Medicare Set Aside and MMSEA Section 111 Legal Cases - Bradley v. Sebelius

Blackburn Group, Inc. MSA and MMSEA Section 111 Legal Cases - Bradley v. Sebelius, 621 F.3d 1330 (11th Cir., Sept. 29, 2010)

This case involved a wrongful death action filed under the Florida Wrongful Death Act for alleged nursing home neglect. The decedent (Mr. Burke) was survived by 10 children. One of his daughters (Cardonvella Bradley) was named personal representative of the estate. Ms. Bradley filed a wrongful death action against the nursing home where damages were claimed for the estate and the other nine surviving children. The action was eventually settled without a formal action being filed in court for the nursing home's policy limits of $52,500.

Medicare asserted a conditional payment claim in the amount of approximately $22.480.89 which represented the net amount of Medicare's conditional payments. Bradley requested that Medicare reduce its claim on various grounds. Medicare refused and demanded a full recovery.

Bradley then requested a hearing before the probate court to have the court allocate the settlement monies between the parties. Although invited to the hearing, Medicare did not attend. Upon reviewing the presented evidence, the probate court allocated the bulk of the settlement monies to the surviving children (from which amount it was argued Medicare could not recover per the Florida Wrongful Death Act) and only $787.50 to the estate claim (from which Medicare could recover). Medicare refused to recognize the probate court's allocation of the settlement proceeds on various grounds, including that Medicare's position, according to their Medicare Secondary Payer manual, would only recognize court orders "on the merits" and that from its view the probate court's order was merely "advisory." The matter proceeded to the United States District Court which ruled in favor of Medicare. Bradley then appealed to the 11th Circuit Court of Appeals.

The 11th Circuit overruled the District Court and held that Medicare only had rights of recovery against the Estate's allocated share of the proceeds. In reaching its decision, the court found that under Florida law any claim of the estate is separate and distinct from the claim of a survivor and that only the estate's allocated share of the proceeds was subject to the Medicare Secondary Payer manual. The court stated, Under Florida law, any claim of the estate is separate and distinct from the claim of a survivor. All loss of consortium or companionship recoveries is the property of the persons who incurred the loss, not Medicare. A child's loss of parental companionship claim is a property right belonging to the child, not Medicare. The Burke children's loss of parental companionship claim does not include the decedent's medical expenses, as a claim for medical expenses belongs only to the estate. Only the estate's allocated share of the proceeds is subject to the province of Medicare.

In rendering its decision, the court also refused to provide controlling legal deference to what it referred to as Medicare's "field manual", or the Medicare Secondary Payer manual. It also criticized the Medicare Secondary Payer Manual because it placed the parties in an "absurd Catch 22" position by forcing them to litigate cases they would otherwise settle simply to obtain a judicial allocation of the settlement proceeds.