Medicare Beneficiaries Cannot Rely on Estimated Conditional Payment Amounts in Making Settlement Decisions
On March 23, 2017, a decision from the South District of Florida, Shapiro v. Secretary of HHS, 2017 U.S. Dist. LEXIS 42278, confirmed Medicare beneficiaries cannot rely on estimated conditional payment amounts from the Centers for Medicare and Medicaid Services (CMS) in making settlement decisions.
The Medicare beneficiary Plaintiff, Shapiro, was injured in an automobile accident. Prior to negotiating a settlement, her counsel obtained an initial conditional payment letter from Medicare, which stated the conditional payments alleged to date were $16,940.51. Prior to agreeing to a settlement, Shapiro had her attorney call Medicare to confirm the current reimbursement amount owed to Medicare. Her attorney was told the lien had increased to $17,306.03. Shapiro relied on the amount told to her counsel by Medicare over the phone and agreed to settle her claim. After the settlement was finalized, Medicare sent a demand for a final conditional payment amount of $23,552.96, based on alleged conditional payments of $40,118.83.
Shapiro challenged the final conditional payment amount arguing she materially relied on the oral estimate provided by Medicare at the time of settlement. She challenged Medicare’s recovery right in other ways as well, and was unsuccessful in each attempt. The District Court’s decision focused on the unreasonableness of her reliance on the amount provided through the initial conditional payment letter and a telephone conversation with Medicare. Initial conditional payment letters do have a disclaimer that indicates the conditional payment amounts are not final and are subject to change. The Court found she was on notice the conditional payment amount was not final until the settlement was finalized.
In sum, Medicare can always change its alleged conditional payment amount up to the time it issues a final demand for payment, which is almost always post-settlement. If parties want to confirm a final demand pre-settlement, then the SMART Act pre-settlement final demand process can be utilized for that purpose. For more information about Medicare’s recovery rights, please feel free to contact the firm’s Medicare compliance group.
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The information published in the Hedrick Gardner Alert is general in nature and not intended to take the place of legal advice on any particular matter. © 2017 Hedrick Gardner Kincheloe & Garofalo LLP