FTCA vs. Medicare: How Do They Interact?

One of our readers asked this questions recently: “FTCA vs Medicare – which takes precedent?” According to the Centers for Medicare and Medicaid Services (CMS), under the Medicare Secondary Payer Act, medical bills paid by Medicare for tort victims are conditional payments. If there is a tort recovery, Medicare is required to be reimbursed.

Medicare says my Federal Tort Claim (FTCA) is a Primary Insurance policy!  We need information about this and guidance/assistance on using this insurance.

To answer this question, it’s important to clarify that FTCA is NOT insurance. The assertion above is incorrect. According to an attorney we spoke with,

“The federal tort claim is not insurance. If a claimant was to collect money under the FTCA, it’s possible that Medicare could assert a lien against any potential settlement proceeds if it payed for any medical treatment related to the claim.”

From what we’ve found in other research, this is true. It would appear that you cannot receive both health reimbursement through a FTCA award from the government and a Medicare health reimbursement. This would be viewed as “double payment”. Therefore, if Medicare has already paid out or is planning to pay out on healthcare for a person and a FTCA award is given to that person for the same healthcare issue, then Medicare has a right to get reimbursed first out of that claim for any monies spent. Depending on the specific military base at issue and the specific case, situations can be very different, or this process may not even come into play at all.

For example, regarding Camp Lejeune and its 2012 health law, FTCA vs. Medicare doesn’t come into play because there simply has not been a FTCA award to date for anyone. All related litigation for that base remains stymied in federal court. Without any FTCA awards, military victims of Lejeune contamination would simply be left to rely on the Lejeune law provision itself if given claims assistance through the VA. It indicates that the VA is to be “the payer of last resort” for health care related to Lejeune health claims. Medicare and other personal insurance would come first.

In other situations where FTCA suits can be pursued successfully, here is some perspective:

In general, when litigating against the government, expect the government to take the position that the claimant is not entitled to double payment for benefits provided from public funds.

*Important Note: We are not experts on FTCA, Medicare or VA reimbursement. We offer this information strictly for informative purposes only. We do not imply any legal authority whatsoever. As such, if you do seek clarity regarding FTCA vs. Medicare coverage vs. VA “payer of last resort” coverage, we highly recommend that you reach out to each respective, relevant agency to address your specific case or situation.

According to one of our readers, their experience is as follows:

Medicare is Secondary, and as I have stated before, medicare has paid some of my medical bills (conditionally) expecting to recover payments from my tort settlement. I believe civilian claims and veteran/family claims are different. While they fought including latent diseases in court, they included latent diseases for workers compensation claims. That’s why I believe it is about protecting the “Feres Doctrine”. Feres Doctrine did not apply to civilian employees.

Before we get too far into the weeds, let’s dig more into these statutes and laws to see how they interact with each other.

Federal Tort Claims Act (FTCA)

The Federal Tort Claims Act (FTCA) was established in 1946 as a legal mechanism for compensating people who have suffered personal injury due to the negligent or wrongful action of employees of the U.S. government.

The entirety of the Federal Tort Claims Act is found in the following government record: (June 25, 1946, ch. 646, Title IV, 60 Stat. 812, “28 U.S.C. Pt.VI Ch.171” and 28 U.S.C. § 1346(b)) (“FTCA”)

The Medicare Secondary Payer Statute

With regard to FTCA claims, the Centers for Medicare and Medicaid Services (CMS) attempts to collect its “mistaken” payment from the Federal agency that is settling the claim, using the Medicare Secondary Payer (MSP) statute.

The  Medicare  Secondary  Payer (MSP)  statute,  42  U.S.C.  §1395y(b)(2)(A), imposes significant obligations upon claimants, their counsel, and insurers, including obligations  to  reimburse  Medicare  for  its  payment of a Medicare beneficiary’s medical expenses incurred prior to an insurance settlement,  judgment,  or  award  (known as  “conditional  payments”).

Essentially, if you win a FTCA judgment, Medicare gets its money back first for any medical expenses incurred prior to settlement for which it provided monies/services to the individual. This is also typical of negligence or wrongful death suits against private healthcare entities, for example. Medicare gets reimbursed first out of any settlement or judgment in such court pursuits, followed by the attorneys, then finally…you.

In  simple  terms,  the  MSP  statute  provides  that  to  the  extent  a  group  health, workers’ compensation, liability, or no-fault insurance  plan  (including  a  self-insured  entity)  is  obligated  or  chooses  to  pay  the  medical  expenses  of  a  Medicare  beneficiary,  the  insurance  plan  is  the  primary  payer  and  Medicare  the  secondary  payer.  In these circumstances, Medicare may pay such expenses conditionally if payment by the commercial insurer is delayed or in dispute, or the existence of private insurance is unknown. If an insurer subsequently pays or  settles  the  beneficiary’s  claim,  Medicare may recover its conditional payments from the beneficiary, any person or entity receiving any portion of the insurance payment  (including  plaintiff ’s  counsel),  and/or  the  insurer. – Dispelling Medicare Myths in Tort Settlements May 2013

For further understanding, there’s something called the “Collateral Source Rule”.  The following is a full excerpt from a document entitled MSP Resource Guide. Link can be found at bottom of this article.

Collateral Source Rule

Issues relating to the collateral source rule frequently arise in FTCA actions.  Shortly after enactment of the Federal Tort Claims Act, the Supreme Court observed:

[w]e now see no indication that Congress meant the United States to pay twice for the same injury.  Certain elements of tort damages may be the equivalent of elements taken into account in providing disability payments.  It would seem incongruous, at first glance, if the United States should have to pay in tort for hospital expenses it had already paid, for example.

Brooks v. United States, 337 U.S. 49, 53-54 (1949)
The collateral source rule as articulated in Brooks has not been consistently followed by the lower courts.  The district and circuit courts have sometimes ignored the limits on double recoveries enacted in the FTCA and commented upon by the Supreme Court in Brooks and have allowed what amounts to a double recovery against the United States.  A long line of cases in which the United States was the defendant have held that Social Security insurance benefits [United States v. Hayashi, 282 F.2d 599  (9th Cir. 1960); Smith v. United States, 587 F.2d 1013 (3d Cir. 1978)], Civil Service retirement benefits [United States v. Price, 288 F.2d 448 (4th Cir. 1961)], and Medicare payments for the cost of medical expenses, [Siverson v. United States, 710 F.2d 557 (9th Cir. 1983); Titchnell v. United States, 681 F.2d 165 (3d Cir. 1982) (cf., Overton v. United States, 619 F.2d 1299 (8th Cir. 1980)], even though they are paid by the United States, are each payments from a so-called “collateral source.”  Therefore, tort judgments against the United States may not be reduced by the amount of these  payments from the United States to the plaintiff.  But see, Steckler v. United States, 549 F.2d 1372 (10th Cir. 1977); (the proportion of Social Security disability payments attributable to payments from federal revenues should be offset against an FTCA award for economic loss due to the disability); Berg v. United States, 806 F.2d 978 (10th Cir. 1986) (applying collateral source rule to Medicare payments and questioning Steckler).

As a result, a plaintiff may receive a tort judgment that includes amounts earmarked to compensate him for these expenses, even though the United States has actually paid benefits to the plaintiff in the past or is bound by law to do so in the future.  Arguably, this permits a double recovery that, if challenged, may be difficult to justify.

The Restatement states the rationale for the collateral source rule as:

[t]o the extent that the defendant is required to pay the total amount there may be a double compensation for a part of the plaintiff’s injury.  But it is the position of the law that a benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor. . . .  The law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him. Restatement (2d) Torts, § 920A (comment b).

Thus, it must be recognized that the collateral source rule sanctions a double recovery under certain circumstances.  Invocation of the collateral source rule permits “the plaintiff to exceed compensatory limits in the interest of ensuring an impact upon the defendant.”  Note, v. “Unreason In The Law Of Damages:  The Collateral Source Rule,” 77 Harvard L.Rev. 741, 742 (1964).  Automatic incantation of the collateral source rule has been deemed “the most dubious of practices” (Id., at 753).  Similarly, at least one appellate court has stated that it perceives “no compelling reason for providing the injured party with double recovery . . . and we are not in the business of redistributing the wealth beyond the goal of making the victim . . . whole.”  EEOC v. Enterprise Assn. Steamfitters, 542 F.2d 579, 592 (2d Cir. 1976), cert. denied, 430 U.S. 911 (1977).  In general, when litigating against the government, expect the government to take the position that the claimant is not entitled to double payment for benefits provided from public funds.

Unlike most other benefits paid to injured FTCA claimants, veterans’ disability benefits paid pursuant to 38 U.S.C. § 310 may be deducted from damages prior to entry of judgment.  Both past and future non-service-connected disability payments, paid on account of the same injury involved in an FTCA action, may be deductible from any award made against the United States.  United States v. Gray, 199 F.2d 239 (10th Cir. 1952); United States v. Brooks, 176 F.2d 482 (4th Cir. 1949) (on remand from the Supreme Court).  See also, Swanson v. United States, 557 F.Supp. 1041 (D.Ida. 1983).  In contrast, future benefits to be paid under 38 U.S.C. § 351, applicable to injuries received as a result of medical treatment, cannot be deducted.  By the terms of the statute, the benefits are suspended until the judgment is recouped.  If the benefits have been paid, the judgment should be reduced by past payments.  Kubrick v. United States, 581 F.2d 1092 (3d Cir. 1978), reversed on other grounds, 444 U.S. 111 (1979).

We hope this helps offer some perspective and clarity. We will continue to research and expand upon the information in this page soon. Check back for future updates.

Do you have your own stories, insights or experiences with FTCA claims, Medicare as second payer, or VA as payer of last resort? Feel free to share your story with us here.

Relevant Links and Resources:

• CMS – Medicare Secondary Payer Guidance
• CMS – 1987 Reference Document
• Dispelling Medicare Myths in Tort Settlements – May 2013
• MSP Resource Guide
• Federal Tort Claims Act Resource Document

*Note: We are not experts on FTCA, Medicare or VA reimbursement. We offer this information strictly for informative purposes only. We do not imply any legal authority whatsoever. As such, if you do seek clarity regarding FTCA vs. Medicare coverage vs. VA “payer of last resort” coverage, we highly recommend that you reach out to each respective, relevant agency to address your specific case or situation.