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Pallay v. Nationwide Insurance Co.10/31/2005
ecover funds from third parties who are liable for the injuries and liable for the related medical expenses. According to federal statutory law, this right of subrogation is superior to any other right, interest, judgment or claim:
{ } "(iii) Subrogation rights
{ } "The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan." Section 1395y(b)(2)(B)(iii), Title 42, U.S. Code.
{ } Littrell held that:
{ } "As a preliminary matter, we hold that expenses and attorney fees are not part of the setoff equation. Such fees are an expense of an insured and should not act, in order to increase underinsured motorist benefits, to reduce the 'amounts available for payment' from the tortfeasor's automobile liability carrier. Conversely, a statutory subrogation lien to Medicare should be considered when determining the amounts available for payment from the tortfeasor. Such a lien is not an expense of an insured." Id. at 434.
{ } Although this quotation from Littrell appears to make a sweeping conclusion about Medicare liens in the context of UIM benefits, there really is very little discussion about the topic in the Littrell opinion. It is necessary to examine the context of Littrell to understand how the Supreme Court came to its conclusion. Littrell actually involved three separate UIM cases, one of which was Karr v. Borchardt. In Karr, the underlying auto accident victim was Helen Beddow, who was riding as a passenger in her husband's car when an accident occurred. Mrs. Beddow was severely injured and soon died from her injuries. Medicare paid for some of Mrs. Beddow's medical expenses prior to her death. Mrs. Beddow was survived by her husband and four children. The five survivors brought a wrongful death suit, and also sought UIM benefits from their own respective auto insurance policies. The tortfeasor had liability insurance of $100,000, which was paid to Mrs. Beddow's estate and then distributed to the survivors. Each of the five survivors, though, only received $9,000 instead of $20,000 because certain expenses, attorney fees, and a pro rata share of a Medicare lien, had been deducted from the original amount.
{ } Three of the survivors attempted to collect UIM benefits from three separate insurance policies. The insurance company attempted to reduce the UIM limits of each policy by $20,000, based on the "amounts available for payment" language of R.C. §3937.18(A)(2). The survivors argued in rebuttal that only $9,000 should be subtracted from the declared limits of their UIM coverages, because the stated expenses, attorney fees, and Medicare lien were expenses of Mrs. Beddow's estate and not of the survivors.
{ } The Littrell opinion determined that attorney fees incurred in order to obtain UIM benefits were an expense of the insured, and could not be deducted from the "amounts available for payment" calculation. Littrell also concluded, without any further comment or analysis, that a Medicare lien was not an expense of the insureds, and that each of the three wrongful death UIM claimants could deduct their pro rata share of the Medicare lien from the "amounts available for payment" calculation. Littrell, supra, 91 Ohio St.3d at 434, 746 N.E.2d 1077
{ } The actual holding in Littrell was that, "a statutory subrogation lien to Medicare should be considered," when interpreting the language of R.C. §3937.18(A)(2). Id. at 434. To "consider" something is a rather open-ended requirement. Littrell did not require that Medicare l
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