Medicare Conditional Payments : Start the Process Early to Avoid Adverse Consequences Later

Recently, an Oregon appellate court ruled in a case which demonstrates the importance of addressing Medicare conditional payment reimbursement obligations early. In Rhoades v. Beck, 2014 Ore. App. LEXIS 82 (filed January 23, 2014), plaintiff appealed a trial court’s decision dismissing her action to recover damages resulting from a motor vehicle accident, arguing there was no meeting of the minds as to material terms of the settlement. The appellate court affirmed the trial court’s finding that parties entered into a binding settlement.

In the underlying case, plaintiff alleged $45,517.69 in medical damages and agreed to a settlement of $15,000 to her, $5,000 to her husband and a payment of any personal injury protection liens asserted by the auto insurance carrier. The terms of the agreement included that plaintiff and her husband would hold defendant harmless from all other liens. The agreement was confirmed via an exchange of correspondence.

Subsequently, the MSPRC advised the plaintiff that Medicare would seek $22,970.62 in recovery for conditional payments made (note that this amount exceeds the gross settlement). Plaintiff refused to sign the settlement agreement unless Medicare would waive its recovery. Defendant argued the settlement was not dependent upon actions by Medicare, and motioned the court for an order requiring plaintiff to sign the documents necessary to complete the settlement. The trial court agreed and did exactly that.

On appeal, plaintiff argued that there was no “meeting of the minds” during settlement discussions as Medicare conditional payment reimbursement would be a material fact that was not considered. The defendant countered that a settlement agreement had been reached, and that the existence of a Medicare conditional payment reimbursement obligation is not sufficient to find the parties did not reach a “meeting of the minds” with respect to all materials terms and conditions. The Court of Appeals agreed with the defendant. It noted that the record supported the trial court’s finding that the parties’ communications and acts objectively established that they had a meeting of the minds.

This case is another example of how not having a formalized approach to addressing Medicare reimbursement obligations (either conditional payments for past medicals or MSA analysis for future medicals) may lead to substantial problems for certain parties post-settlement. Garretson Resolution Group advocates that all parties adopt a formalized approach to addressing all MSP obligations so that all parties affirmatively satisfy these obligations such that a closed file can remain closed in perpetuity.