Opinion
# 2016-038-551 Claim No. 100497 Motion No. M-87535
08-25-2016
LAMAR HARDWICK and CELESTE M. HARDWICK v. THE STATE OF NEW YORK
ANDREW H. ROSENBAUM, ESQ. ERIC T. SCHNEIDERMAN, Attorney General of the State of New York By: Robert J. Schwerdt, Assistant Attorney General
Synopsis
Case information
| UID: | 2016-038-551 |
| Claimant(s): | LAMAR HARDWICK and CELESTE M. HARDWICK |
| Claimant short name: | HARDWICK |
| Footnote (claimant name) : | |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 100497 |
| Motion number(s): | M-87535 |
| Cross-motion number(s): | |
| Judge: | W. BROOKS DeBOW |
| Claimant's attorney: | ANDREW H. ROSENBAUM, ESQ. |
| Defendant's attorney: | ERIC T. SCHNEIDERMAN, Attorney General of the State of New York By: Robert J. Schwerdt, Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | August 25, 2016 |
| City: | Saratoga Springs |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
Claimants seek an order directing defendant to comply with a stipulation of settlement that has yet to be paid. They request that defendant be compelled to immediately release its file to the Office of the State Comptroller and forward the claimants' counsel a settlement check in the agreed-upon amount of $60,000.00, along with costs, disbursements and interest and the imposition of certain sanctions against defendant.
The parties' Stipulation of Settlement and Discontinuance was approved by this Court on March 4, 2015 as a predicate to the State Comptroller's performance of his statutorily required duty to "examine, audit, and certify for payment the settlement of any claim filed in the court of claims for . . . personal injuries caused by [a] tort of an officer or employee of the state" (Court of Claims Act § 20-a). The dispute between the parties over payment of the settlement and much of the delay attendant thereto arises from defendant's requests that claimants execute Medicare affidavits and claimants' unwillingness to comply with that request. In the course of this dispute, a further issue has arisen about whether the Attorney General's office has even forwarded the settlement file to the Office of the State Comptroller (OSC). Decision on this motion has been held in abeyance for further submission from defendant explaining why Medicare information is necessary for derivative claimant Celeste Hardwick and why the documents that have been produced by claimants are inadequate, and addressing whether the Attorney General's file had been sent to the Comptroller (see Hardwick v State of New York, UID No. 2016-038-511 [Ct Cl, DeBow, J., unpublished decision dated Mar. 9, 2016]). Defendant has submitted the affidavit of Angel Davis, the Medicare Compliance Officer with the Office of the Attorney General (OAG), and the affirmation of Caitlin D. Heim, Esq., Senior Attorney with the OSC's Division of Legal Services. Claimants oppose defendant's submission in a surreply in which they offer further support of their motion.
Claimants argue that the Court should preclude, reject and/or not consider defendant's supplemental papers and any new arguments/grounds alleged therein, but in light of the Court's specific request for further submissions by defendant as to the inadequacy of the documents submitted by claimants and the necessity of Medicare information for claimant Celeste Hardwick, claimants' argument is rejected.
The Davis affidavit explains the statutory, regulatory and administrative framework for payments of liability settlements to Medicare beneficiaries. As relevant to this matter, the federal Medicare Secondary Payer Act ("MSPA") establishes insurers including the self-insured defendant State of New York as primary payers. Medicare payment is prohibited where there is a primary payer, except that Medicare may make conditional payments, but a primary payer will be required to repay such conditional payments. If they fail to do so, Medicare can seek recovery and double damages against any party to settlement of the underlying litigation (see Davis Affidavit, ¶¶ 7-8). The Medicare and Medicaid SCHIP Extension Act (MMSEA) of 2007 requires primary payers to report all settlements, judgments or other payments that involve Medicare beneficiaries to the Center for Medicare and Medicaid Services (CMMS), the administrator for Medicare, and a failure to do so results in a $1,000 per day penalty (see id., ¶¶ 9, 17).
In any action where a claimant alleges personal injuries, including loss of consortium, the case must be reviewed to determine whether a claimant is Medicare eligible, or will be eligible within 30 months (see id., ¶ 13), which involves entering certain pedigree data about a claimant into a computer database (see id., ¶ 15). If a claimant is Medicare eligible, defendant is statutorily required to repay Medicare for any past conditional payments and to protect Medicare from future medical costs that may arise from the injury that is covered by the settlement. To comply with these two obligations, the OAG generally requires a settling claimant to provide a letter from CMMS stating whether Medicare is entitled to any reimbursement, and if so, then a check to Medicare is issued by OSC in the amount of the outstanding conditional payments (see id., ¶ 19). Defendant must also consider claimant's future claim-related medical expenses along with Medicare's interests regarding any such potential future expenses (see id., ¶ 18). Davis asserts that CMMS has promulgated rules to protect Medicare's future interest only for workers compensation cases (id., ¶ 11), but defendant's consideration of potential future claim-related medical expenses is guided by two memoranda issued by CMMS personnel (see id., Exhibits 2-3). The first memorandum, issued by Sally Stalcup, a CMMS MSPA Regional Coordinator for Region VI (hereinafter "Stalcup Memo"), provides that the "law requires that Medicare Trust Funds be protected from payment for future services whether its is a Workers' Compensation case or liability case" and that "[s]et aside is our method of choice and the agency feels it provides the best protection for the program and the Medicare beneficiary" (id., Exhibit 2). The second memorandum, issued by Charlotte Benson, the Acting Director of the Financial Services Group in the Office of Financial Management for CMMS (hereinafter "Benson memo"), was issued "to provide information regarding proposed Liability Medicare Set-Aside Arrangement (LMSA) amounts related to liability insurance (including self-insurance) settlements," and it states that where a beneficiary's treating physician certifies in writing that the treatment for the injury related to the settlement has been completed and that future treatment will not be needed, "Medicare considers its interest, with respect to future medicals for that particular settlement, satisfied" (id., Exhibit 3 [internal quotations omitted]). Thus, where a settling claimant has alleged permanent injuries, the OAG generally requires either a physician's certification that no future medical items and/or services for claimant's injuries will be required or that future medical expenses are provided for by a Medicaid Set Aside Trust (MSAT) (see id., ¶ 20).
The Stalcup Memo provides that "[i]t is intended to provide consolidated guidance to those attorneys, insurers, etc., working liability, no-fault and general third party liability cases for any Medicare beneficiary residing in Oklahoma, Texas, New Mexico, Louisiana and Arkansas and is not considered a CMMS official statement of policy" (id., Exhibit 2).
Despite the statement in Davis' affidavit that she has not been provided with claimant Celeste Hardwick's pedigree data (see id., ¶ 22), it is abundantly clear that defendant is and has been in possession of such data (see Rosenbaum Sur-Reply Affirmation, ¶¶ 5-7; Rosenbaum Affirmation in Support of Claimant's Motion, Exhibit V). Thus, there is no genuine impediment to OAG's determination of claimant Celeste's Hardwick's Medicare eligibility, and defendant is directed to make such a determination forthwith if it has yet to do so. In light of this, the disputed issue of whether defendant may require Medicare eligibility information for a claimant whose damages are only for loss of consortium is rendered academic, and need not be addressed.
Defendant has used information provided by claimants to verify that claimant Lamar Hardwick is a Medicare beneficiary (see Davis Affidavit, ¶ 24), and a CMMS letter dated March 30, 2015 (see Rosenbaum Affirmation, Exhibit G) demonstrates that conditional payments by Medicare have been satisfied. However, the claim alleges that claimant Lamar Hardwick sustained permanent injuries, and the CMMS letter does not address the issue of future expenses (see Davis Affidavit, ¶¶ 23, 25).
Heim, an OSC attorney, affirms that when the OAG seeks to have a settlement paid, it forwards the following documents to OSC: (1) a certified copy of the claim; (2) stipulation of settlement and discontinuance, so-ordered by the Court; (3) agency approval (20-a) letter; and (4) general release. In addition, Heim affirms that OSC will not pay a Court of Claims Act § 20-a settlement absent review by the OAG's Medicare Compliance Account Manager (i.e. Davis) (see Heim Affirmation ¶ 5) that is documented by the OAG with a "Medicare Affidavit or other documentation/settlement language indicating that the file has been cleared for Medicare compliance" (id., ¶ 6). Upon OSC's "satisfactory review" of all the documents, including the Medicare compliance documents, the settlement will be readied for payment (see id., ¶¶ 7-8). If, however, the settlement paperwork does not appear to contain necessary proof of Medicare compliance, OSC will seek further guidance from the OAG Medicare Compliance Account Manager and "[i]f the settlement file is insufficient in terms of Medicare compliance, the Medicare Compliance Account manager will ask that OSC place the case on hold pending clearance and ask that OSC refrain from further processing the settlement paperwork for payment" (id., ¶ 11).
In the instant matter, OSC received the claim, stipulation of settlement, the 20-a letter and the general release on various dates between April 14, 2015 and January 2, 2016 (see Heim Affirmation, ¶ 9). The March 30, 2015 CMMS letter concerning Lamar Hardwick (Rosenbaum Affirmation, Exhibit G) was received by OSC on April 14, 2015 and the Worker's Compensation Set-Aside Web Portal report concerning claimant Celeste Hardwick (Rosenbaum Affirmation, Exhibit V) on August 10, 2015 (Heim Affirmation, ¶ 10). Heim averred that upon OSC's receipt of the initial settlement paperwork on April 14, 2015, it "sought clarification from [Davis] on two issues: (i) is Medicare compliance clearance required for [claimant] Celeste M. Hardwick; and (2) [sic] should 'Medicare' be listed as a payee on the check (as set forth in the Stipulation of Settlement and Discontinuance) since the March 30, 2015 CMMS letter indicated that [claimant] Lamar Hardwick's case was 'resolved' " (id., ¶ 12). Heim further averred that on July 8, 2015, Davis asked OSC to continue to place a hold on the case pending Medicare compliance, and that to date OSC has not been notified by the OAG that the Medicare compliance review is complete (see id., ¶ 13).
Claimants argue that OSC has long been in possession of all of the papers needed to effectuate settlement of the action pursuant to Court of Claims Act § 20-a and that it has failed to promptly pay the settlement in accordance with CPLR § 5003-a (c) and (e) due to defendant's "ignorance of the law and its misunderstanding of its Medicare reporting requirements," and that the Court should reject defendant's "hollow" and "specious excuses" for failing to pay the settlement (Rosenbaum Sur-Reply Affirmation, ¶ 4). Claimants contend that neither the MSPA and MMSEA nor other law nor the stipulation of settlement require Medicare affidavits (see id., ¶ 8), nor is there a requirement under applicable law or the stipulation that claimants provide defendant with a physician certification concerning medical treatment or a MSAT (see id., ¶ 9). Claimants refer to an August 12, 2012 letter from the American Insurance Association stating its position that CMMS has no statutory authority to impose any obligations on an insurer or a self-insured with respect to "future medicals" or granting it a right of recovery against insurers or a self-insured with regard to future medicals (see id., ¶ 12, Exhibit C). Claimants also cite a May 2013 article in a publication of the Defense Research Institute (DRI) that states that "Medicare does not impose an explicit or implied obligation on the part of liability insurers to 'protect Medicare's interests by paying or reimbursing Medicare for future medical expenses that may be incurred by Medicare beneficiaries" and that "there is no broad obligation to 'protect Medicare's interests' or to allocate a portion of the settlement funds for payment of a claimant's future medical expenses (id., ¶ 13 [emphasis omitted], quoting Exhibit D).
After a review of the all of papers submitted on the motion, the applicable statutes and case law, and the terms of the parties' executed and so-ordered stipulation of settlement, the Court concludes that OSC has yet to receive "all the papers required to effectuate the settlement" (CPLR § 5003-a), and thus claimants are not entitled to the relief they seek (see Alvarez v State of New York, UID No. 2001-028-800 [Ct Cl, Sise, P.J., Apr. 4, 2001]).
Claimants correctly contend that federal law does not require a MSAT in personal injury liability settlements for future medical expenses (see Sipler v Trans Am Trucking, Inc., 881 F.Supp.2d 635,638 [DNJ 2012]). However, and despite claimants' arguments to the contrary, the state of the law is unclear as to whether federal law requires a self-insured defendant to protect the interests of Medicare for future medical expenses. Resolution of federal legal requirements is unnecessary, however, as the parties' stipulation of settlement controls their mutual obligations (cf. Hoover v N.Y Dept. of Corr. Servs., 2013 WL 5652751 at *2-3 [W.D.N.Y. 2013]; see also Bruton v Carnival Corp., 2012 WL 1627729 [S.D.Fla. 2012]).
The parties agreed per their executed and so-ordered stipulation that:
"prior to tendering the requisite documents for payment, as provided in CPLR 5003-a(c), that any Medicare-recipient claimant shall have notified Medicare of this settlement and requested a final demand letter for conditional payments. A Medicare Set-Aside Trust may also be required if future anticipated medical costs are found to be necessary pursuant to 42 U.S.C. Section 1395y(b) and 42 C.F.R. Sections 411.22 through 411.26"
(Rosenbaum Affirmation, Exhibit D, ¶ 6 [emphasis added]). The first quoted sentence requires claimant to take certain steps that clearly evidence a desire to protect Medicare's interest for past payments. While the underscored language does not explicitly require any specific action with respect to proof of future medical costs, it clearly manifests the parties' agreement and intention to address potential future medical costs that may be incurred to address the injury that was the subject of the claim and to establish a MSAT for "anticipated" future medical costs. To effect this mutual intention, defendant is within its rights to request that claimants demonstrate whether future medical expenses may be necessary as the result of claimant's June 13, 1998 injury by submission of a physician's certification or the Medicare affidavits that defendant requested of claimants (see Rosenbaum Affirmation, Exhibit AA).
The cases upon which claimants rely are all easily distinguishable from this matter, and thus, they do not compel a different result. In Brown v State of New York (10 Misc3d 1071[A] [Ct Cl, 2005]), claimant provided all of the necessary paperwork required by OSC to effectuate the settlement and then complied with OSC's request to execute and return a voucher to OSC to effectuate payment of the settlement, whereas here, OSC has not yet determined that "all papers required to effectuate the settlement have been received by [OSC]" (CPLR § 5003-a [c]) and has not yet forwarded a voucher to claimants. Rodgers v State of New York (14 Misc3d 1215[A] [Ct Cl 2006]) addressed payment of a settlement that was due within 21 days after tender of the release and stipulation pursuant to CPLR 5003-a (c) and CPLR 5003-a (a), as well as required by the parties' stipulation. Finally, Klee v Americas Best Bottling Co., Inc. (76 AD3d 544 [2d Dept 2010]) decided a dispute that required payment within 21 days of a settlement that did not involve Medicare issues.
Thus, claimants are not yet entitled to payment of the settlement amount. The Court is compelled to state, however, that it does not countenance either the extensive delays that have been attendant to the review and processing of the settlement papers, nor the adversarial conduct of counsel in effectuating the agreed-upon resolution of the claim. In the event that the parties are unable to resolve their differences and reach a point where payment of the settlement can occur, the Court will entertain an application to vacate the so-ordered stipulation.
Accordingly, it is
ORDERED, that claimants' motion number M-87535 is DENIED; but it is further
ORDERED, that defendant is directed to make a determination with regard to claimant Celeste Hardwick's Medicare eligibility utilizing the pedigree information in its possession to the extent it has not already done so, and shall do so forthwith.
August 25, 2016
Saratoga Springs, New York
W. BROOKS DeBOW
Judge of the Court of Claims Papers considered: (1) Notice of Motion to Enforce Settlement, Enter Judgment, and Award Costs, Disbursements, Interest, Attorney's Fees and Sanctions, dated October 13, 2015; (2) Affirmation of Andrew H. Rosenbaum, Esq., in Support of Claimants' Motion to Enforce Settlement, Enter Judgment, and Award Costs, Disbursements, Interest, Attorney's Fees and Sanctions, dated October 13, 2015, with Exhibits A-DD; (3) Affirmation in Opposition of Robert J. Schwerdt, AAG, dated October 23, 2015, with Exhibits A-B; (4) Reply Affirmation of Andrew H. Rosenbaum, Esq., in Further Support of Motion to Enforce Settlement, Enter Judgment, and Award Costs, Disbursements, Interest, Attorney's Fees and Sanctions, dated December 1, 2015; (5) Decision and Order in Hardwick v State of New York, UID No. 2016-038-511 (Ct Cl, DeBow, J., unpublished decision dated Mar. 9, 2016); (6) Affirmation of Robert J. Schwerdt, AAG, dated April 8, 2016, with Exhibits A-B, including: Affidavit of Angel Davis (Exhibit A), sworn to April 8, 2016, with Exhibits 1-3; and Affirmation of Caitlin D. Heim, Esq., dated April 7, 2016; (7) Sur-Reply Affirmation of Andrew H. Rosenbaum, Esq., in Support of Claimants' Motion to Enforce Settlement, Enter Judgment, and Award Costs, Disbursements, Interest, Attorney's Fees and Sanctions, dated April 29, 2016, with Exhibits A-D.