Question: When a court allocates a personal injury settlement as “pain and suffering only” does the Court’s determination preclude Medicare’s subrogation claim?
Answer: As long as you have a judicial allocation based on the merits (i.e. a fact-based determination on allocation), it has always been Medicare’s policy to accept the court-ordered allocation. In any allocation hearing, it is important that Medicare be put on notice of the hearing, because if Medicare officials aren’t notified they can use that as an argument against the allocation.
Medicare's manual states that Medicare is bound by an allocation that has been designated by a court on the merits of the case.... "The only situation in which Medicare recognizes allocations of liability payments to non-medical losses is when payment is based on a court order on the merits of the case. If the court or other adjudicator of the merits specifically designates amounts that are for payment of pain and suffering or other amounts not related to medical services, Medicare will accept the Court's designation." MSP Manual 50.4.4:
It’s important to note that Medicare officials will likely challenge any allocation they believe was done after the fact in an effort to avoid any reimbursement claims. Medicare officials want to ensure that the allocation stemmed from judicial fact-finding on the merits of the case.
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