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In Finke v. Hunter’s View, Ltd. A Minnesota Federal District court held no liability Medicare set aside was necessary given the facts of the case.  The plaintiff Darus Finke was paralyzed from the chest down after a 30 foot fall from a tree while using a hunting deer tree stand manufactured by Hunter’s View.  The plaintiff brought an action alleging the deer stand was defective in design and unreasonably dangerous to the user of the stand.  Wal-Mart was also sued since it sold the stand.  Mr. Finke received both Medicaid and Medicare benefits following his injury.  Medicare has approximately $18k in conditional payments.  Mr. Finke also had private group health care coverage.  The parties negotiated a settlement of $1,500,000. 

Approval of the settlement was sought from the United States District Court in Minnesota.  The case is important for findings contained in the order approving the settlement.  Specifically, the court made the following finding of fact “Medicare does not currently have a policy or procedure in effect for reviewing or providing an opinion regarding the adequacy of the future medical aspect of a liability settlement or recovery of future medical expenses incurred in liability cases.”  The court pointed out that Mr. Finke was not currently receiving Medicare benefits, even though he was eligible, because he was covered by a private group health plan.  The court stated “[t]he parties have considered the fact that it is not reasonably likely that Medicare will make any additional payments for future medical expenses in the reasonably foreseeable future. The parties have also considered the fact that Plaintiff Darus Finke is currently subject to coverage under his wife, Shea Finke's, policy, and benefits available through that policy are more than adequate to cover all reasonably anticipated medical expenses for the reasonably anticipated future. In view of these facts there has been no allocation in the settlement for future medical expenses.”

The court went on to make some interesting conclusions of law.  First, “[t]he parties shall, and have, reasonably considered and protected Medicare's interest in this matter.  Second, “Darus Finke's reasonably anticipated future medical care expenses will be reimbursed by and governed by the Grand Itasca policy which will continue to be primary over Medicare.”  Third and most importantly, “[t]o the extent that the parties are obligated to reasonably consider the interest of Medicare in reaching the settlement, the Court concludes the Parties have reasonably considered the interests of Medicare. The Findings of Fact support the Conclusion that it is not reasonably likely that Plaintiff Darus Finke will require Medicare benefits in the reasonably foreseeable future. The court concludes therefore that there is no reason for the parties to set aside any certain amount for future Medicare claims.”  In the order, it stated “[t]he parties have reasonably and adequately considered the interest of Medicare in this settlement, and Plaintiffs Darus Finke and Shea Finke and Defendants Wal-Mart and Hunter's View will not be subject to any claim, demand or penalty from Medicare, Medicaid, or any other party, as a result of its settlement payments in this matter.”

This is the first and only decision I have come across on such an issue.  It is interesting for several reasons.  First, CMS has taken the position in the context of Workers’ Compensation Medicare Set Asides that the existence of private health insurance does not avoid the need to establish a set aside.  The Finke case rules the opposite way on that issue.  The following is CMS’s position from their website:

Group Health Plan (GHP) Insurance, Managed Care Plan, and Veterans' Administration (VA) Coverage

(Ref: 7/11/05 Memo Q8)

In a WC settlement, a WCMSA is recommended where the claimant is covered under a GHP or a managed care plan or has coverage through the VA.  A WCMSA is still appropriate because such other health insurance or health service could in the future be canceled or reduced, or the injured individual may elect not to take advantage of such services. It is important to remember that workers' compensation is always primary to Medicare and many other types of health insurance coverage for expenses related to the WC claim or settlement.

The second very interesting part of this case is the court’s order that none of the parties could be subjected to any claims, demand or penalties as a result of the settlement.  Obviously, that is very important as much of the fear surrounding set asides is the result of the concern of an action by the government against the parties for failing to set up a set aside. 

While the decision is a notable one and fairly important, I don’t think it means anyone can declare with certainty that a liability Medicare set aside is unnecessary in every case.  It is important from the standpoint of cases with similar fact patterns.  When a private group health plan exists and Medicare is not the sole coverage, plaintiff counsel can use this case to argue a set aside isn’t unnecessary.  The fact that the court places so much emphasis on the fact that Medicare will not pay anything in the future in arriving at its decision seems to indicate that if the reverse were true the outcome could be different.  Nevertheless, it is nice to see any type of “law” on the subject of liability Medicare set asides.