The United States Court of Appeals for the Eleventh Circuit has ruled that Medicare is not entitled to rely on its field manual and argue that a subrogation interest be reduced under a "made whole" type of analysis only if a judgment is entered in the case.
In Bradley v. Selbelius, plaintiff settled a wrongful death case for policy limits, $52,500, and put Medicare on notice of the settlement. Medicare asserted a $38,000+ lien, less procurement costs. Plaintiff filed suit in the probate court and asked the court to determine the value of the case and the amount that needed to be re-paid to Medicare. Medicare refused to participate.
The trial judge ruled that the value of the case exceeded $2,500,000 and that Medicare’s reimbursement should be cut to $787.50. Medicare refused to recognize the probate court’s decision, saying that its field manual provided that it need not rely on a court order allocating proceedings unless the court order was based on the merits of the controversy. The estate paid Medicare under protest, exhausted its administrative remedies, and then filed suit in federal court.