On Oct. 1, 2012, the Supreme Court of the United States declined
review of a 6th Circuit decision that upheld the
government's authority under Medicare Secondary Payer (MSP)
law to recover all expenses paid on behalf of a Medicare
beneficiary when that beneficiary, in turn, recovers from a third
In this case, a beneficiary was injured in an accident and
subsequently reached a settlement with a third party for expenses
arising from that accident. Under the authority of the Medicare
Secondary Payer Act (MSPA), the government demanded that the
beneficiary repay the full amount of his medical expenses. The
beneficiary argued that he should repay Medicare only for the
percentage of his medical expenses caused by the settling third
party. The 6th Circuit rejected his argument and held that the
government was entitled to fully recover the amounts paid on the
The Supreme Court's refusal to review this case
highlights the broad discretion that the courts have granted the
government in MSP recovery actions. The following are the three key
takeaways from the 6th Circuit decision:
Under MSP Law, the Government is not Limited to
Subrogation. The 6th Circuit decision demonstrates that
the government can enforce its rights by recovering from
any entity (whether provider, beneficiary, or other) that
has received payment from a primary payer (e.g., a settlement in a
tort case). And as such, there is no requirement that the
government's recovery be limited to a proportionate
Medicare v. Medicaid: Recoveries do not have to Look
the Same. The beneficiary in this case argued that, under
the federal Medicaid statute, the state is entitled to recover only
its share of a discounted settlement according to the extent of the
third party's liability for medical expenses. See42 U.S.C. § 1396a(a)(25). While the court
agreed that such a limitation applies in a state's recovery
of Medicaid payments, no such limitation exists for Medicare. The
court held that, under the MSPA, a beneficiary who receives payment
as part of a settlement is responsible for reimbursing the
government for the full amount that is demanded. See42 U.S.C. § 1395y(b)(2)(B)(ii) .
When Reviewing MSP Recovery Amounts, the Court Will
Focus on the Scope of the Beneficiary's Claim Against a
Third Party. The court held that a beneficiary cannot
claim a third party is responsible for all his medical expenses, on
the one hand, and subsequently tell the government that the same
third party was responsible for only a percentage of those expenses
on the other. Thus, even if the beneficiary settles or compromises
on the amount that the third party will pay, and even if the third
party never admits liability, the beneficiary can be required to
reimburse the government for the Medicare payments made on his
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