Bankrupt Claimant Spends Set Aside Money on New Truck.

And the Bankruptcy Judge let him get away with it! We have all suspected for a while now that Claimants are not actually using Medicare Set Aside money to pay for medical bills. Well, on Monday, our suspicions were confirmed. A Federal Bankruptcy Judge ruled that an injured worker who used set aside money to buy a Ford pickup and some property on the side was actually protected by the federal bankruptcy laws. The details: claimant broke his hip on the job, comp case settled for $225,000 and about $70,000 was put into a Medicare set-aside account. It is pretty clear that the claimant self-administered this account because he bought a truck and some land with the set-aside money. He filed for bankruptcy (Chapter 7) and he asked the bankruptcy Judge to shield the truck and the land from the bankruptcy case. (In a Chapter 7 bankruptcy you have to sell all of your assets and pay off your creditors).

The Judge allowed him to keep his truck and the land! And, the Judge said even though he spent the set aside money, it was there to arguably pay his future medical bills!

So, according to this case, an injured worker can settle his comp case, spend the set aside money on a new truck and some land, and then file for bankruptcy and get to keep the truck and the land. Not sure if CMS/Medicare will now be doing anything in this case, but that would be interesting if they did.

You can read all the gory details here. The names are deleted to protect the debtor.

Author: jfkesq

Pennsylvania lawyer.