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Since 2001, the Centers for Medicare and Medicaid Services (CMS) has been publishing policy memorandums explaining the details of Medicare compliance when settling future medical benefits in a liability, self-insured, no-fault, and workers’ compensation scenario. In its 2003 memorandum, the CMS made it clear that Medicare has a direct priority right of recovery against any entity, including the beneficiary, any provider, supplier, physician, attorney, state agency, or private insurer that has received any portion of a third-party payment directly or indirectly. The same memorandum explained that the CMS also has a subrogation right with respect to any such third-party payment per 42 CFR Sections 411.24(b), (e), and (g) and 42 CFR Section 411.26.

In 2004, the CMS again published information regarding Medicare’s rights when non-compliance exists. In the 2004 memorandum, CMS made it clear that if Medicare’s interests are not “reasonably considered,” Medicare may deny payment for medical services related to the claimed injury or disease until such time that the related medical expenses equal the entire amount of the settlement. In other words, if Medicare determines there is an intent to shift the responsibility of the claimed injury’s medical care to Medicare, Medicare may refuse to ever pay for medical expenses for the condition and/or may seek double damages from all parties involved (42 CFR Section 411.40 and 42 CFR Section 411.46).

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