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How the Medicare Secondary Payer Rule Can Impact Your Florida Estate


One potentially critical task for your probate estate is managing any litigation arising from your death. Unfortunately, many Floridians die each year due to acts of negligence or medical malpractice. The task of seeking damages against the responsible parties often falls to the estate, which is why it is so important to name someone you trust as executor under your will.

Florida Estate Left On the Hook for Medicare Reimbursement

Estate litigation is often further complicated by potential liens from third parties. Recently we discussed how Medicaid liens affect the estates of many low-income Florida residents. By law, Florida must seek reimbursement for any amounts that it paid for a recipient’s care from their estate. There is a similar law that can apply to Medicare recipients as well, which is known as the Medicare Secondary Payer (MSP) law.

As the name suggests, the idea behind MSP is that Medicare should only serve as the “secondary” payer when some other party legally bares primary financial responsibility for the recipient’s care. The primary payer may be the recipient’s own insurance company. Or in some cases, it may be a tortfeasor–a negligent third party–who is obligated to pay the recipient’s medical expenses under a court judgment.

Under MSP rules, Medicare will usually advance the money necessary for the recipient’s care as a “conditional payment,” and then recover double that amount later from the responsible party. The law also allows private parties–such as a deceased recipient’s estate–to seek repayment on the government’s behalf. The private party may then receive a portion of the ultimate award as payment for its services to the government.

Estates need to be careful when pursuing MSP claims. Absent a legally binding judgment holding a third party responsible for a beneficiary’s medical costs, the estate–or even the beneficiary’s heirs–may have no grounds for recovering any money they may have already paid to Medicare themselves. A recent decision by a federal appeals court offers a cautionary tale on this point.

This case involved a deceased Florida man and his estate. The decedent was a Medicare recipient, and the government spent approximately $620,000 to pay for his medical care. After he died, the estate sued the hospital that treated him for malpractice. The parties agreed to binding arbitration on the issue of damages.

After arbitration began, the estate moved to add an MSP action against the hospital, seeking recovery of the $620,000. The estate’s position was that by agreeing to arbitration in the first place, the hospital admitted liability under the MSP statute. The hospital argued this was premature, and the arbitration panel declined to address the issue.

The final arbitration award, approximately $700,000, did not include any specific payment of damages for medical expenses. Yet the estate still used these funds to reimburse Medicare the full $620,000, apparently because it was concerned the government would assert a lien against the arbitration award otherwise. Medicare then returned about $400,000 to the estate as payment for its services in procuring the arbitration award from the hospital.

The estate and the decedent’s widow then opted to pursue additional litigation in an attempt to recover the money they gave to Medicare, for which they maintained the hospital was responsible. This ultimately led to a federal lawsuit rejected by both a trial judge and the U.S. 11th Circuit Court of Appeals. As the appellate court explained in an unpublished opinion, the widow and the estate had no basis for reimbursement under the MSP statute since they never actually obtained a judgment holding the hospital liable for the decedent’s medical expenses. As noted above, the arbitration award expressly excluded such costs.

Get Help From a Florida Estate Planning Lawyer

Even if your estate is not facing the prospect of reimbursing Medicaid or Medicare, there may be other debts and legal disputes that remain unresolved at the time of your death. Having a proper estate plan in place is critical to ensuring an orderly resolution of these outstanding claims. If you need help from a qualified Fort Myers estate planning attorney in preparing your will or trust, contact the Kuhn Law Firm, P.A., at 239-333-4529 today.


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