Audish, Medicare Rates, and the Future of Medical Damages
***NEWSLETTER***
Using the Medicare Secondary Payer Act to Counter the Defense Playbook
California defense counsel increasingly rely on Medicare reimbursement rates to reduce the valuation of future medical damages. The strategy is straightforward: Argue that future care should be valued not at the reasonable market rate charged by treating physicians, but instead at the substantially lower rates paid by Medicare.
The recent decision in Audish v. Macias (2024) 102 Cal.App.5th 740 has accelerated that trend.
For plaintiff attorneys, the question is no longer whether the defense will attempt to introduce Medicare based valuation evidence. The question is how to counter it effectively.
This module examines not only the Audish decision itself, but also a developing strategy grounded in two powerful federal statutes that were not raised in the case:
- The Medicare Secondary Payer Act
- The False Claims Act
Together, these statutes create an opportunity to fundamentally reframe the defense argument.
What Happened in Audish?
Audish v. Macias arose from a routine automobile collision tried in San Diego Superior Court. The jury awarded damages for past medical expenses, future medical expenses, and noneconomic harm, while allocating comparative fault equally between the parties.
At trial, defense counsel cross examined the plaintiff’s life care planner regarding future Medicare eligibility and whether Medicare reimbursement rates had been incorporated into future care projections.
They had not.
The plaintiff argued this line of questioning violated the collateral source rule. The Court of Appeal disagreed.
Relying heavily on Cuevas v. Contra Costa County (2017) 11 Cal.App.5th 163 and Stokes v. Muschinske (2019) 34 Cal.App.5th 45, the court concluded that limited evidence concerning future Medicare eligibility and Medicare reimbursement rates was admissible in evaluating the reasonable value of future medical care.
For defense counsel, the ruling provides a roadmap.
For plaintiff attorneys, it creates a challenge that must now be anticipated from intake through trial.
The Problem with the Defense Position
The defense argument sounds deceptively simple.
If Medicare may eventually pay for treatment, why should future damages be valued at anything higher than Medicare reimbursement rates?
The problem is that this argument ignores the structure and purpose of federal Medicare law.
Medicare is not designed to relieve tortfeasors of responsibility for future medical care.
It is a secondary payer.
That distinction matters.
The Medicare Secondary Payer Act Changes the Analysis
The Medicare Secondary Payer Act, codified at 42 United States Code section 1395y(b)(2), establishes a two-step rule:
- Medicare may not pay when payment has already been made by a liability carrier.
- Medicare also may not pay when payment can reasonably be expected to be made by a liability carrier.
Translated into practical terms, if a plaintiff recovers damages for future medical care, those settlement funds are expected to pay for that treatment before Medicare contributes.
This principle is the foundation of Medicare Set Aside analysis and Medicare’s broader reimbursement framework.
In other words, the defense cannot simultaneously argue that future medical care has been compensated through the verdict while also assuming Medicare should become the primary source of payment.
Federal law says otherwise.
The False Claims Act Adds Another Layer
The issue becomes even more significant when viewed through the lens of the False Claims Act.
Under 31 United States Code section 3729, knowingly presenting an improper claim for federal payment may create substantial civil liability, including penalties and treble damages.
That creates an important practical question.
If future medical expenses have already been compensated through a tort recovery, what happens when those same injury related expenses are later submitted to Medicare for payment?
The answer may expose the contradiction embedded in the defense position.
This issue was never addressed in Audish.
Nor was it addressed in Cuevas or Stokes.
That omission creates room for plaintiff attorneys to reshape the discussion at trial.
Building the Strategy Before Trial
Successfully countering Medicare rate evidence requires preparation long before the jury is seated.
The first question is eligibility.
- Is the plaintiff currently enrolled in Medicare or a Medicare Advantage Plan?
- Is the plaintiff even eligible for Medicare?
- Will Medicare realistically become available during the projected treatment period?
These questions matter because defense billing experts often rely on Medicare rates even when the plaintiff is not currently eligible for Medicare coverage.
The next step is educating treating physicians, life care planners, and retained experts regarding the Medicare Secondary Payer Act and the False Claims Act.
Witnesses should be prepared to explain a straightforward principle: Medicare is a federally funded safety net program intended to function as a secondary payer, not as a substitute for damages owed by a liable defendant.
That testimony reframes the issue from one of discounted billing to one of legal responsibility.
Cross Examination Opportunities
The defense billing expert often becomes vulnerable once the Medicare assumptions are examined closely.
Important questions include:
- Does the plaintiff currently qualify for Medicare?
- Do the treating physicians actually accept Medicare patients?
- Do those providers accept Medicare reimbursement rates for cash paying patients?
- Can the defense expert identify any law requiring physicians to provide treatment at Medicare reimbursement rates in this context?
The answer to that final question is no.
The defense methodology also frequently ignores critical variables, including physician experience, provider quality, overhead costs, staffing requirements, and access to care.
By treating Medicare reimbursement as the universal measure of value, the defense risks reducing future care analysis to an artificial pricing model disconnected from real world medical practice.
Strategic Use at Trial
The strategic question is not simply whether to object.
It is whether to use these federal statutes to shape the narrative of the case.
A carefully crafted motion in limine may allow plaintiff counsel to educate the court regarding the
Medicare Secondary Payer Act and the False Claims Act before the defense introduces Medicare based valuation evidence.
Requests for judicial notice can reinforce the framework.
Special jury instructions may also help establish that any damages awarded for future care must be exhausted before Medicare becomes responsible.
By the time the case reaches closing argument, the issue becomes much larger than reimbursement rates.
The defense is no longer merely arguing for lower numbers.
It is attempting to shift the financial burden of its conduct onto a federally funded public benefit system.
That is a far different conversation.
The Takeaway
Audish remains controlling authority unless and until another court revisits the issue. But the decision is not the end of the discussion.
The Medicare Secondary Payer Act and the False Claims Act provide plaintiff attorneys with powerful statutory tools to challenge the misuse of Medicare reimbursement rates in future damages analysis.
Used strategically, these statutes may help reframe the case, strengthen future medical damages, and expose the weaknesses in the defense valuation model.
For plaintiff attorneys, the lesson is simple.
Do not wait until trial to address Medicare.
Build the foundation early. Develop the testimony carefully. And be prepared to explain why Medicare was never intended to subsidize the defendant’s liability.
Built for Plaintiff Attorneys
Lien Project Network was built to help plaintiff attorneys navigate exactly these kinds of evolving issues.
Our Medicare modules provide practical strategies, litigation frameworks, statutory analysis, and trial focused guidance designed specifically for the plaintiff trial bar.
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Members receive up to $900 each year in credits toward those services.
Visit www.lienprojectnetwork.com to access the full module and continue building your lien resolution strategy.
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