COVID-19 Resource Center

January 04, 2013

Addressing Medicare Liens: Defendants Sanctioned for Refusal to Pay Settlement Funds

In Dailey-Console v. Barnwell et al., Court of Common Pleas of Monroe County, Pennsylvania, the court addressed the effect of the Medicare Secondary Payer Act (MSPA) on certain settlement agreements. In this case, the plaintiffs filed a claim for personal injuries arising from a motor vehicle accident. The parties reached a settlement and the plaintiffs signed a general release. Defendants refused to tender the settlement funds, contending that a Medicare lien existed which must be satisfied before the settlement funds were distributed. The plaintiffs filed a Petition to Compel Enforcement of Settlement.

The Court of Common Pleas granted the plaintiffs’ petition and rejected the defendants’ arguments that they were not obligated to disburse the settlement funds until proof was presented that the Medicare lien was resolved or a final demand letter from Medicare was provided. In reaching its decision, the court applied traditional principles of contract interpretation and concluded that the terms of the release were clear and unambiguous.

Specifically, the court held that the release language did not condition payment of the settlement funds on satisfaction of a Medicare lien. The court acknowledged that under the MSPA, defendants could be forced to satisfy the Medicare lien and could be fined for failure to do so. Despite such acknowledgement, the court followed the Superior Court in Zaleppa v. Seiwell and concluded that the defendants could not delay distribution of settlement proceeds for this reason. The court commented further that had the defendants wanted to ensure that the Medicare lien was satisfied before payment of the settlement proceeds, such a clause could have been included in the release. The court awarded attorney fees and sanctions to the plaintiffs based on the defendants’ delay.

What It Means to You

Based on this opinion and other recent, similar cases, it is advisable to consider including language in the release which conditions disbursement of settlement funds on confirmation of the absence, or satisfaction, of a Medicare lien in claims for personal injury.

Sources

Dailey-Console v. Barnwell et al.(May 2011)