Court Upholds Insurer’s Refusal to Disburse Settlement Funds Until Plaintiff Proves Reimbursement of Medicare Conditional Payments

Not often do you see an MSP compliance issue arise in a bankruptcy decision. (But it’s 2020 and nothing seems to surprise me anymore.) In the matter of In Re Jordan, 2020 Bankr. LEXIS 2363, the court held that Progressive Insurance Company could hold back releasing settlement funds until the Plaintiff, a Medicare beneficiary, demonstrated that he satisfied Medicare’s final demand. The bankruptcy judge, acknowledged that Progressive could be liable to Medicare if the Plaintiff did not reimburse conditional payments. The court further found that Progressive’s refusal to rely on Medicare hold-harmless language in the settlement agreement was “certainly permissible and reasonable”. This is one of the many reasons why it is so important to get the conditional payment search process going early on and to make sure the terms of Medicare Secondary Payer compliance are negotiated as part of the settlement.