Hinsinger v. Showboat Atl. City
| Citation | 420 N.J.Super. 15,18 A.3d 229 |
| Parties | Thomas HINSINGER, Plaintiff,v.SHOWBOAT ATLANTIC CITY, Defendants. |
| Decision Date | 19 May 2011 |
| Court | New Jersey Court of Chancery |
OPINION TEXT STARTS HERE
Kenneth Iulo, Passaic, for plaintiff (Kenneth Iulo, attorneys).GIZINSKI, J.S.C.
This motion is for attorney's fees from a Medicare Set Aside Trust created after the trial of a liability action. Plaintiff prevailed at trial and thereafter successfully sought an additur from this court. Following the granting of an additur, the parties settled this matter in August 2010 for $600,000.
Due to the injuries sustained by plaintiff in the accident that was the basis of this case, plaintiff became a Medicare recipient. He was declared totally disabled by the Social Security Administration on May 31, 2008, and became eligible for Medicare in approximately November 2009. Due to the fact that plaintiff became a Medicare recipient, plaintiff's counsel appropriately contacted the Center for Medicare and Medicaid Services Coordination of Benefits department and inquired as to whether any conditional payments had been made for treatment of injuries plaintiff sustained in the accident. Medicare had not made any conditional payments. In an effort to comply with the requirements of the secondary payer provision of 42 U.S.C.A. § 1395y (2006), plaintiff and defendant agreed to allocate $180,600 1 to a Medicare Set Aside Trust to provide for plaintiff's future medical expenses related to his injuries.
Plaintiff's attorney, Kenneth Iulo, now seeks permission from this court to withdraw a portion of his fees from the money allocated to a Medicare Set Aside Trust.
The Medicare system was established in 1965 and provides federal health insurance for individuals over the age of sixty-five, or under the age of sixty-five if the individual has permanent disabilities. Originally, Medicare was the primary insurer except in situations when workers' compensation provided compensation, where Medicare was the secondary payer. However, the secondary payer provision has expanded over time in an effort to save taxpayer money where healthcare is provided by other means. See 42 U.S.C.A. § 1395y.
With regard to settlements, judgments, or awards which provide funds for future medical services, Medicare's interests in those funds must be taken into account. 42 U.S.C.A. § 1395y(b)(2)(A). The Center for Medicare has established the use of Medicare set asides as a method of protecting Medicare's interests in funds received for future medical care. Medicare set asides are accounts set up to provide future medical services to the injured individual. Medicare will not cover any medical expenses until the set aside account is exhausted. Although there is no statutory or regulatory requirement to create a Medicare set aside when future medical expenses are awarded, it is recommended by the Center for Medicare and has become standard practice, particularly in workers' compensation cases, to create a set aside to protect the future interests of the injured individual and Medicare.
Plaintiff's attorney argues that there is no law in place regarding deducting attorney's fees from Medicare set asides, and that all directives issued by the Center for Medicare Management apply only to workers' compensation claims, not third-party liability cases. However, this court finds no reason to apply a different standard to set asides created with money obtained from third-party liability claims than it applies to set asides created with money obtained from workers' compensation claims. The statutory and policy reasons for creating both of them are the same: to protect the government, and the Medicare system in particular, from paying medical bills for which the beneficiary has already received money from another source. In addition, the Center for Medicare and Medicaid Services has stated multiple times that the same statutes that necessitate or otherwise apply to Medicare set asides in workers' compensation cases apply to third-party liability situations. Transcript of Center for Medicare and Medicaid Services Conference Call, 18 (October 29, 2008) ( ); Transcript of Center for Medicare and Medicaid Services Conference Call, 61 (March 24, 2009) (the statutes that apply to workers' compensation situations also apply to liability situations).
Having concluded that the same regulations and directives that apply to set asides created in workers' compensation cases apply to set asides created in third-party liability cases, this court must now consider whether these regulations and directives allow an attorney to recover fees for a judgment or settlement obtained on behalf of a client in a civil suit from the set aside itself.
42 C.F.R. § 411.37, entitled “Amount of Medicare recovery when a primary payment is made as a result of a judgment or settlement,” provides that where recovery is sought from the party that received payment, Medicare reduces its recovery by the costs expended in procuring the judgment or settlement if the “[p]rocurement costs are incurred because the claim is disputed” and “[t]hose costs are borne by the party against which CMS seeks to recover.” 42 C.F.R. § 411.37(a). When Medicare payments are less than the judgment or settlement amount, Medicare's recovery amount is reduced by the ratio of procurement costs to the total settlement or judgment. 42 C.F.R. § 411.37(c). When Medicare's recovery amount is equal to or exceeds the judgment or settlement amount, Medicare's recovery is the entire settlement or judgment less total procurement costs. 42 C.F.R. § 411.37(d).
It is unclear from 42 C.F.R. § 411.37 whether the...
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