A New Jersey appeals court rules that a plaintiff in a personal injury settlement can't invoke the collateral source rule, or hold a hearing to allocate settlement proceeds, in order to avoid paying a Medicare lien, especially since the plaintiff specifically demanded reimbursement for the lien in her complaint. Jackson v. Hudson Court, LLC (N.J. Sup. Ct., App. Div., No. A-4755-08T1, May 24, 2010).
Ilse Theresa Jackson, a 79-year-old Medicare recipient, was injured in a trip-and-fall incident in 2005. She sued numerous defendants, and in her complaint and response to interrogatories she specifically demanded reimbursement for the lien Medicare had asserted on any potential award. After Ms. Jackson settled the case for $85,000, she requested a court order to allocate settlement proceeds, and when that request was denied she asked the trial court to find that no part of the settlement was attributable to her medical expenses. When the trial court refused this as well, Ms. Jackson appealed.
On appeal, Ms. Jackson claimed that New Jersey's collateral source rule, which prevents personal injury plaintiffs from recovering benefits that they are entitled to receive from another source, prohibits recovery of medical expenses paid by Medicare. Citing Arkansas Department of Health and Human Services v. Ahlborn, Mrs. Jackson asserted that courts have the authority to allocate settlement proceeds so that funds designated for pain and suffering are not used to reimburse Medicare.
The Superior Court of New Jersey, Appellate Division, rejects Ms. Jackson's appeal. Applying a previous decision that held that the collateral source rule did not apply to Medicaid liens, the court holds that "the double recovery prohibited by [the collateral source rule] is not possible because of Medicaid's reimbursal liens, which are virtually identical to Medicare liens." Therefore, the court goes on, "[a] Medicare recipient cannot have his medical expenses paid for and then retain that exact amount in a personal injury recovery any more than can a Medicaid recipient . . . we conclude the collateral source rule does allow a personal injury settlement to include recovery of medical expenses paid for by Medicare."
For the full text of this decision, go to: https://lawlibrary.rutgers.edu/courts/appellate/a4755-08.opn.html
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