On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-415-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lisa and Alvarez.
Plaintiff Ilse Theresa Jackson appeals from an April 17, 2009 Law Division order refusing to allocate settlement proceeds in conjunction with the discharge of a Medicare lien. Plaintiff also sought to have the motion judge find that no portion of her personal injury settlement was attributable to her medical expenses. This relief was denied as well. For the reasons set forth below, we affirm.
Plaintiff sued the numerous defendants as a result of a trip and fall on September 21, 2005, in Cliffside Park. Plaintiff, who was seventy-nine years old at the time the accident occurred, filed a complaint on January 17, 2007, seeking damages for permanent bodily injury and disability, pain and suffering, emotional distress, and economic losses, including medical expenses paid for by Medicare. The only defendants remaining, not dismissed either through summary judgment or by stipulation, are Nunzio P. Scalo and Carol J. Scalo, Verizon New Jersey, Inc. (improperly pled as Verizon Company, Verizon Communications, Inc.), Time Warner, and PSE&G.
On August 27, 2008, plaintiff was notified in writing by the Centers for Medicare and Medicaid Services (CMS) that payments made by Medicare for the cost of medical treatment necessary due to injuries sustained from the fall were "subject to reimbursement" from any recovery. Plaintiff not only demanded reimbursement for the Medicare lien in her complaint, she included the expenses as an element of her damages in answers to interrogatories.
The case was referred to non-binding arbitration, and on November 5, 2008, the arbitrator awarded plaintiff $85,000. $30,000 of the award was earmarked as funds in satisfaction of plaintiff's Medicare lien. The case eventually settled for the same amount as the arbitration award - $85,000.
To reiterate, plaintiff's motion sought a court ordered allocation of the settlement proceeds in order to avoid payment of the Medicare lien. Her medical expenses were satisfied under the Medicare Secondary Payer Statute (MSPS), 42 U.S.C.A. § 1395y(b)(2). The only defendant participating in the appeal is TWFanch-One Co. d/b/a Time Warner Cable of New Jersey.
Medicare's right of reimbursement arises when a third party has or had a responsibility "to make payments with respect to [a Medicare-covered] item or service." 42 U.S.C.A. § 1395y(b)(2)(B)(ii). Once a beneficiary receives a payment from Medicare, he or she is obligated to submit reimbursement within sixty days. Insurance Coverage That Limits Medicare Payment: General Provisions, 42 C.F.R. § 411.24(h). In fact, if Medicare is not reimbursed by the beneficiary, "the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary...." Ibid. This obligation means that if plaintiff does not satisfy the lien, the settling defendants in this case could be compelled to pay twice, once to plaintiff, and a second time to Medicare, in satisfaction of the lien.
According to the Medicare Secondary Payer Manual, Medicare policy requires the recovery of "payments from liability awards or settlements... without regard to how the settlement agreement stipulates disbursement should be made." Medicare Secondary Payer Manual ch. 7, ¶ 50.4.4. Because "liability payments are usually based on the injured or deceased person's medical expenses, liability payments are considered to have been made 'with respect to' medical services related to the injury even when the settlement does not expressly include an amount for medical expenses." Ibid. Medicare does, however, recognize "allocations of liability payments to non-medical losses... when payment is based on a court order on the merits of the case." Ibid. This exception applies "[i]f the... adjudicator of the merits specifically designate[s] amounts that are for payment of pain and suffering or other amounts not related to medical services." Ibid. It is this allocation that plaintiff sought from the motion court.
Plaintiff contends that N.J.S.A. 2A:15-97, the collateral source rule, bars recovery by Medicare beneficiaries of ...