Recovery from Liability Insurers

40.14 – Recovery from Liability Insurers (Rev. 12438; Issued: 01-04-24; Effective: 02-06-24; Implementation: 02-06-24) The fact that a settlement has been made between the beneficiary and the liable party does not, necessarily, bind Medicare to that settlement. If the liability insurer was aware of Medicare’s interest, but Medicare was not consulted in the settlement, Medicare may pursue the balance of its claim, over and above any amount granted to it in the settlement, against the liability insurer. (See 42 C.F.R. § 411.24(i)). Section 1862(b) of the Act, as amended in 1984, gives the Government the right to recover Medicare payments from liability insurers without regard to whether the insurer has already made a liability insurance payment. If the liability insurer does not properly pay Medicare, Medicare has the right to take legal action against the insurer and to collect double damages. NOTE: When a liability insurer is obligated to make payment to an injured plaintiff who is age 65 or older, the insurer has reason to know of Medicare’s probable interest and to act to ascertain Medicare’s involvement. When CMS seeks to recover Medicare conditional payments from an insurance company paying a settlement amount owed to the beneficiary, the MSP Contractor must send a copy of the letter to the beneficiary. Likewise, it must notify the insurer of the fact that the beneficiary was sent a copy of the letter. If it knows that the beneficiary has an attorney, it forwards a copy of the letter to the attorney. It retains copies for the file.