In post-trial motions, the defendants argued that the trial court erred in denying the defendants' request that the court enter an order directing the defendants to pay the verdict either (1) by naming Medicare, along with the plaintiff and her attorneys, as payees on the check satisfying the verdict, or (2) by paying the verdict into court pending notification from Medicare that all outstanding Medicare liens had been satisfied.
In its opinion, the Superior Court noted that there was no evidence presented at the trial court level that any of the plaintiffs' past medical treatment had been paid by Medicare to date. The Superior Court additionally noted that there was no claim presented by the plaintiff at trial for any past medical expenses because she was precluded from doing so by 75 Pa.C.S.A. 1722 in that the first-party medical benefits under the plaintiff's own automobile insurance policy had not been exhausted. The Zaleppa court further emphasized, in any event, that the jury did not enter any award for past medical expenses.
The Superior Court therefore upheld the argument by plaintiffs counsel Lenahan & Dempsey of Scranton that there was no legal basis under either federal or Pennsylvania law for the insurance carrier to assert the interests of the U.S. government as to the reimbursement of Medicare liens. As such, the Superior Court held that the trial court properly denied the defendants' request for an order granting leave to the carrier to list Medicare as a payee on the settlement draft.
It is noted that the Superior Court provides a nice analysis in Zaleppa of a defendant's (and arguably a plaintiff's) obligations under the Medicare Secondary Payer Act.
A String of Trial Court Opinions
After the Superior Court took away the possible protection offered by naming Medicare as a payee on settlement drafts, automobile and liability insurance carriers sought out protection from potential Medicare liens by demanding that injured party plaintiffs provide written confirmation from Medicare as to whether or not any Medicare liens existed before a settlement draft would be issued. In response, plaintiffs have refused, demanded immediate payment of the agreed-upon settlement amount and proceeded to courts on motions to enforce the settlement.
These disputes have led to a series of trial court opinions over the past year, all of which have held that a settlement of a claim cannot be held up in this regard. The recent decisions suggest that, instead, the insurance carriers and their insureds should seek to protect themselves by way of clearly worded indemnification clauses in the general release mandating that the injured party agree to protect the insurance carrier should any Medicare lien issue arise in the future.
In both the Cambria County case of Vincent v. Buck, and the Monroe County case of Dailey-Console v. Barnwell, PICS Case No. 11-1115 (Monroe Co. May 18, 2011, Zulick, J.), the trial court judges relied upon the Zaleppa case to support the granting of a plaintiff's motion to compel a defendant to pay a settlement over the defendants' objections that Medicare lien issues were not yet resolved. In both decisions, the trial courts emphasized that there was nothing in the general releases entered into between the parties that entitled the defense to insist that certain measures be taken by the plaintiff to ensure the Medicare lien was addressed prior to the issuance of the settlement check.
In Dailey-Console, Judge Arthur L. Zulick granted a plaintiff's motion to compel a defendant to pay a settlement over the defendants' objection that Medicare lien issues were not yet resolved.
The Dailey-Console case arose out of a motor vehicle accident. The parties eventually agreed to settle the claims and the plaintiffs signed a general release. However, the defendants did not tender payment of the settlement because they asserted that a Medicare lien existed that had to be satisfied prior to payment as the defendants could potentially be liable for the lien.
The plaintiffs argued that the terms of the release executed by the parties governed the dispute and that, under the release, they were entitled to an immediate payment of the settlement funds. The court agreed.