NEW CASE REMINDER TO INCLUDE MEDICARE COMPLIANCE AS A TERM OF SETTLEMENT

It is well known to most individuals in the insurance and legal industries that terms of settlement must be agreed upon by all parties. A party cannot unilaterally add or change a term of settlement. The United States District Court of the Middle District of North Carolina recently reminded us of this in Bone v. Univ. of N.C. Health Care Sys., 2022 U.S. District LEXIS 82148 (M.D. NC May 6, 2022). There, Plaintiffs sued UNC Health Care for denying blind individuals an equal opportunity to access their health care information. They sought compensatory and injunctive relief but did not request compensation for any medical expenses.

UNC Healthcare initially indicated that if a monetary settlement were reached, they would require information from each plaintiff necessary to comply with Section 111 and the Medicare Secondary Payer Act (MSPA). Plaintiffs responded, noting that the MSP was not applicable as payments for medical care were not claimed or released in settlement. When the parties later participated in a settlement conference with the court and reached a binding settlement agreement, MSP issues were not discussed. It was not until the parties began drafting the settlement release that UNC Healthcare attempted to include terms whereby payment of the settlement funds was contingent upon receiving confirmation from CMS that there were no outstanding liens for each plaintiff. The Court found this to be a new, material term of settlement that prejudiced the plaintiffs and refused to deem it as part of the parties’ settlement agreement. The court further held that the new terms were unnecessary as Plaintiffs did not seek compensation for medical expenses and thus, the settlement did not implicate MSP obligations. The Court looked to the MMSEA Section 111 User Guide which makes clear that the critical component for triggering MSP obligations is where the injury party is a Medicare beneficiary and the settlement releases or has the effect of releasing medicals.

This case serves as an important reminder to determine, early on, whether a case triggers the need to comply with the MSPA. If so, we must remember to discuss the need to comply with Section 111 Reporting requirements and the MSPA during settlement discussions and create a plan for addressing the same. Our team is available to assist in evaluating a case for MSP implications and assisting with the same during settlement negotiations. Please let us know how we can help.