Secondary Payer: Brief says Supreme Court Review Needed on Limits to Settlement Recovery Authority

The federal government overstepped its Medicare Secondary Payer Act authority when it sought recovery of all of its costs of caring for a Medicare beneficiary from that beneficiary’s third-party settlement, the beneficiary argued in a brief filed with the U.S. Supreme Court Aug. 7 (Hadden v. United States, U.S., No. 11-1197, reply brief filed 8/7/12).

A reply brief filed on behalf of Vernon Hadden said high court review of the issue—whether the government may recover all, as opposed to only an apportioned share, of a beneficiary’s settlement with a responsible third party—is necessary because of a split in the federal appeals court circuits that have addressed the issue and because the approach adopted by the appeals court below is at odds with the approach used by courts addressing government settlement recoveries under Medicaid and other federal health care payment programs.

The brief disputed the government’s claims, asserted in a brief in opposition filed July 26, that the case was not appropriate for high court review. The government claimed that there is no circuit split, that the U.S. Court of Appeals for the Sixth Circuit properly resolved the case, and that the issue is not of ‘‘national importance,’’ which otherwise might justify Supreme Court review.

The government said the Sixth Circuit properly determined that the United States may seek full repayment from a Medicare beneficiary of the amount Medicare provided when the beneficiary settles with a responsible tortfeasor for more than the amount Medicare paid. A petition challenging the Sixth Circuit’s November 2011 decision—a 2-1 ruling—was filed March 30.

Petition Seeks Reversal. Hadden, in his petition, argued that the Sixth Circuit majority misinterpreted the MSPA and issued a decision that conflicts with a ruling by the U.S. Court of Appeals for the Eleventh Circuit in Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010) and is inconsistent with the U.S. Supreme Court’s decision in Arkansas Dep’t of Health & Human Services v. Ahlborn, 547 U.S. 282 (2006). The high court, in Ahlborn, rejected a state’s efforts to recover all of its Medicaid costs from a third-party settlement.

‘‘The court’s holding is unsupported by the text of the Act and interprets the law contrary to Congress’s intent. Attempting to avoid the impact of this Court’s Ahlborn decision, the court of appeals rewrote the statute to deny Mr. Hadden recovery,’’ the petition said.

The Sixth Circuit, in its decision, rejected Hadden’s argument that he should repay only one-tenth of Medicare’s claim based on the fact that his settlement covered only 10 percent of his total damages. The court ruled that the Medicare statute clearly provides for full reimbursement when a settlement resolves a claim, even if the party believes the settlement only reflected a partial recovery.

A dissent filed in the case said that the majority was incorrect that the statute was clear regarding the amount of recovery. Rather, according to the dissent, the statute is ambiguous and the government’s ‘‘absolute priority’’ theory of full reimbursement, similar to the Medicaid proposal rejected by the Supreme Court in Ahlborn, was not entitled to deference and raised a serious impediment to settlements in a large number of cases.

Source: Bloomberg BNA

Featured News

  • MARC Coalition Announces 2026 Executive Committee

    December 18, 2025 (Washington, DC) – This week, the MARC Coalition, a national coalition advocating for the improvement of Medicare Secondary Payer (MSP) programs, announced their Executive Committee for 2026.   MARC’s Executive Committee consists of a Chair, Vice Chair, Secretary/Treasurer, and At-Large members. The officers are elected to 2-year terms, and At-Large members are elected to a […]

    Read Article
  • MARC Coalition Hosts Webinar to Discuss the CMS ORM program

    November 17, 2025 (Washington, DC) – The MARC Coalition today hosted a webinar about the CMS ORM program at 1:00pm ET. Presenters included David Farber, Partner at King and Spalding and Brian MacAllister, Senior Medicare Unit Manager – Managed Solutions at Liberty Mutual. Approximately 60 people attended the public webinar, including MARC members and industry stakeholders. […]

    Read Article
  • MARC Announces Introduction of the RAMP Act in 119th Congress

    Washington, DC (June 20, 2025)  Today, the Medicare Advocacy and Recovery Coalition (MARC) celebrated the introduction of the Repair Abuses of MSP Payments Act (RAMP Act, H.R. 4056), introduced in the U.S. House of Representatives by Representative Gus Bilirakis (R-FL) and Representative Brad Schneider (D-IL). The legislation advocates for modernizing the broken and outdated MSP “private cause […]

    Read Article