RECENT COURT DECISIONS
Vernon Hadden, Plantiff versus United States of America, Defendant
In this district court decision, and innocent pedestrian harmed in an automobile accident settled with the utility company that owned the truck involved in the
accident. The settlement also made the pedestrian responsible for payment of MSP liabilities. When CMS demanded
100% of the MSP liability, which consumed most of the settlement, the pedestrian sought a reduction in the MSP payment based upon two arguments: comparative fault principles and the "made whole" doctrine. Under comparative fault, the beneficiary pedestrian argued that if CMS has sued directly it would have only recovered 10% of its claim, and therefore should not be entitled to excess recovery simply because the beneficiary had brought the suit first. Under the "made whole" doctrine, the beneficiary invoked the principle that a subrogated entity is not entitled to recovery until such time as the victim has been "made whole" and recovered 100% of their loss. The district court, however, rejected both claims, noting that unlike the Medicaid statute, the Medicare MSP law allows CMS to recover 100% of its MSP claim regardless of state comparative fault allocation or other common law recovery principles.
The case is important in highlighting the extent to which the MSP law harms beneficiaries, and advantages CMS in ways that would not exist if the Agency sought recovery directly. Further noteworthy is the nearly 4 years that it took to work the appeals through the administrative process before even reaching federal district court.