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An amendment quietly tucked into last December’s Medicare drug benefits law could have a significant impact on tort lawyers and their elderly clients, even in cases that were pending at the time of its enactment. The provision, codified at 42 U.S.C. 1395y(b)(2), states that a tort victim who receives Medicare-funded treatment must reimburse the government out of any award or settlement by the tortfeasor, even if it comes years after the treatment was rendered. Frank Verderame, a frequent seminar speaker on Medicare reimbursement, alleged, “Nobody who voted for it understood that it was targeting the elderly.” Verderame, of Phoenix’s Plattner Verderame, feels it unfairly discriminates against the elderly because under the law of many states, including Arizona, tort victims are not required to reimburse their private medical insurers. On the other hand, prior law gave rise to much confusion and sometimes led to results described as absurd even by courts that reached them. Last July, the 5th U.S. Circuit Court of Appeals said that Medicare could be reimbursed only if the tortfeasor could reasonably be expected to pay promptly and the tortfeasor was self-insured. That produced the absurd result, the court conceded, that Medicare was entitled to reimbursement only in those situations where Medicare was not likely to have offered benefits in the first place�that is, when it could expect someone else to pay promptly. Nonetheless, the court chided the federal government for advancing a contrary interpretation that had repeatedly been rejected by the courts. Thompson v. Goetzmann, 337 F.3d 489. Medicare’s odds improved last September, when the 11th Circuit ruled that the expectation of prompt payment was not a prerequisite to reimbursement, and defined self-insurance in an expansive way. U.S. v. Baxter Int’l Inc., 345 F.3d 866. Ruling on retroactivity The 4th Circuit-the first court to rule on the new provision-declared on July 7 that it applied retroactively. In 2000, Jeannette D. Brown received emergency-room treatment, funded by Medicare, for injuries caused by an earlier medical procedure performed at a Kaiser Foundation Health Plan facility, according to the court’s opinion. In 2002, Kaiser settled Brown’s malpractice claim for $285,000. Of that, Medicare sought reimbursement for the emergency-room care. Brown’s attorney, solo practitioner Peter Cerick of Herndon, Va., said that although there was some dispute about the amount, the parties ultimately stipulated that Medicare would be owed $32,000, provided that it had any right to reimbursement at all. Cerick asked a federal judge to declare that Medicare had no such right. His appeal was pending before the 4th Circuit in December. Brown v. Thompson, No. 03-1588. The U.S. attorney’s office in Alexandria, Va., which represented Medicare, declined to comment. The Centers for Medicare and Medicaid Services did not respond by press time. The 4th Circuit held that the new law did apply to Brown’s case. It noted that by its own terms the amendment was retroactive and was merely “technical” and “clarifying.” In Verderame’s view, an amendment that will have a $900 million impact can’t honestly be called technical. He drew that figure from a government brief estimating the cost it would bear if its interpretation of the law were rejected. Roger J. Larue, director of Mediation Arbitration Professional Systems of Metairie, La., said that retroactive application may cause constitutional problems in other cases. Larue co-authored an analysis of the new law in the Louisiana Bar Journal. In Brown, Medicare’s claimed share was set aside pending resolution of the case. “What happens if the money actually changes hands?” Larue asked. He noted that in many cases, litigants in the same position as Brown may have relied on prior law in some circuits by paying their attorneys and non-Medicare lienholders out of their settlements and perhaps spending the rest. If Medicare expects its share in such cases, it may run afoul of constitutional provisions dealing with ex post facto laws and the impairment of contracts, Larue said. Young’s e-mail is [email protected].

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