Medicare on the Check – Zaleppa v. Seiwell follows Tomlinson v. Landers

Posted date in Jason D. Lazarus, J.D., LL.M., MSCC Liens, Medicare, Medicare Secondary Payer Act, MSP Compliance

In a Superior Court of Pennsylvania decision, Tomlinson v. Landers was followed holding that Medicare is not required to be a payee on the check after judgment.  While Tomlinson dealt with a settlement, Zaleppa dealt with a verdict.  Zaleppa was injured in an automobile accident in which Seiwell was at fault.  Seiwell admitted liability and the case was tried on the issue of damages only.  The jury returned a verdict of $15,000 which consisted of $5,000 for future medical expenses and $10,000 for past, present and future physical pain and suffering, mental anguish and distress, embarrassment and humiliation, and loss of the pleasures and enjoyment of life. 

In post trial motions, Seiwell argued that the terms of the Medicare Secondary Payer Act required all parties in litigation to protect Medicare’s interests when resolving claims involving conditional payments made by Medicare.  As such, Seiwell requested the trial court allow her to either “[i]nclude and identify [Zaleppa], her attorneys and Medicare as payees on the draft that satisfies the verdict” or “[p]ay the verdict into [the trial] [c]ourt pending notification from Medicare to the [trial] [c]ourt that the Medicare lien is satisfied.”  The trial court denied this request and entered judgment in favor of Zaleppa.  An appeal was taken from that decision. 

On appeal, Seiwell contended that the trial court erred in denying her post trial motion because the MSPA “require[s] parties in litigation to protect Medicare’s interests when resolving claims involving conditional payments made by Medicare.”  Seiwell argued that she risked potential future liability stemming from the MSPA and its corresponding regulations unless evidence demonstrated that Medicare’s interests were protected.  The Pennsylvania appellate court framed the legal question on appeal as whether the “MSPA either requires or allows a private entity to assert the rights of the United States government regarding a potential claim for reimbursement of a Medicare lien.” 

In addressing the question on appeal, the Zaleppa court reviewed MSP law.  The court stated that the “MSPA sets forth only one method for the United States government to recover the funds which it dispersed through conditional Medicare payments.”  According to the court, the MSPA only authorizes the United States government to pursue its own right to reimbursement pointing to 42 U.S.C.A. §1395y(b)(2)(B)(iii).  The court did acknowledge that the MSP establishes a “private cause of action for damages” but recognized that the consensus among Federal Circuit Courts of Appeal had determined that the MSPA does not allow a private party to bring suit on behalf of the United States government for the reimbursement of conditional Medicare payments.  By extension, the court concluded that the “MSPA also prohibits private entities from asserting the interests of the United States government in a post-trial motion or at any other phase of the litigation.” 

The court then discussed having Medicare on the check.  In this regard, the court pointed out that “Seiwell could not satisfy the judgment if she added Medicare as a payee to the award check because, in doing so, she would fail to discharge all of her obligations pursuant to the judgment.”  The court went on to say that the “judgment entered in this case only determines the rights and obligations of Zaleppa and Seiwell, as they are the only parties involved in this action.  Because the United States government is not a party, the obligations that either Zaleppa or Seiwell owe Medicare are irrelevant with respect to satisfying the judgment entered in this case.  Adding Medicare as a payee would interfere with the rights of Zaleppa as affirmed by the judgment.”  Finally, the court held that the “MSPA does not authorize the trial court to grant Seiwell’s motion for post-trial relief requesting that either Medicare be added as a payee to the draft satisfying the verdict or that the verdict award be paid into escrow until receiving notification that no outstanding Medicare liens exist.” 

The basis of the Zaleppa decision is important.  The MSPA does not require at settlement or post verdict for Medicare to be a payee on the check or for the monies to be held in escrow whether by the court or a 3rd party.  The MSPA requires one of the parties to satisfy the Medicare conditional payment obligations that are outstanding at resolution of the claim.  This can be achieved by an agreement between the parties as to who will be responsible for this task.  It is simple and does not require complicated release language either.  In today’s Medicare environment, the parties have to work together to get these issues resolved at settlement or post judgment.