Background
William Stillwell suffered injuries in a slip-and-fall accident and later became eligible for Medicare. The Stillwells settled their tort claims for two hundred thousand dollars, with the agreement explicitly releasing the insurers from liability for future medical expenses and placing responsibility for those costs on the Stillwells. The insurers reimbursed Medicare for pre-settlement expenses but refused to pay for post-settlement costs. Penelope Stillwell sued the insurers under the Medicare Secondary Payer Act and the False Claims Act, alleging they failed to reimburse Medicare for post-settlement expenses.
The court’s reasoning
The court explained that the Medicare Secondary Payer Act requires a plaintiff to demonstrate that the primary plan had a responsibility to pay for the specific medical expenses in question. The settlement agreement here established that the insurers had no responsibility for post-settlement expenses, as the Stillwells assumed that liability. Because the insurers had no duty to pay, they could not be liable for failing to reimburse Medicare for those expenses. The court rejected arguments based on pre-settlement contracts or regulations regarding workers’ compensation, noting those did not apply to the post-settlement context. Regarding the False Claims Act, the court found that since the insurers had no obligation to pay, the medical providers’ claims to Medicare were accurate, and no fraud occurred.
What it means going forward
This decision clarifies that a settlement agreement releasing an insurer from future liability cuts off any obligation to reimburse Medicare for expenses incurred after the settlement, even if the insurer was responsible for pre-settlement costs.
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