<i>Hadden</i> and Medicare's 'Full Reimbursement' Rule

As observed previously, under the Sixth Circuit's opinion, a plaintiff settling a claim for Medicare-covered injuries may keep nothing from the settlement even if the settlement includes payment for the plaintiff's pain and suffering and lost earnings. Assuming the settlement involves a significant discount ' as is common in cases involving difficulties in proving liability or recovering from a penniless defendant ' the amount of the settlement might be less than the amount of the government's Medicare payments. The entire settlement (after procurement costs) might then be redirected to the government. See Nicole Miklos, Giving an Inch, Then Taking a Mile: How the Government's Unrestricted Recovery of Conditional Medicare Payments Destroys Plaintiffs' Chances at Compensation Through the Tort System, 84 St. John's L. Rev. 305, 319 (2010) (“Because plaintiffs are the last entity to receive funds from a settlement, they can easily be left with little or no compensation.”); Rick Swedloff, Can't Settle, Can't Sue: How Congress Stole Tort Remedies from Medicare Beneficiaries, 41 Akron L. Rev. 557, 598 (2008) (“[A] Medicare beneficiary settling a tort claim could find herself without any compensation after Medicare has taken its due.”).

By adopting a construction of the Act that allows the government to obtain full reimbursement of Medicare payments from a discounted settlement, even if the reimbursement exhausts the settlement, the Sixth Circuit's opinion chills settlement and undermines the efficient use of judicial resources.