DuHammell v. Renal Care Group East Inc., L-871-09, L-1138-09; Law Division, Atlantic County; opinion by Kane, J.S.C.; decided December 7, 2012; approved for publication May 16, 2013. DDS No. 22-3-9978 [6 pp.]
Through mediation, plaintiffs Catherine Ney and Brenda DuHamell reached an amicable resolution of their underlying claims. However, they have not consummated the settlement because part of the settlement contemplated a determination by the Department of Health and Human Services, Center for Medicare and Medical Services (CMS) concerning the amount to be set aside pursuant to the Medicare Secondary Payer Statute (MSP), 42 U.S.C.A. § 1395(y)(b)(2).
Plaintiffs retained attorney Christine Hummel, a renowned expert, to determine the potential future amount due to be set aside for future medical expenses relating to the underlying incident/accident, which would otherwise be covered or reimbursable by Medicare. She recommended that $13,689.25 be deposited into a separate interest-bearing account to be used solely to satisfy Ney’s future related medical expenses and that $114,246 be set aside for DuHamell’s future medical expenses.
Both proposed set-aside amounts were submitted to the CMS for review. However, CMS provided "no review" letters, advising that due to resource constraints, it was not providing a review of the proposed set-aside amounts.
Plaintiffs contend that Medicare’s response will delay settlement indefinitely, or until Medicare has the resources to review the claims. They argue that this result is contrary to public policy and will result in trials despite amicable and just resolutions reached by the parties. They ask the court to decide whether to enforce the settlement agreements and declare Medicare’s interests adequately protected notwithstanding its response to plaintiffs regarding their claims.
Held: In each of these cases, Medicare’s interests under the Medicare Secondary Payer Statute have been adequately protected, as the proposed set-aside amounts are both reasonable and reliable. Therefore, plaintiffs’ motion to enforce the settlement is granted, notwithstanding Medicare’s "no review" letters.
The court says 42 U.S.C.A. § 1395(y)(b)(2) assigns primary responsibilities for Medicare recipients’ medical bills to private health plans when the recipient is also covered by private insurance. Medicare may obtain secondary payer status if payment has been made, or can reasonably be expected to be made, under a workers’ compensation law or plan, or an automobile or liability insurance policy or plan or under no-fault insurance.
The MSP further provides that when Medicare makes a payment that a primary plan was responsible for, the payment is conditional and Medicare is entitled to reimbursement.
The U.S. Supreme Court has consistently held that interpretive rules such as those in opinion letters, policy statements, and agency manuals do not require notice and comment and thus do not have the force and effect of law. It is equally well-settled that settlements are encouraged as a matter of public policy.
The court says it bases its decision on notions of fairness and public policy. Both plaintiffs have submitted expert reports determining the proposed set-aside amounts for future medical expenses. Both reports were submitted to CMS for review. CMS responded that they did not have resources to review the proposed set-asides. There is no other policy or procedure for determining the adequacy of protecting Medicare’s interests for future medical expenses in conjunction with the settlement of plaintiffs’ claims.
The court says that in light of the foregoing, and given that the no-review letters lack the force of law, requiring plaintiffs to force their case to trial when they have reached an amicable resolution outside of court runs contrary to New Jersey’s strong public policy interests in encouraging settlements. Setting this precedent would cause a flood of litigation, resulting in expense and delay of the judicial process, where it would not otherwise be necessary. Such a result cannot be held to be in the interest of justice.
The court finds that the proposed set-aside amounts fairly take Medicare’s interests into account in that the figures are both reasonable and reliable. Therefore, the court is satisfied that Medicare’s interests have been adequately protected pursuant to the MSP. It orders plaintiffs to set aside the proposed sums in interest-bearing accounts to be used solely for future medical expenses related to the underlying accidents/incidents and grants plaintiffs’ motion to enforce the settlement.
For plaintiffs — Jeffrey R. Youngman and Frederick E. Gerson (Feitlin, Youngman, Karas & Gerson). For defendants: Renal Care Group East Inc. et al. — Joseph E. O’Neil and John J. O’Donnell, admitted pro hac vice (Lavin, O’Neil, Ricci, Cedrone & Disipio); Philadelphia Suburban Development Corp. — Theodore C. Forrence and David M. Barry, admitted pro hac vice.