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16 Journal of American Law // Spring 2015 Since its creation in 1965, Medicare and its stat- utory right of reimbursement has created con- fusion among legal practitioners and insurers. One of the recent subjects of intense discussion regarding protection of the right of reimburse- ment concerns defense counsel requests for in- demnifcation provisions in settlement releases to protect the interests of Medicare. While var- ious local and state bar associations have issued opinions regarding the ethical dilemma that arises when defense counsel requests plaintif 's counsel to insert an indemnifcation or hold harmless provision into a settlement release, there remains some dispute as to whether the agreements are enforceable to protect the in- terests of Medicare. Tis article will address the development of the relevant statutory provisions that recognize Medicare as the secondary payer and the reporting obligations under those provi- sions as well as issues that arise while protecting Medicare's right of recovery and reimbursement, including insertion of indemnifcation clauses in settlement releases. Creation of medicare Medicare was enacted on July 30, 1965, as part of the Social Security Act. 1 It is a feder- al program that covers medical services for qualifed benefciaries and was established to provide health insurance to individuals age 65 and older. Medicare also may provide coverage for medical expenses incurred by disabled persons who qualify for Social Secu- rity Disability Insurance as well as individu- als with end-stage renal disease. Te program is administered by the Centers for Medicare and Medicaid Services (CMS). Prior to 1980, Medicare was the primary payer for most medical expenses for Medicare benefciaries, excluding workers' compensation claims, fed- eral black lung benefts, and veterans benefts. As such, Medicare costs soared. 1 http://www.ssa.gov/history/ssa/lbjmedicare1.html Diane S. Davis is a senior associate attorney with Funderburk Funderburk Courtois LLP, a mid-sized defense frm in Houston, Texas. Her practice areas in- clude products liability, em- ployment, and construction litigation. She is a member of the State Bars of Texas and Louisiana as well as the Defense Research Institute and American Bar Associa- tion. She also serves as her frm's Medicare compliance representative. SUMMARY Established in 1965, Medicare is a federal program that covers medical services for qualifed bene- fciaries. Medicare provides health insurance to individuals age 65 and older as well as coverage for medical expenses incurred by disabled persons who qualify for Social Security Disability Insurance and individuals with end-stage renal disease. Te Centers for Medicare and Medicaid Services (CMS) is a federal agency that administers Medicare and works in partnership with state governments to adminis- ter Medicaid, the State Children's Health Insurance Program (SCHIP), and health insurance portability standards. In an efort to reduce Medicare costs and expenses and to ensure that certain insurers fulfll their obligations as primary payers to benefciaries, the Medicare Secondary Payer Act (MSP) was en- acted as Section 953 of the Omnibus Reconciliation Act of 1980. Generally, Medicare is recognized as the secondary payer. Since 1980, the federal government has embraced its statutory right to recover expenses from any proceeds obtained by a Medicare-eligible plaintif from a settlement, hearing, or trial. Under the MSP, Medicare is recognized as the secondary payer for benefciaries who also are covered through (1) a group health plan based on their own or their spouse's current employment, (2) auto and other liability insurance, (3) no-fault liability insurance, and (4) workers' compensation programs, including the Fed- eral Black Lung Benefts Program. Under the MSP statute, CMS has a statutory right of reimbursement for all injury-related medical expenses that Medicare paid that should have been paid by a primary pay- er. CMS can seek statutory damages against any entity that attempts to transfer the burden of payment for medical costs and expenses to Medicare. Reporting Obligations Under the Medicare Secondary Payer Act Ethically Protecting Medicare's Statutory Right of Repayment and Reimbursement By Diane S. Davis CiviL LitigAtion & PRoCeDuRe