Neither state law nor the federal Medicare secondary payer act allows auto insurers to list Medicare as a ‘payee’ on auto accident settlement checks
If your name isn’t Medicare, then the word “Medicare” has no place on your settlement check after a car accident. Unfortunately, some rather hard-headed auto insurance companies and their adjusters just don’t – or won’t – get it.
Instead, in cases where Medicare is entitled to be reimbursed for benefits it paid out to auto accident victims, the auto insurers and adjusters insist on naming Medicare as a payee on the settlement checks. Not only is there no legal basis for this, but it’s sabotaging an auto accident victims’ ability to get the money they need and are legally entitled:
Settlement checks with Medicare listed as a payee are effectively “uncashable” by auto accident victims.
Sadly, during my legal career spanning more than 20 years helping auto accident victims, I’ve seen this type of abuse often by adjusters and insurance companies, but it is now getting worse.
Fortunately, there is a way to stop this. The law is on the side of auto accident victims to stop this type of abusive practice. As Macomb County Judge Peter J. Maceroni said in his much-circulated, frequently-cited April 29, 2011, opinion in Tipton v. Evangelical Homes of Michigan:
The “Defendant is prohibited from adding Medicare as a payee on any check to the Plaintiff … [T]here is no provision in the Medicare Secondary Payer Act that permits Medicare to be named as a payee on any settlement draft issued by [the] Defendant.”
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The plaintiff “is fully aware of her obligations to both notify Medicare of the settlement … and to reimburse Medicare the amount it is owed upon receipt of a final demand letter. It is the responsibility of the Plaintiff to deal with the claim for Medicare reimbursement, not the Defendant. Defendant is entitled to a simple release and a hold harmless agreement from Plaintiff regarding the Medicare lien. Nothing more is required or necessary.”
Why is Medicare appearing so often on settlement checks?
In Michigan especially, which is an auto No Fault state, Medicare should have absolutely nothing to do with paying for the medical expenses of a person who has been injured in a car, truck or motorcycle accident.
That’s the purpose of Michigan No Fault auto insurance. Unfortunately, often a doctor’s office or biller will sometimes bill Medicare erroneously because they think it is easier. And sometimes Medicare ends up paying.
Whatever the reason, when it happens, Medicare does have an absolute legal right to be reimbursed by the auto accident victim for the money spent on accident-related medical care that should have – and would have – been covered by auto No Fault insurance.
Medicare enforces its right of reimbursement by sending a final demand amount letter to the auto accident victim and filing a Medicare lien on any recovery the victim may obtain from a lawsuit related to the accident.
What has been happening is that auto insurance companies are exploiting the situation and using it as an opportunity to make the lives of people who need to collect No Fault PIP benefits or cash a settlement check more difficult.
As if recovering from serious accident-related injuries and having to hire a lawyer and sue an insurance company for the No Fault insurance benefits and pain and suffering compensation they’re due and owed isn’t already difficult enough.