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Review of Medicare Set-Aside Not Necessary to Enforce Settlement in NJ

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In an opinion published May 16, 2013, the New Jersey Superior Court, Law Division, of Atlantic County held that a settlement reached in a personal injury case was enforceable; even though it's proposed Medicare Set-Aside had not been reviewed or approved by the Center for Medicare and Medicaid Services (CMS).

The underlying case of Duhamell, et al. v. Renal Care Group East, Inc., et al., involved a mediated settlement which was reached in September 2012.  Several months later, the settlement had yet to be consummated as CMS had not yet made a determination as to the amount of funds for future medical expenses which was to be "set aside," pursuant to the Medicare Secondary Payer Statute ("MSP") 42 U.S.C.A. 1395(y)(b)(2).  The plaintiffs therefore retained an expert to determine the proper amount of the Medicare Set-Aside and submitted this total to CMS for approval.

In November 2012, the plaintiffs received correspondence from CMS stating that a review of the Medicare Set-Aside was not being provided "due to resource constraints."  This essentially delayed the consummation of the settlement indefinitely, as CMS advised that the present circumstances "[did] not constitute a release or a safe harbor from any obligations under . . . the MSP statute . . . [and that] [a]ll parties must ensure that Medicare is secondary to any other entity responsible for payment of medical items . . . related to the liability settlement . . . ."  Upon receipt of this correspondence, the plaintiffs filed a motion with the Superior Court to enforce the settlement and declare that the interests of Medicare had been adequately protected.

In reviewing this issue of first impression, the court held that the correspondence from CMS did not have "the force and effect of law," and that generally, "settlement of litigation ranks high in our public policy."  Noting that there was no other policy or procedure with regard to settlement for determining Medicare's interests in future medical expenses, the court ruled that the "notions of fairness and public policy" dictated that the settlement at issue should be enforced.  Taking into account the testimony of plaintiff's expert regarding the proposed set-aside amounts, the court found these totals to be "both reasonable and reliable," such that "Medicare's interests [had] been adequately protected pursuant to the MSP."

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