Medicare Settlement Will Tap Clinic Awards

By Walter F. Roche Jr.


A proposed global settlement of Medicare liens for victims of the 2012 fungal meningitis outbreak will also trigger reductions in the amounts those victims may eventually get from suits filed against the healthcare facilities where they were treated.
Interviews with attorneys involved in the litigation, victims and a review of court documents shows that deductions of 10.5 percent to 21.5 percent will apply not only to the so-called national settlement fund but also to some $70 million in awards from settlements with clinics or other health care providers in Michigan, New Jersey, Virginia and North Carolina.
According to some victims and attorneys the dual reductions could, in some cases, result in Medicare being paid more than it actually spent on the care of some of the victims.
The settlement agreement, which has been approved by a federal court judge and the Centers for Medicare and Medicaid Services specifically mentions settlements with Insight Imaging, Inspira Health Network, Michigan Pain Specialists and High Point Surgery Center.
The agreement does give victims the right to opt out and attorneys representing victims in Virginia and Tennessee have indicated that most of their clients will be doing just that. That means they will settle each case on an individual basis.
The global settlement, which still needs formal approval from the U.S. Justice Department, is the latest development in the civil litigation stemming from the 2012 fungal meningitis outbreak. It comes as the fourth anniversary of the outbreak approaches and victims have yet to receive any payments.
The outbreak, caused by fungus tainted injectable steroids, sickened 778 patients, killing 77 of them.
William Leader, a Nashville, Tenn. lawyer, said that while precise numbers are not yet available for his clients, the settlement agreement could likely result in Medicare being reimbursed for larger amounts than would normally occur in the individual settlement of such cases.
In some cases, he said, Medicare could conceivably be paid more than it spent on an individual victim.
A settlement with Nashville's Saint Thomas Outpatient Neurosurgical Center apparently has not been finalized and it was not specifically mentioned in the settlement agreement. But Tennessee victims contacted recently said they just learned deductions of up to 21.5 percent would be made from any awards from that litigation.
Scott Sexton, a Virginia attorney for outbreak victims, told U.S. District Judge Rya Zobel at a recent hearing that the proposed global settlement was not advantageous for victims from Virginia or Tennessee.
Leader said that a remaining concern for his clients is the fact that opting out of the settlement agreement is very likely to lead to even longer delays in victims getting any award.
"But most of our clients will be a lot better off by opting out," he concluded.

National Settlement Fund $120 million (increases are possible)
High Point Settlement Fund $3.5 million
Inspira Settlement Fund $16 million
Insight Settlement Fund $40 million.
Michigan Pain Specialists Settlement Fund $10.5 million.