Federal court rules medical malpractice victim must repay Medicare bills

A U.S. District Court judge recently ruled that medical malpractice victimss receiving benefits from Medicare must pay back the federal government for medical care in cases where plaintiffs make a successful recovery in their claims. The victim’s wife brought the claim against the Center for Medicare and Medicaid Studies (CMS) in an attempt to block the agency’s action to collect on $171,537.04 in medical coverage paid out from the time of the victim’s diagnosis until his passing.


The case began in April 2007 when doctors diagnosed the victim with prostate cancer after initially failing to to so in a timely manner. From the time of the victim’s diagnosis until his passing in January 2012, Medicare conditionally paid the victim’s medical bills, which totaled $253,546.73.


In 2009, the victim and his wife filed a medical malpractice lawsuit in Cook County Circuit Court in Illinois against the victim’s primary care physician and urologist, arguing the defendant’s failed to make a timely diagnosis. After the victim’s passing, his wife became the administrator of his estate and continued the lawsuit on his behalf to recover for their damages under the Illinois Survival Act.


In February 2014, the court approved a $250,000 between the two sides with $175,000 going to the victim’s wife and children and the rest apportioned for attorney’s fees. Soon after, the Medicare Appeals Council initiated legal proceedings to recover Medicare payouts. The plaintiffs argued unsuccessfully the government had not preserved its right to recoup money from the settlement because it had not participated in the proceedings in state court.


Under Medicare’s Secondary Payer Statute, the agency may seek reimbursement from a primary plan like health insurance or liability coverage. The statute holds that third-party tortfeasors (defendants in civil lawsuits) are also primary plans and tus the agency can seek reimbursement from verdicts or settlements in personal injury or medical malpractice lawsuits.


The case serves as an example of the lengths CMS will go to recoup its payments for medical bills that many elderly and disabled individuals rely upon for health care treatments. While we never want to think about it, medical malpractice occurs all the time against elderly persons on Medicare and Medicaid and families bringing claims on behalf of their deceased relative need to understand there may be liens against an estate that must be paid out.

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