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In Hackley v. Garofano, a minor brought sought through is father for injuries he suffered in a motor vehicle accident.  The case was settled and the insurer, USAA, refused to deliver the settlement proceeds without the plaintiffs providing their Social Security numbers even though a release was executed.  The plaintiffs refused to provide their Social Security numbers and filed a motion seeking a default judgment. 

The defendant insurer, citing the MMSEA (now codified at 42 U.S.C. § 1395y(b)(8)(C)), argued it is required to “determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under [Medicare] on any basis” before disbursing any settlement funds.  The only way to determine entitlement to Medicare is with the plaintiff’s Social Security number according to USAA’s argument. 

The plaintiff’s attorney argued that Connecticut’s laws required her firm to establish its own privacy policy to protect against disclosure of her client’s Social Security number to a third party.  In addition, plaintiff counsel argued that the injury victim in this case was 16 years old and obviously was not Medicare eligible and that the defendant insurer’s determination of Medicare eligibility could be made on the basis of the child’s age alone.

The parties were at an impasse over the issue and thus the plaintiffs filed their motion for a default judgment.  The Court framed the issue in the following manor “is court must first determine whether an insurer may legitimately condition the settlement of a civil case on the provision to it of the plaintiffs' social security numbers. Although this appears to be an issue of first impression in Connecticut, at least one federal court has considered this question and resolved it in favor of the insurer.”  The court cited and explained the Seger decision from Nebraska which I recently discussed in a previous post.

The Court went on to discuss the basis for the Segerdecision requiring the plaintiff to provide information to the defendant insurer through interrogatories so that a determination could be made whether the plaintiff was Medicare beneficiary.  The Seger Court discussed the “query” system whereby insurers can determine Medicare eligibility with either the client’s Social Security Number or Medicare HICN.  The Hackleycourt found the logic of Seger persuasive and followed it. 

The court’s rationale for following Seger in this case was that “the plaintiff does not dispute the governmental need to prevent abuse of programs such as Medicare and to assure that such programs are reimbursed where appropriate. That there is a simple mechanism to assure that Medicare's interests are protected when a Medicare-eligible person receives a verdict or settlement in a personal injury case-the electronic “query process”-is apparent, as is the fact that both that process and USAA's confidentiality policy provide reasonable, albeit not foolproof, assurance that this personal identifying information will not be compromised. This court therefore concludes that it is permissible for USAA to condition its disbursement of settlement funds on the plaintiffs' provision of their social security numbers.”

The Court went on to discuss whether there was a settlement at all given the fact that the parties had not agreed for the plaintiff to disclose their Social Security numbers as part of the deal.  The Hackley court said “[i]t is clear to the court that under these circumstances, the plaintiffs never unambiguously agreed to a settlement that required them to provide their social security numbers.”  “The only conclusion that this court can reach, therefore, is that while the parties had agreed on the amount of the settlement, they had not reached an unambiguous agreement as to all of the terms of the settlement.”  “Although the amount of the settlement is the principal-and, most often, the only-issue in controversy, with most other elements of the release documents falling within the category of “boilerplate language,” it is certainly conceivable that, as here, one or the other party will insist on inclusion of a relatively unusual term. When it does, there can be no enforceable agreement until all have unambiguously agreed on the term's inclusion or exclusion.”

In my opinion, the silver lining of this decision is the fact that there was no meeting of the minds due to the additional term of providing Social Security numbers added after the fact.  Most of the settlements today where there is a question about Medicare and conditional payments, are being settled without terms related to these issues being agreed to prior to reaching a settlement number.  The case is settled then after the fact insurers are demanding onerous language related to Medicare.  It seems pretty clear that courts are willing to compel disclosure of certain pieces of information in the name of the MMSEA, but many settlements may not be settlements at all due to the inclusion of language that was never negotiated upon or agreed to as part of the settlement process.

It is interesting that the court just assumed that USAA was required, under Section 111 of the MMSEA, to collect a Social Security number in a case where clearly the minor didn’t have Medicare coverage.  Section 111 of the MMSEA, now codified at 42 U.S.C. § 1395y(b)(8)(C), provides:

 (8) Required submission of information by or on behalf of liability insurance (including self-insurance), no fault insurance, and workers’ compensation laws and plans

(A) Requirement

On and after the first day of the first calendar quarter beginning after the date that is 18 months after December 29, 2007, an applicable plan shall—

(i) determine whether a claimant (including an individual whose claim is unresolved) is entitled to benefits under the program under this subchapter on any basis; and

(ii) if the claimant is determined to be so entitled, submit the information described in subparagraph (B) with respect to the claimant to the Secretary in a form and manner (including frequency) specified by the Secretary.

While clearly the law does mandate an inquiry, I don’t think it does in every case.  In a birth related injury case where the infant has not worked and is under age 18, there is no chance of Medicare coverage and no need for an inquiry (like in Hackley).  Nevertheless, an 18 year old with no work history could be Medicare eligible.  I say could be Medicare eligible because it is possible for an 18 year old disabled prior to age 22 to get Medicare coverage by getting SSDI.  An 18 year old could get SSDI and automatically Medicare coverage 24 moths after disability payments start if they are disabled prior to age 22 and their parents are currently drawing Social Security (either retirement or disability).  Accordingly, it can be difficult for an insurer to arbitrarily determine whether to do the inquiry or not on someone over the age of 18 and disabled simply based on work history or age.