[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 09-13765 SEPTEMBER 29, 2010
________________________ JOHN LEY
CLERK
D.C. Docket No. 07-01690-CV-ORL-31GJK
CARVONDELLA BRADLEY,
JOYCE ELAINE NIEVES,
LARHONDA WILLIAMS,
CHRIS CROWLEY,
DERRICK BURKE,
CHARLES E. BURKE, JR.,
GREG BURKE,
CYNTHIA BURKE,
BEATRICE WELLS,
KARL CROWLEY,
individually,
Plaintiffs-Appellants,
versus
KATHLEEN SEBELIUS,
Secretary, U.S. Department
of Health and Human Services,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(September 29, 2010)
Before DUBINA, Chief Judge, MARTIN and HILL, Circuit Judges.
HILL, Circuit Judge:
The facts of this claim against a Florida nursing home for neglect and abuse
are simple and not in dispute. However, the question of law as to the interplay
between the Florida Wrongful Death Act (FWDA) and the federal Medicare
Secondary Payer statute (MSP) is an issue of first impression in this court.
I.
Charles Burke (Burke or Decedent) resided in a Gainesville nursing home
for approximately eighteen (18) months. In November 2004, Burke was removed
from the nursing home and admitted to a Gainesville medical hospital. On January
30, 2005, he died in the hospital as a result of multi-organ failure, secondary to
sepsis and wound infection. During Burke’s approximate three (3) month hospital
stay, the Secretary of the Department of Health and Human Services (Secretary or
HHS), on behalf of Medicare, paid $38,875.08 for Burke’s medical care.1
One of Burke’s surviving children, Carvondella Bradley (Bradley), was
named as personal representative of Burke’s estate. Bradley, on behalf of the
estate and the ten surviving Burke children, presented a wrongful death claim in a
1
Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq., commonly known as
the Medicare Act, established the Medicare program. For convenience, we refer to the United
States as the Secretary, HHS, Medicare or the government, as the context requires.
2
demand letter to Burke’s nursing home and its liability insurance carrier, asserting
nursing home abuse and neglect under Florida law.2
Bradley settled the wrongful death tort claims for $52,500, the full amount
of the nursing home’s liability insurance policy limits.3 Settlement was made
without filing suit. Burke’s nursing home tendered the settlement amount and
Bradley executed a release of all claims of the estate and the surviving children
against the nursing home and its liability insurance carrier.4
Bradley notified the Secretary of the settlement proceeds and associated
legal fees and costs. The Secretary refused to recognize that the medical expense
2
Florida’s Wrongful Death Act (FWDA) is codified at Fla. Stat. §§ 768.16 to 768.26
(2003). Under Florida law, “[t]he action shall be brought by the decedent’s personal
representative, who shall recover for the benefit of the decedent’s survivors and estate all
damages, as specified in this act, caused by the injury resulting in death.” Fla. Stat. § 768.20.
Children of a decedent may also recover for lost parental companionship, instruction, and
guidance and for mental pain and suffering from the date of injury. Fla. Stat. § 768.21(3).
3
The personal representative of an estate is merely a nominal party to a wrongful death
action brought on behalf of a decedent; the estate and the decedent’s survivors are the real parties
in interest. See DeVaughn v. DeVaughn, 840 So.2d 1128 (Fla. Dist. Ct. App. 2003); Fla.
Emergency Physicians-Kang and Assocs., M.D., P.A. v. Parker, 800 So.2d 631 (Fla. Dist. Ct.
App. 2001).
4
At the time, no allocation was made in regard to the $52,500 settlement lump sum as to
the wrongful death claims of the ten surviving children, and the claim of the estate. In view of
the limited insurance coverage, no evidence in the record of other nursing home assets, and the
ever present hazards of trial, counsel for the estate and the children determined that the policy
limit settlement was a practical and efficient alternative to filing suit. No party in this record has
suggested that this settlement was not a reasonable disposition, though it obviously represented a
considerably diminished compromise. There is speculation in the record that the potential value
of the loss of companionship claims to the children was estimated to be over $2,500,000, or
$250,000 per child.
3
claim had been settled for less than 100%. She asserted that under the MSP, 42
U.S.C. §1395y(b)(2)(B)(ii), and its attendant regulations, 42 C.F.R. § 411.37(c),
the Secretary had the authority to claim the total amount of medical expenses,
$38,875.08, less procurement costs, or a net amount of $22,480.89. The Secretary
gave the estate sixty (60) days to pay Medicare.5
Counsel for the children and the estate filed with the probate court an
application for the court to adjudicate the rights of the estate and the rights of the
children in regard to the compromised sum received in settlement of their claims.6
See Thompson v. Hodson, 825 So.2d 941, 950 (Fla. Dist. Ct. App. 2002) (where
the personal representative receives a nonspecific settlement offer in a wrongful
death action, he or she is obligated to apportion the proceeds between the estate
and the survivors in a reasonable and equitable manner or to seek court approval
of an apportionment); Hess v. Hess, 758 So.2d 1203 (Fla. Dist. Ct. App. 2000).
5
The Secretary’s position is that the children are forced to “chip in” a substantial portion
of their recovery to make Medicare’s recovery 100%. She does not acknowledge that this would
constitute a taking of their property with no process.
Medicare had not paid for or provided medical care for any of the children. None of the
children contributed funds to pay for their father’s medical care and none were under any
obligation to do so. See Scott v. Estate of Myers, 871 So.2d 947, 949 (Fla. Dist. Ct. App. 2004)
(where proceeds from a wrongful death action are not for the benefit of the estate, and are not
subject to estate claims; rather, they are the property of the survivors and compensation for their
loss).
6
The Florida Legislature designated the probate court as the appropriate entity in which
to adjudicate the rights of the parties. Fla. Const. of 1845, art. V, § 5.
4
Counsel for the children and the estate gave adequate notice to Medicare of
the probate court proceedings and invited the Secretary’s participation. The
Secretary declined to appear or to participate.7
The state probate court ordered:
(c) . . . The Court after having heard sworn testimony on the potential
value of each child/survivors’ independent claim, and after calling on
its own experience in the range of values each child’s claim
potentially carried, finds that the values asserted by the Personal
Representative’s counsel in this motion are reasonable, and the Court
adopts and specifically finds that each of the respective ten (10)
survivors’ claims holds a value of at least $250,000.00. The Court
notes that Medicare has asserted a claim of lien based upon payments
of $38,875.08. Therefore, the Court finds that the total, full value of
this case had the total, full value been collectible, was/is
$2,538,875.08.
(d) Based upon principles of equity, the Court determines the
medical expense recovery in the instant cause is $787.50. The Court
has calculated such figure based on such component’s contribution to
the total full value, if such value were collectible. The Court has not
prioritized the recovery of medical expenses over the recovery on
each of the respective survivors’ claims. Further, the Court
determines the independent survivors’ claims recovery in the instant
cause is $51,712.50. The Court has likewise calculated such figure
based on all survivors’ claims contributions to the total, full value.
The Court has likewise not prioritized the recovery on each of the
7
Under the FWDA, the decedent’s personal representative can recover for the decedent’s
estate only “medical or funeral expenses due to the decedent’s injury or death that have become
a charge against her or his estate or that were paid by or on behalf of the decedent.” Fla. Stat. §
768.21(6)(b). (Emphasis added). A survivor, on the other hand, may recover only “[m]edical or
funeral expenses due to the decedent’s injury or death that the survivor has paid.” Fla. Stat. §
768.21(5). (Emphasis added). There had been no wrongful death suit filed. The claim had been
settled. There was an undifferentiated fund – $52,500 paid for the release – in Bradley’s
possession for the benefit of the surviving children and any other claimant.
5
respective survivors’ claims over the recovery of medical expenses.
(Emphasis added).
The Secretary refused to accept the probate court’s determination that she
would only recover $787.50. Relying upon language contained in a document
entitled ‘Medicare Secondary Payer Manual’, the Secretary responded that she
would not recognize the probate court’s allocation of liability payments to non-
medical losses unless and until payment was based on a court order issued on the
merits of the controversy. See MSP Manual (CMS Pub. 100-05) Chapter 7, §
50.4.4 (where “[t]he only situation in which Medicare recognizes allocations of
liability payments to non-medical losses is when payment is based on a court order
on the merits of the case”).8
8
Chapter 7, Section 50.4.4 of the MSP Manual states:
In general, Medicare policy requires recovering payments from liability awards or
settlements, whether the settlement arises from a personal injury action or a
survivor action, without regard to how the settlement agreement stipulates
disbursement should be made. That includes situations in which the settlements do
not expressly include damages for medical expenses. Since liability payments are
usually based on the injured or deceased person’s medical expenses, liability
payments are considered to have been made “with respect to” medical services
related to the injury even when the settlement does not expressly include an
amount for medical expenses. To the extent that Medicare has paid for such
services, the law obligates Medicare to seek recovery of its payments. The only
situation in which Medicare recognizes allocations of liability payments to non-
medical losses is when payment is based on a court order on the merits of the case.
If the court or other adjudicator of the merits specifically designates amounts that
are for payment of pain and suffering or other amounts not related to medical
services, Medicare will accept the Court’s designation. Medicare does not seek
6
The Secretary contended that the probate court’s decision was merely
advisory in nature or superceded by federal law. The estate paid Medicare under
protest, perfected its administrative appeal, and exhausted its administrative
remedies.9
II.
The case proceeded as an appeal to the district court from a final decision of
the Secretary, wherein the surviving children filed their brief in opposition to the
Secretary’s decision, the Secretary filed her brief in support of her final decision,
and the case became ripe for district court review.
The district court, adopting the report and recommendation of the magistrate
judge, held that the Secretary’s interpretation of the MSP, 42 U.S.C. §
recovery from portions of court awards that are designated as payment for losses
other than medical services.
(Emphasis added).
9
Originally, in 2007, the ten surviving children, as surviving individuals, not as heirs to
an estate, filed a complaint for a declaratory judgment in federal district court, asking the court to
adjudicate and determine the rights and priorities of the respective parties’ interests, including the
Secretary’s, in the wrongful death settlement funds procured under the FWDA. The estate was
not a party to the declaratory judgment action.
The survivors sought a declaration that the Secretary, under federal law, had no priority
over the survivors’ rights in the settlement proceeds under state law. The survivors also claimed
that the Secretary could not hide behind the advisory language of a Medicare field manual that
indicated it would honor an agreed allocation, if and only if the agreement was reflective of an
actual trial and judgment on the merits, when the Secretary refused to attend the probate hearing.
In 2008, the district court dismissed the declaratory judgment complaint filed by the survivors on
28 U.S.C. § 1331 grounds.
7
1395y(b)(2)(B)(ii)(2006), and its attending regulations, 42 C.F.R. §§ 411.37(c)(1),
(c)(2), (c)(3)(2004), was reasonable. The district court also relied heavily upon
the language contained in the Medicare field manual. Accordingly, the district
court held that Medicare was entitled to reimbursement in the amount of
$22,480.89, not $787.50, for conditional medical expense payments paid on behalf
of the Decedent. This appeal follows.
III.
We review de novo the district court’s interpretation of the MSP federal
statute in relation to the FWDA as a question of law over which this court’s
review is plenary. See United States v. Endotec, Inc., 563 F.3d 1187, 1194 (11th
Cir. 2009). In reviewing the district court’s analysis of the Secretary’s decision,
we may reverse the district court if its decision is “arbitrary, capricious, an abuse
of discretion, not in accordance with law, or unsupported by substantial evidence
in the record taken as a whole.” Univ. Health Servs., Inc. v. Health & Human
Servs., 120 F.3d 1145, 1148 (11th Cir. 1997) (citations omitted).
IV.
The Burke surviving children contend that the FWDA controls. As
previously stated, under Florida law, in a recovery for wrongful death action,
children of the decedent may recover for lost parental companionship, instruction,
8
and guidance and for mental pain and suffering from the date of injury. Fla. Stat.
§ 768.21(3). The FWDA contemplates that damages allowed an estate are
separate and distinct from damages recoverable by the deceased’s survivors. See
Hartford Ins. Co. v. Goff, 4 So.3d 770, 773 (Fla. Dist. Ct. App. 2009); South Shore
Hosp. v. Easton, 441 So.2d 161, 163 (Fla. Dist. Ct. App. 1983). Florida courts
have repeatedly held that proceeds from a wrongful death action are not for the
benefit of the estate, rather, that they are the property of the survivors and
compensation for their loss. See Scott v. Estate of Myers, 871 So.2d 947, 949 (Fla.
Dist. Ct. App. 2004); Continental Nat. Bank v. Brill, 636 So.2d 782, 784 (Fla.
Dist. Ct. App. 1994). Here the children’s right of action under the FWDA is an
individual’s property right, not derived from the estate.10
V.
The Secretary relies upon the MSP, enacted in 1980 to reduce federal health
care costs by transforming Medicare from the primary payer to the secondary
payer, with a right of reimbursement. See United States v. Baxter Int’l, Inc., 345
F.3d 866, 874 (11th Cir. 2003). The MSP “makes Medicare the secondary payer
10
Under Fla. Stat. § 768.21(6)(b), the personal representative may recover for the
decedent’s estate medical expenses due to the decedent’s injury or death that have become a
charge against his estate or that were paid by or on behalf of decedent.
9
for medical services provided to Medicare beneficiaries whenever payment is
available from another primary payer.” Cochran v. U.S. Health Care Financing
Admin., 291 F.3d 775, 777 (11th Cir. 2002). “This means that if payment for
covered services has been or is reasonably expected to be made by someone else,
Medicare does not have to pay . . . .” Id.; see 42 U.S.C. § 1395y(b)(2)(A)(i)
(2006).11
11
The portions of the MSP statute relevant here are contained at 42 U.S.C. §
1395y(b)(2)(A)-(B)(iv) (2006), and read as follows:
(2) Medicare secondary payer
(A) In general
Payment under this subchapter may not be made, except as
provided in subparagraph (B), with respect to any item or service
to the extent that –
(i) payment has been made, or can reasonably be
expected to be made, with respect to the item or
service as required under paragraph (1), or
(ii) payment has been made or can reasonably be
expected to be made promptly (as determined in
accordance with regulations) under a workmen’s
compensation law or plan of the United States or a
State or under an automobile or liability insurance
policy or plan (including a self-insured plan) or
under no fault insurance.
In this subsection, the term “primary plan” means a group health
plan or large group health plan, to the extent that clause (i) applies,
and a workmen’s compensation law or plan, an automobile or
liability insurance policy or plan (including a self-insured plan) or
no fault insurance, to the extent that clause (ii) applies. An entity
that engages in a business, trade, or profession shall be deemed to
have a self-insured plan if it carries its own risk (whether by a
failure to obtain insurance, or otherwise) in whole or in part.
(B) Conditional payment
10
(i) Authority to make conditional payment
The Secretary may make payment under this subchapter with
respect to an item or service if a primary plan described in
subparagraph (A)(ii) has not made or cannot reasonably be
expected to make payment with respect to such item or service
promptly (as determined in accordance with regulations). Any
such payment by the Secretary shall be conditioned on
reimbursement to the appropriate Trust fund in accordance with the
succeeding provisions of this subsection.
(ii) Repayment required
A primary plan, and an entity that receives payment from a primary
plan, shall reimburse the appropriate Trust Fund for any payment
under this subchapter with respect to an item or service if it is
demonstrated that such primary plan has or had a responsibility to
make payment with respect to such item or service. A primary
plan’s responsibility for such payment may be demonstrated by a
judgment, a payment conditioned upon the recipient’s compromise,
waiver, or release (whether or not there is a determination or
admission of liability) of payment for items or service included in a
claim against the primary plan or the primary plan’s insured, or by
other means. If reimbursement is not made to the appropriate Trust
Fund before the expiration of the 60-day period that begins on the
date notice of, or information related to, a primary plan’s
responsibility for such payment or other information is received,
the Secretary may charge interest (beginning with the date on
which the notice or other information is received) on the amount of
the reimbursement until reimbursement is made (at a rate
determined by the Secretary in accordance with regulations of the
Secretary of the Treasury applicable to charges for late payments).
(iii) Action by United States
In order to recover payment made under this subchapter for an item
or service, the United States may bring an action against any or all
entities that are or were required or responsible (directly, as an
insurer or self-insurer, as a third-party administrator, as an
employer that sponsors or contributes to a group health plan, or
large group health plan, or large group health plan, or otherwise) to
make payment with respect to the same item or service or any
portion thereof) under a primary plan. The United States may, in
accordance with paragraph (3)(A) collect double damages against
any such entity. In addition, the United States may recover under
this clause from any entity that has received payment from a
primary plan or from the proceeds of a primary plan’s payment to
11
Such payment is conditioned on Medicare’s right to reimbursement if a primary
plan later pays or is found to be responsible for payment of the item or service. Id.
Nowhere in the definition of primary plan are listed “surviving children with tort
property beneficiary rights.”12 Id.
VI.
In this case, Bradley, as personal representative, on behalf of the estate and
the ten surviving Burke children, settled wrongful death claims for abuse and
neglect brought under the FWDA with the nursing home and its liability insurance
carrier. The total, undifferentiated amount of the settlement was $52,500.00. The
issue of first impression in this case is therefore: “Whose property is the
settlement?” The settlement involved the medical expenses and costs recovered
any entity. The United States may not recover from a third-party
administrator under this clause in cases where the third-party
administrator would not be able to recover the amount at issue
from the employer or group health plan at the time the action for
recover is initiated by the United States or for whom it provides
administrative services due to the insolvency or bankruptcy of the
employer or plan.
(iv) Subrogation rights
The United States shall be subrogated (to the extent of payment
made under this subchapter for such an item or service) to any right
under this subsection of an individual or other entity to payment
with respect to such item or service under a primary plan.
12
“In this subsection, the term ‘primary plan’ means a group health plan or large group
health plan . . . and a workmen’s compensation law or plan, an automobile or liability insurance
policy or plan (including a self-insured plan) or no fault insurance . . . .” 42 U.S.C. §
1395y(b)(2)(A) (2006). See also supra note 11.
12
by the estate (and subject to the MSP statute), along with the non-medical, tort
property claims of the surviving Burke children for lost parental companionship,
etc., under state law, (and not subject to the MSP statute).13
Under Florida law, any claim of the estate is separate and distinct from the
claim of a survivor. All loss of consortium or companionship recoveries are the
property of the person who incurred the loss. Not the Secretary of HHS. A
child’s loss of parental companionship claim is a property right belonging to the
child. Not the Secretary of HHS. The Burke children’s loss of parental
companionship claims do not include the decedent’s medical expenses, as a claim
for medical expenses belongs only to the estate. Only the estate’s allocated share
of the proceeds is subject to the province of the Secretary.14
VII.
There is a particularly troubling sub-issue contained in this appeal. Here
counsel for the estate and for the survivors, out of an abundance of caution,
13
The Burke surviving children recovered damages for lost parental companionship,
instruction, and guidance and for mental pain and suffering. The estate’s wrongful death claim
included medical expenses and costs. The children’s claims did not. The children never
received anything from Medicare. They paid none of their father’s medical expenses, nor were
they obligated to pay any.
14
This appeal involves the ten surviving Burke children, not as heirs or beneficiaries of
their deceased father’s estate, but as survivors entitled to compensation under the FWDA. Theirs
is a cause of action under state law, sounding in tort against the nursing home and its insurance
carrier for the loss of their father.
13
notified the Secretary of the $52,500 in settlement proceeds recovered, and invited
her view as to the proper division of the funds in an adversarial probate court
proceeding. The Secretary asserted that she was entitled to the total amount of
medical expenses, $38,500, less procurement costs.15
At this point, the conflicting claims to the fund had never been made the
subject of any court proceeding.16 Counsel properly turned to the Florida probate
court for a proration, filing an application with the probate court to adjudicate the
rights of the estate and rights of the children vis-à-vis the rights of the Secretary to
the compromised sum received in settlement of the claims.17
The Secretary declined to take any part in the litigation although at all times
her position was adverse to the interests of the surviving children. The probate
court made the allocation, finding that the Secretary should recover the sum of
$787.50. Yet, still, the Secretary, citing no statutory authority, no regulatory
authority, and no case law authority, merely relied upon the language contained in
15
It is obvious that under such an arrangement, the reasonable expectations of the
children would be remarkably reduced. The Secretary would get 100% of her funds, and the
estate and the surviving children would be left with the insufficient remainder.
16
Counsel for the estate and the surviving children refused to agree that their claims
should be treated as inferior to the claims of the Secretary or that any of the property of the
children should be taken from them to “beef up” the share of Medicare.
17
Counsel did this openly and in good conscience. He notified the Secretary of the
pendency of the proceedings and invited the Secretary to participate.
14
one of its many field manuals and declined to respect the decision of the probate
court.
In essence, the Secretary is asserting that its field manual is entitled to
deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984). The Supreme Court has stated that “agency interpretations
contained in policy statements, manuals, and enforcement guidelines are not
entitled to the force of law.” United States v. R & F Properties of Lake County,
Inc., 433 F.3d 1349, 1357 (11th Cir.2005) citing Christensen v. Harris County,
529 U.S. 576, 587 (2000) (ordinarily “policy statements, agency manuals, and
enforcement guidelines, all of which lack the force of law – do not warrant
Chevron-style deference”); see Shalala v. Guernsey Memorial Hosp., 514 U.S. 87,
99 (1995) (definition in HHS’s Medicare Provider Reimbursement Manual “is a
prototypical example of an interpretive rule” that does not require notice and
comment, and therefore “do[es] not have the force and effect of law and [is] not
accorded that weight in the adjudicatory process”).18 We conclude that the
deference given to the language in the field manual in this case by the Secretary
18
Medicare field manuals are not promulgated pursuant to the Administrative Procedures
Act, 5 U.S.C. § 551, et seq., as agency rules. Accordingly they are entitled to less deference than
an interpretation arrived at after a formal adjudication or notice-and-comment rulemaking. See,
e.g., Guernsey Memorial Hosp., 514 U.S. at 99; South Shore Hosp., Inc. v. Thompson, 308 F.3d
91, 103 (1st Cir. 2002) (a Medicare field manual “is merely an interpretive guide, and
interpretive guides generally do not have the force of law.”).
15
and the district court is misplaced.
Counsel for the survivors and the estate acted sensibly, in a cost-effective
manner. The nursing home neglect claim was settled for the full value of the
available insurance. Clearly, if the language of the field manual applied, in
practice, it would lead to an absurd Catch-22 result.19 Forcing counsel to file a
lawsuit would incur additional costs, further diminishing the already paltry sum
available for settlement. This flies in the face of judicial and public policy.
The Secretary’s position is unsupported by the statutory language of the
MSP and its attending regulations. The Secretary’s ipse dixit contained in the
field manual does not control the law. The district court also erred in relying upon
the advisory language contained in a field manual as the rationale for its opinion
upholding the actions of the Secretary.
VIII.
There is a second reason that the Secretary’s position, as adopted by the
district court, is in error. Historically, there is a strong public interest in the
expeditious resolution of lawsuits through settlement. See, e.g., Hines v. Anchor
19
The Secretary declined to participate in the probate court’s allocation proceeding but
won’t recognize the probate court’s order as valid because she didn’t participate. This paradox
has been compared to the oft-told story of the child defendant found guilty of murdering his
parents, only to throw himself upon the mercy of the court because he is an orphan.
16
Motor Freight, Inc., 424 U.S. 554, 574 (1976); McDermott, Inc. v. AmClyde, 511
U.S. 202, 215 (1994). Throughout history, our law has encouraged settlements.
See United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826 (11th Cir.
1975); Fla. Trailer & Equip. Co. v. Deal, 284 F.2d 567 (5th Cir. 1960); Delancy v.
St. Paul Fire & Marine Ins. Co., 947 F.2d 1536 (11th Cir. 1991); Johnson v.
Occidental Fire and Cas. Co. of North Carolina. 954 F.2d 1581 (11th Cir. 1992).20
The Secretary’s position would have a chilling effect on settlement. The
Secretary’s position compels plaintiffs to force their tort claims to trial, burdening
the court system. It is a financial disincentive to accept otherwise reasonable
settlement offers. It would allow tortfeasors to escape responsibility.21
20
Due to the inherent risk of litigation, the increased cost of taking a case to trial,
problems of proof, a potential finding of contributory or comparative negligence, and limitations
on the defendant’s ability to pay full compensation, the vast majority of tort lawsuits are resolved
by settlement. Settlement is often for less than the full value of the damages suffered by the
plaintiffs. See Mark Galanter, The Hundred-Year Decline of Trials and the Thirty Years War, 57
Stan. L. Rev. 1255, 1272-74 (2005).
21
Section 1395 is not a model of clarity. Yet it does clearly provide that, where there is
some entity, other than Medicare, obligated to pay for an item or service, that entity shall pay first
and Medicare shall pay the excess. See 42 U.S.C. § 1395y(b)(2)(A), (b)(2)(B)(ii). Here the
liability insurance carrier of the nursing home became obligated to pay a compromise amount for
services to Burke; the obligation was created as its consideration for the release by his estate.
But no provision was made in the settlement to determine the amount of the compromise
settlement fund paid to the estate and the amount paid to obtain the release of the separate claims
of the children. [At this juncture, the liability insurance carrier was a “primary plan” under 42
U.S.C. § 1395y(b)(2)(A), and the estate was the “entity that receives payment from a primary
plan” under 42 U.S.C. § 1395y(b)(2)(B)(ii).].
The Secretary clearly anticipated that a court should determine the issue of allocation
between payees. She advised Medicare’s field agents that Medicare would recognize allocations
of such payments between payees if the allocation is based on a court order. The court involved
17
Without citing any statutory authority, regulatory authority, or case law
authority, the Secretary and the district court’s reliance upon language in a field
manual is unpersuasive.22 The Secretary is not entitled to any share of the Burke
surviving children’s loss of parental companionship claims.23
IX.
Under our de novo review, we conclude that the district court erred in
upholding the decision of the Secretary because it was unsupported by substantial
here was the probate court of the state of Florida. No other court was involved. All parties were
notified and invited to participate.
Lawyers routinely handling claims involving injury and medical expenses deal with
settlements and judgments to resolve the participation in the settlement amounts by agreement or
similar allocation litigation. At present, there is no vehicle or mechanism in the MSP statute or
its regulations that specifically prescribes how a lump sum settlement will be prorated between
multiple parties. Until better methods are prescribed and followed, the one pursued here is
reasonable and, indeed, the only one available.
22
Incidentally, we have not been advised by briefs or oral argument exactly how the
parties could accomplish the Secretary’s interpretation of the language in the field manual, even
if we determined it was entitled to due deference, which we do not. In a settled case or claim,
there is no “court order on the merits of the case” if “the case” refers to the claims against the
alleged tortfeasor. Settlement replaces court proceedings. However, here, there was an
“allocation based on a court order.” The adverse parties interested in that proceeding were the
estate and children on one hand, and the Secretary on the other. The “merits of the case” were
the merits of the Secretary’s position versus the merits of those of the estate and children. By
this observation, however, we do not intend to indicate that compliance vel non with the field
manual is a viable issue.
23
Under both the statute and the regulations, the Secretary could have sought recovery
from the liability carrier for the nursing home. 42 U.S.C. § 1395y(b)(2)(B)(ii). She could also
have tried to obtain a recovery from the nursing home as tortfeasor. Id. The Secretary also has a
right of subrogation which she chose not to exercise. 42 U.S.C. § 1395y(b)(2)(B)(iv). However,
what course the Secretary must take in the absence of a right of recovery against the Burke
children for loss of companionship is a matter that this court need not decide, and we offer no
opinion as to the Secretary’s business.
18
evidence in the record taken as a whole. See Univ. Health Servs., Inc., 120 F.3d at
1148. We reverse, finding the Secretary entitled to the sum of $787.50, as
determined by the allocations of the probate court, and remand to the district court
for further proceedings.
REVERSED AND REMANDED WITH INSTRUCTIONS.
19
MARTIN, Circuit Judge, dissenting:
I would affirm the decision of the District Court in this case, and therefore I
write in dissent. Like the District Court, I recognize that when this court reviews
the decisions of the Secretary of Health and Human Services, “we must abide by
those decisions unless they are arbitrary, capricious, an abuse of discretion, not in
accordance with law, or unsupported by substantial evidence in the record taken as
a whole.” Fla. Med. Ctr. of Clearwater, Inc. v. Sebelius, No. 09-13922,
--- F.3d ----, 2010 WL 3258871, at *2 (11th Cir. Aug. 19, 2010) (quoting Alacare
Home Health Servs., Inc. v. Sullivan, 891 F.2d 850, 854 (11th Cir. 1990)
(alteration and internal quotation marks omitted)). Under this standard, I believe
we are required to abide by the actions taken by Secretary Sebelius here.
As the majority notes, the facts of this case are straightforward: Mr. Burke
developed severe bed sores while he was in the care of a nursing home facility.
He was hospitalized, and eventually succumbed to multiple-organ failure
secondary to sepsis and wound infection. Medicare conditionally paid $38,875.08
for his hospital treatment, subject to reimbursement from any payment made by
the nursing home’s liability insurance carrier. After the plaintiffs, through the
personal representative of Mr. Burke’s estate, received an undifferentiated
settlement of $52,500 from the nursing home’s insurer, Medicare requested that it
20
be reimbursed $22,480.89 for Mr. Burke’s medical expenses. Rather than
administratively appeal the agency’s initial determination, however, the plaintiffs
proceeded to the Probate Court of Alachua County, Florida, which simply adopted
the plaintiffs’ proposed allocation of a mere $787.50 to Medicare and the
remaining $51,712.50 to themselves. The Secretary was never made a party to
that proceeding. The Probate Court received no evidence nor any adversarial
presentation.
Applying the express provisions of the agency’s Medicare Secondary Payer
manual, the Secretary declined to recognize the Probate Court’s allocation because
it was not based on a determination of the merits of the case. The Medicare
Secondary Payer manual is a lengthy and comprehensive agency manual
governing the complex workings of the Medicare Secondary Payer program and
reflects the longstanding policy of the agency. While the majority opinion is
correct when it says that such policy statements and guidance interpretations are
not entitled to the force of law, it ignores what is required of us in the way of
deference to agency interpretations of the complex statutory and regulatory
schemes they administer. Statements and guidance interpretations such as the
Medicare Secondary Payer manual “reflect ‘a body of experience and informed
judgment to which courts and litigants may properly resort for guidance,’” Fed.
21
Express Corp. v. Holowecki, 552 U.S. 389, 399, 128 S. Ct. 1147, 1156 (2008)
(quoting Bragdon v. Abbott, 524 U.S. 624, 642, 118 S. Ct. 2196, 2207 (1998)),
and they should not be lightly disregarded. In my view, the Secretary’s
interpretation of the Medicare Secondary Payer statute and regulations embodied
in the manual is entitled to some deference.24 Id.; see also, e.g., United States v.
Mead Corp., 533 U.S. 218, 234, 121 S. Ct. 2164, 2175 (2001) (explaining that
agency interpretations “may merit some deference . . . given the ‘specialized
experience and broader investigations and information’ available to the agency”
and “the value of uniformity in its administrative and judicial understandings of
what a national law requires” (quoting Skidmore v. Swift & Co., 323 U.S. 134,
139, 65 S. Ct. 161, 164 (1944))). Because I find the agency’s guidance
sufficiently persuasive on the record before us, I would affirm the Secretary’s
decision under the deferential standard of review applicable to our review of
agency decisions.
24
In sharp contrast to the way the majority dismisses the Secretary’s reliance on the
Manual here, this court has held that the Handbook developed by the Secretary of the Interior and
the Fish & Wildlife Service is in fact entitled to Chevron deference. Miccosukee Tribe of
Indians of Fla. v. United States, 566 F.3d 1257, 1273 (11th Cir. 2009).
22