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Superior Court Rules on Whether to Include Medicare in Verdict Payment

In a three judge panel's decision filed on November 17, 2010, the Superior Court in Zaleppa v. Seiwell affirmed an order of the trial court entered on October 26, 2009, which refused to allow the Appellant to pay the underlying verdict either (1) by naming Medicare, along with Appellee and her attorneys, as payees on the draft satisfying the verdict or (2) by paying the verdict into court pending notification from Medicare that all outstanding Medicare liens had been satisfied.

The underlying case at issue involved an automobile accident where Appellant admitted liability and a trial was held on damages only. After a judgment was rendered against Appellant, Appellant filed a post-trial motion arguing that because the Medicare Secondary Payer Act (MSPA) required all parties to protect Medicare's interest when resolving conditional payments made by Medicare, the trial court should have allowed her to either name Medicare as a payee on the draft satisfying the verdict or alternatively, to pay the verdict into court pending notification from Medicare that all outstanding Medicare liens had been satisfied.

In ruling on the validity of the trial court's order, the Superior Court first examined the relevant terns of the MSPA, noting that Medicare "may make payment [. . .] with respect to an item or service if a primary plan . . . has not made or cannot reasonably be expected to make payment with respect to such an item or service promptly[.]" 42 U.S.C.A. 1395y(b)(2)(B)(i). However, it was also noted that under the MSPA, the primary responsibility of payment for Medicare recipients falls on any primary, or private, insurance the recipient may have, i.e. the "primary payer," with the remainder of payment of bills not covered by private insurance falling on Medicare, i.e. the "secondary payer." Thus, the court concluded that a duty existed on behalf of the primary plan, as "an entity that receives payment from the primary plan," to reimburse Medicare if the primary payer is ultimately responsible to pay for the medical treatment provided.

Notwithstanding the duty imposed on primary plans to reimburse Medicare, the court drew on 42 C.F.R. 411.22(c), stating that such recovery could only be sought by the government after the issuance of a recovery demand letter to the primary plan. More importantly, despite the establishment of a "private cause of action for damages" noted in the MSPA, the court further held that the MSPA did not allow a "private party to bring suit on behalf of the United States government for the reimbursement of conditional Medicare benefits," either in a post-trial motion or at any other phase of litigation.

Thus, because they were the only parties involved in the underlying action, the judgment entered by the trial court determined the rights and obligations of Appellant and Appellee only. As such, according to the court, not only were the obligations owed to Medicare irrelevant, but the rights of Appellee would ultimately be subjected if Appellant was allowed to add Medicare as a payee. Therefore, because neither the MSPA nor Pennsylvania law authorized Appellant as a private entity to assert the interests of the federal government viz. Medicare, the court refused to allow Appellant to add Medicare as a payee to the draft satisfying the verdict.


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