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In Jackson, the plaintiff made a creative argument that an Ahlborn type of reduction hearing should be used to allocate damages in order to defeat a Medicare lien.  Jackson sued for a trip and fall incident which occurred in 2005 when she was seventy-nine years old.  She sued for her injuries including pain and suffering as well as medical expenses which were paid by Medicare.  Medicare notified the plaintiff of their right to recover the conditional payments that were made.  The case was referred to non-binding arbitration.  The arbitrator awarded $85,000 with $30,000 of the award "earmarked" to satisfy the conditional payment.  Ultimately the case settled for the same amount of the arbitration award.

Post settlement, the plaintiff filed a motion seeking an order from the trail court on allocation of the settlement proceeds in order to avoid repayment of the Medicare conditional payment.  The argument was based upon an Ahlborn type theory.  The trial court refused.  The plaintiff appealed. 

The court held that NJ collateral source rules allowed for recovery of medical expenses paid by Medicare, despite plaintiff's arguments to the contrary.  The court said:

"Just as with Medicaid, because the secondary payer, Medicare, has a nearly unqualified right to reimbursement, the outcome is the same. Even if a claimant was able to recover medical expenses, he could not pocket them and hence cannot obtain the "double recovery" that the collateral source statute is designed to avoid. A Medicare recipient cannot have his medical expenses paid for and then retain that exact amount in a personal injury recovery any more than can a Medicaid recipient."

In the end despite some creative arguments, the end result is as expected.  You can't get around repayment of a Medicare conditional payment in this fashion.