Court Grants Department of Health and Human Services’ Motion for Summary Judgment

Plaintiffs in this matter settled wrongful death lawsuits with the State of Montana, Burlington Northern Santa Fe Railroad (“BNSF”) and BNSF’s insurers (“CNA”). Following the settlements, CMS issued demand letters pursuant to the Medicare Secondary Payer Act (“MSPA”) seeking to recover conditional payments made on behalf of the decedents.

Plaintiffs argued that CMS could not recover from the settlement amounts paid to decedents’ families, because the settlement proceeds were for the wrongful death claims belonging to the decedents’ families. Plaintiffs exhausted their administrative remedies through CMS. The Medicare Administrative Law Judge ruled against the Plaintiffs, and the ALJ’s determination was upheld by the Appeals Council. Following the decision of the Appeals Council, the Plaintiffs sought judicial review in the United States District Court for the District of Montana. (Hagerty v. Azar, 2020 U.S. Dist. LEXIS 174976, D. Mont. September 23, 2020).

Montana law allows for two distinct causes of action following the wrongful death of an individual. The first, a “survival” claim, includes pain, suffering, and medical expenses of the decent. The second is a “wrongful death” claim which addresses the injury to the claimant’s family resulting from the loss of the decedent’s care, comfort, and society. Though the two causes of action are brought together in a single legal action, the damages are distinct. The survival damages are personal to the decedent, while the wrongful death damages are personal to those who survive them.

The court noted that the Plaintiffs are correct that, because wrongful death damages are distinct from survival damages, Medicare cannot recover conditional payments from Montana wrongful death settlements. The ALJ and Appeals Council acknowledged this, citing the Eleventh Circuit’s decision in Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010). In this case, however, the initial complaints in the underlying actions include specific requests for reimbursement of medical expenses for the decedents. Additionally, the release language addresses both the Plaintiffs’ wrongful death and survival claims.

The Plaintiffs argue that eight of the cases could not pursue survival claims because the statute of limitations for those claims had passed. The Plaintiffs even obtained a probate order to that effect. The Court determined, however, that the probate order was not an order on the merits and is not dispositive as to whether Medicare is entitled to recover conditional payments.

Though the court acknowledged that the Plaintiffs could have presented a history consistent with the argument that these were “wrongful death only” settlements, they failed to do so in this instance. Because the Plaintiffs failed to establish that the settlement proceeds did not include survival benefits, the findings of the Appeals Council were upheld, and the Department of Health and Human Services’ Motion for Summary Judgment was granted.