New Jersey Criminal Article
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No Legal Requirement for Medicare on Settlement checks
Many insurance companies are insisting on putting Medicare as a payee on settlement checks. As Clayton Starnes of The Plaintiff’s Resource points out in the following piece there is no legal requirement for Medicare to be made a payee on settlement checks.
“There is a misconception among payers of personal injury settlements that Medicare, by law, should be named on the settlement check to comply with the Medicare Secondary Payer Provisions of the Social Security Act (MSP). This is not the law and is simply not so. There is no legal requirement to put Medicare’s name as a payee. Medicare is not a party to the lawsuit. Further, Medicare does not request that they be included on the settlement check.
In Tomlinson v. Landers, 2009 WL 1117399 (M.D. Fla. 2009) the Court found that the MSP didn’t require Medicare be on the check. This was an auto accident case with a $100,000 policy limit. The Defendant’s insurance company added Medicare as a payee on the check after the parties agreed to settle the case. Unpleased about it, the Plaintiff returned the check and requested it to be issued without Medicare listed as payee, and further indicated that Medicare would be reimbursed and would agree to hold the insurance company harmless for any Medicare claims. Nonetheless, the carrier insisted that federal law requires that Medicare be included as a payee on the settlement check, citing 42 CFR 411.24(i) and refused to remove Medicare from the check.
The Court stated that Defendant misconstrued the Medicare Secondary Payer Act and the Code of Federal Regulations. The Court found that: 1) federal law does not mandate that a primary payer (or insurer) make payment directly to Medicare; and 2) the insurance company would not have violated federal law if it omitted Medicare from the settlement check.
Although the Court recognized that an insurer may be liable to Medicare if the beneficiary/payee does not reimburse Medicare for any amounts owed to Medicare within 60 days, and may be in the carrier’s best interest, the carrier was not required by federal law to include Medicare on the check. “
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