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US District Court Approves Split of Settlement Funds between CMS and TriCare

The present action, Geico Gen. Ins. Co. v. Dep’t of the Navy Med. Care Recovery Unit, arises out of a motor vehicle accident where June Shaw, an occupant of the vehicle was severely injured when Cecil Shaw had a medical event that led to the accident. Ms. Shaw was both a Medicare and TriCare beneficiary.

As a beneficiary of both entities, Ms. Shaw was entitled to treatment on the condition that Medicare and TriCare would be reimbursed after settlement for payment of accident-related treatment. After settlement, the $100,000 policy limit proceeds were paid to the court for safekeeping and Geico, the plaintiff in this case and Mr. Shaw’s insurance carrier, filed an interpleader to allow third parties to claim their interest in the settlement proceeds from Ms. Shaw’s accident.

Both Medicare and the Department of the Navy, Medical Care Recovery Unit answered the interpleader and sought statutory reimbursement for funds paid on behalf of Ms. Shaw. The court determined that both parties had undisputed liens for treatment paid on Ms. Shaw’s behalf and that Medicare’s lien alone exceeded the policy limits. As a result, Medicare and Navy came to an agreement to split the settlement proceeds on a pro rata basis with Medicare taking 93% of the proceeds and Navy the remaining 7%.

The court determined that both CMS and Navy have statutory rights to reimbursement from the interpleaded funds and approved the parties’ agreement regarding the splitting of the proceeds.

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