Richard L. Gilbert
Richard L. Gilbert, Judge of the Superior Court (Retired)
Resolution Arts Building
2630 J Street, Sacramento, CA 95816
T: 916.442.0414 F: 916.442.7046
© Richard L. Gilbert 2015
The United States District Court in New Jersey
recently issued an interesting, though unpublished, opinion concerning Medicare
Set asides. In Sipler v. Trans-M Trucking,
the parties reached a preliminary settlement of the case without discussing
potential Medicare liability. In the settlement documentation subsequently
presented by the defense, the defense included a previously un-discussed
confidentiality provision and a provision concerning Medicare:
"1) he [Sipler]
cannot claim reimbursement from Medicare for injuries arising out of the March
8, 2006 accident; (2) his private health insurance will not pay for claims
arising out of accident-related injuries because those injuries are
preexisting; and (3) Medicare will not pay for any future treatment for
injuries arising out of the accident."
The court enforced the settlement agreement on
plaintiff's motion without requiring the inclusion of any language regarding
Medicare or a Medicare set aside. The court discussed Medicare's rights and the
potential requirement for Medicare set-asides in third-party cases:
"Indeed, no federal law requires
set-aside arrangements in personal injury settlements for future medical
expenses. To be sure, Medicare set-asides are prudent in settlements for future
medical expenditures in the worker's compensation context because, under the
MSP, Medicare becomes a secondary payer for such expenditures to the extent a
"compensation award stipulates that the amount paid is intended to
compensate the individual for all future medical expenses," 42 CFR
411.46(a), or "the settlement agreement allocates certain amounts for
specific future medical services," 42 CFR 411.46(d)(2).
The settlement in this case, however, does not arise in the
worker's compensation context. And it does not indicate a particular amount to
compensate Mr. Sipler for future medical expenses arising out of the accident.
Nor should it. In contrast to the worker's compensation scheme that
"generally determine[s] recovery on the basis of a rigid formula, often
with a statutory maximum .... [t]ort cases ... involve noneconomic damages not
available in workers' compensation cases, and a victim's damages are not
determined by an established formula." Zinman
v. Shalala, 67 F.3d 841, 846 (9th Cir. 1995) (citation omitted). Thus, to
require personal injury settlements to specifically apportion future medical
expenses would prove burdensome to the settlement process and, in turn,
discourage personal injury settlements. See McDermott, Inc. v. AmClyde, 511
U.S. 202, 215 (1994) (noting that "public policy wisely encourages settlements").
In sum, the parties in this case need not include language in the settlement
documents noting Mr. Sipler's obligations to Medicare or fashion a Medicare set
aside for future medical expenses."
I think that Judge Debevoise is spot on, and not just because he
reaches the same conclusion as I do in the article on this website (Click HEREfor our article).
I am told that some plaintiffs' attorneys are
reading the conclusion in Sipler that
set-asides are "not required" as the beginning and end of the inquiry
in their cases. This is a shallow and foolish approach.
The issue before the
court in Sipler was not whether
Medicare set-asides are "required," but whether a party could insist
upon the inclusion of that term in final documentation contrary to the original
I read the Sipler decision as holding that, because
Set asides are not specifically required, and thus not "inherently" a
part of settlement agreements, they cannot be forced on a party, absent
There is nothing in Sipler, however, that prevents a
defendant from insisting upon some form of set aside or other arrangement to
protect Medicare's interest as a condition of settlement in the first instance.
Had this been the case in Sipler, I think the outcome would have been
Based on my reading of the case, I think it is
foolish to read the court's accurate holding in Sipler and conclude,
without more thought, that Medicare set-asides are not "required".
The point, among others, of the discussion of Medicare Set asides on this
website is that the absence of a formal "requirement" for Medicare
Set Asides is not the end of the analysis as to whether one should be pursued.
The failure to include set asides in the right case may, in fact, be contrary
to the plaintiff's best interests. Moreover, such a failure could ultimately
subject plaintiff's counsel to liability either to Medicare or to the plaintiff
saddled with the denial of Medicare benefits or to an unexpected reimbursement
Click HERE for a PDF version of the Sipler decision.
Remember, it is unpublished!