A decision by a federal appeals court which permits Medicare to claim nearly half of the liability settlement of an injured man can hurt insurer’s ability to settle claims and could become an issue that reaches all the way to the US Supreme Court.
The 6th US Circuit Court of Appeals in Cincinnati Ohio made a 2-1 ruling in November which allowed Medicare to get back a total of $62,300 from a $125,000 liability settlement amount won by Vernon Hadden. Mr. Hadden received the settlement from a 2004 vehicle accident.
Medicare paid $82,000 in medical bills after Mr. Hadden was hit by a Pennyrile Rural Electric Cooperative Corporation truck. The company is based in Hopkinsville, Kentucky. The attorneys for Mr. Hadden argued that the Pennyrile truck only constituted 10% of the total damages. Another driver that caused the truck to hit Hadden was 90% responsible for the accidents and proposed that only 10% of the settlement from Pennyrile should be give back to Medicare.
This decision may have a drastic affect on future judgments, settlements, and awards in workers compensation cases and other liability suits. Critics of the court’s decision worry that there will not be anything left for the victim if Medicare is allowed to take the majority of the settlement.
It is believed ‘impractical’ for Medicare to be awarded a full reimbursement in cases where the victim did not make a full recovery for the damages. As a result of the most recent decision, the future cases may result in less settlement amounts which means there will be less money for Medicare to get back.