This article has been published in "The Advocate", a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, January 2007 issue, @2007 by Steven J. Bruzonsky, Esq.
Does Medicare Have a Lien Against Wrongful Death Actions in Arizona?
Does the Medicare lien apply for recovery of the deceased's medical expenses when the survivors in an Arizona Wrongful Death action are not claiming the medical bills?
The Medicare Secondary Payer Manual, Chapter 7, § 220.127.116.11.1 states the following: "Wrongful death statutes are State laws that permit a person's survivors to assert the claims and rights that the decedent had at the time of death. These laws may include recovering for the deceased's medical expenses. When a liability insurance payment is made pursuant to a wrongful death action, Medicare may recover from the payment only if the State statute permits recovery of these medical expenses. Generally, if the statute permits recovery of the deceased's medical expenses, Medicare may pursue its payments, even if the action fails to explicitly request damages to cover medical expenses. Thus, in that event, even if the entire cause of action sets forth only the relatives and/or heirs damages and losses, then Medicare may still recover its payments. - - - - - NOTE: If a wrongful death statute does not permit recovering medical damages, Medicare has no claim to the wrongful death payments."
The Arizona Wrongful Death statutes, A.R.S. § 12-611 to § 12-613, do not permit a person's survivors to assert the claims and rights that the decedent has at time of death or to recover the decedent's medical expenses, and therefore the survivors Wrongful Death proceeds are not subject to any Medicare lien. However, if there is no surviving spouse, children or parents, and the estate's personal representative brings a Wrongful Death action on behalf of the estate, then damages are limited to financial including the decedent's medical bills and Medicare will have a lien.
A.R.S. § 14-3110 also provides for a Survival action, in that the decedent's personal injury claim may survive the decedent's death and may be asserted by the personal representative of decedent's estate but that damages for the decedent's pain and suffering shall not be allowed. A Survival action includes damages for accident-related medical bills and hedonic damages.
Lets say that you bring a Wrongful Death action, that you do not claim accident-related medical expenses as a damage, you settle the claim for a substantial sum, and the defendant and insurer require as a condition of settlement the typical hold harmless and indemnity agreement by which plaintiff(s) agree to indemnify defendants for attorneys' fees and costs and damages if sued by a lienholder. Are you and your client potentially exposed to later assertion of a Medicare lien for payment of accident-related medical expenses?
The language of MSP Manual, Chapter 7, § 18.104.22.168.1 expressly states that when the state Wrongful Death statutes do not permit recovery of the decedent's accident-related medical expenses, then Medicare has no claim to the wrongful death payments. Accordingly, Medicare has made an administrative decision, per the above MSP Manual provision, not to claim lien rights against Wrongful Death actions in states with Wrongful Death statutes like Arizona wherein the Wrongful Death statutes do not themselves provide for recovery of the decedent's accident-related medical expenses. Perhaps if the wording of the above MSP Manual provision were different the outcome would be different, as Medicare does have direct right of action to recover the Medicare lien under 42 U.S.C. § 1395y(b)(2)(B)(iii). To date, no fellow Arizona Trial Lawyers Association member has reported that Medicare has later asserted a lien after a Wrongful Death settlement (in which there was no claim made for the decedent's accident-related medical expenses) was made.