The Court of Appeals, Hardiman, Circuit Judge, held that:
(1) recipient's liability settlement from third-party tortfeasor qualified as a “primary plan” within the meaning of the Medicare as a Secondary Payer Act;
(2) recipient's $90,000 settlement with tortfeasor included her medical expenses, and thus recipient had obligation to reimburse Medicare for $10,121.15 in medical
(3) the New Jersey Collateral Source Statute (NJCSS) did not prevent Medicare from recovering medical expenses as part of her damages in tort suit;
(4) state court's order apportioning settlement proceeds did not bar government from seeking reimbursement for medical expenses;
(5) District Court lacked jurisdiction to adjudicate recipient's unexhausted claim pursuant to “equity and good conscience” exception under Act; and
(6) District Court lacked federal question jurisdiction over due process claim.
"As the ALJ correctly found, the Superior Court's apportionment order was not “on the merits,” and need not be recognized by the agency. A court order is “on the merits” when it is “delivered after the court has heard and evaluated the evidence and the parties' substantive arguments.” Black's Law Dictionary 1199 (9th ed.2009); cf. Greene v. Palakovich, 606 F.3d 85, 98 (3d Cir.2010) (finding, in a criminal case, that “on the merits” means the state court “acted on the substance of [the] claim”), aff'd sub nom. Greene v. Fisher, ––– U.S. ––––, 132 S.Ct. 38, 181 L.Ed.2d 336 (2011); Thomas v. Horn, 570 F.3d 105, 115 (3d Cir.2009) (holding that state proceedings occur “on the merits” “when a state court has made a decision that 1) finally resolves the claim, and 2) resolves the claim on the basis of its substance”). Here, the state court did not adjudicate any substantive issue in the primary negligence suit. Indeed, in her motion for the order, Taransky clarified that she sought an apportionment not to resolve any outstanding issue in her suit, but “only to the extent necessary to obtain specified documentation relevant to anticipated administrative proceedings with the federal Centers for Medicare and Medicaid Services.” JA at 267. The state court, in effect, rubber stamped her request. Taransky's motion was uncontested, issued pursuant to a stipulation between Taransky and Larchmont, and prepared and submitted by Taransky's counsel for the judge's signature. This order is the antithesis of one made on the merits."
Taransky v Sec of US Dept of HHA, 760 F.3d 307 (3rd Cirt 2014)
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