and a wrongful death act claim and since the claim was one for wrongful death damages only, then the Medicare lien was not required to be satisfied out of the settlement proceeds).

The need to satisfy the Medicare lien out of the settlement proceeds will arise if a survival act claim is brought or if the wrongful death act at issue allows for recovery of the decedent’s medical expenses. In Mathis, the Eighth Circuit considered the propriety of the Medicare lien on the settlement proceeds of a wrongful death claim filed under Missouri law. The Missouri wrongful death statute provides that a fact finder may award damages “for the death and loss” of the decedent as well as “such damages as the deceased may have suffered between the time of injury and the time of death and for the recovery of which the deceased might have maintained an action had death not ensued.” The court found that the decedent’s medical costs were damages that he could have sought had he survived. Since the plaintiffs claimed all damages available under the Missouri wrongful death act, the settlement necessarily resolved the claim for medical expenses. Accordingly, the court held that Medicare had a right to reimbursement of the amounts it paid for the decedent’s medical expenses.

Thus, when settling a wrongful death claim, the settling party must consider whether a claim has been brought for survival damages and whether the wrongful death act at issue allows for the recovery of medical costs by the decedent. If the answer to both of these considerations is no, then under the current state of Illinois law, the Medicare lien need not be satisfied out of the settlement funds resolving an Illinois wrongful death action.

© 2020 Heyl, Royster, Voelker & Allen, P.CNational Law Review, Volume V, Number 362


About this Author

Ann Barron, Environmental Litigation Attorney, Heyl Roster Law Firm
Of Counsel

Ann concentrates her practice in civil litigation, including environmental and business-related disputes, nursing home litigation, and personal injury defense.

Ann joined Heyl Royster in 2013. Before joining Heyl Royster, Ann served as in-house counsel at Valero in San Antonio, TX, where she managed complex environmental, commercial, class action and tort litigation. While at Valero, Ann also served on the Information Governance Committee, and was responsible for electronic discovery and electronic records implementation, retention and...