SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0603-19T1

COOPER HOSPITAL 

UNIVERSITY MEDICAL 

CENTER on assignment 

by DALE MECOUCH,

Plaintiff-Respondent,

v.

SELECTIVE INSURANCE 

COMPANY OF AMERICA,

Defendant-Appellant.

_________________________

Argued October 15, 2020 – Decided

Before Judges Whipple, Rose, and Firko.

On appeal from the Superior Court of New Jersey, Law 

Division, Camden County, Docket No. L-0316-18.

Laura A. Brady argued the cause for appellant 

(Coughlin Duffy, LLP, attorneys; Laura A. Brady, of 

counsel and on the briefs; Christa McLeod, on the 

briefs).

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

November 18, 2020
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A-0603-19T1

Stanley G. Wojculewski argued the cause for 

respondent (Costello Law Firm, attorneys; Stanley G. 

Wojculewski, on the briefs).

Susan Stryker argued the cause for amicus curiae

Insurance Council of New Jersey (Bressler Amery & 

Ross, PC, attorneys; Susan Stryker, of counsel and on 

the brief).

Greenbaum Rowe Smith & Davis, LLP, attorneys for 

amicus curiae New Jersey Hospital Association (Robert 

B. Hille, of counsel and on the brief; Neil Sullivan and 

John W. Kaveney, on the brief).

PER CURIAM

In this appeal, we address whether Medicare or a private insurance carrier 

has primary payment responsibility for hospital services rendered for ongoing 

medical injuries arising from a 1977 automobile accident. Defendant, Selective 

Insurance Company of America appeals from an August 16, 2019 order denying 

its motion for summary judgment; an August 26, 2019 order granting plaintiff,

Cooper Hospital University Medical Center's summary judgment motion and 

ordering defendant to pay plaintiff $769,323.06 plus interest, fees and costs; and 

a September 13, 2019 order finding those reasonable attorneys' fees and costs to 

be $33,340. We reverse.

The seeds of this controversy were planted when Dale Mecouch was 

injured in a 1977 automobile accident, which left him with paraplegia. Mecouch 
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filed suit against defendant, and in 1979, secured an order that required 

defendant pay for Mecouch's medical expenses under his father's no-fault 

insurance Personal Injury Protection (PIP) policy. At that time, no-fault policies 

offered unlimited medical coverage. Since that order, defendant has paid most 

of Mecouch's medical expenses arising from the accident.

On December 11, 2015, defendant sent Mecouch a letter advising him that 

it was not the primary payer for any claim related to treatment for the 1977 

accident. The letter informed Mecouch that pursuant to section 111 of the 

Medicare, Medicaid, and SCHIP1 Extension Act (MMSEA) of 2007, and the 

Medicare Second Payer Statute (MSP), 42 U.S.C. § 1395y(b), Medicare remains 

the primary payer on no-fault PIP claims where the date of injury was prior to 

December 5, 1980. It stated:

Accordingly, it is respectfully requested that you notify 

your medical providers to cease billing [defendant] as 

the primary insurance carrier for treatment related to 

the above referenced claim and instruct them to submit 

all bills for any July 16, 1977 accident[-]related 

treatment to Medicare. If Medicare denies any 

accident[-]related bill[s] or if a deductible or copayment is billed to you, kindly forward the bill and 

Medicare's Explanation of Benefits (EOB) for our 

consideration.

1

 State Children's Health Insurance Program.
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A-0603-19T1

Mecouch was treated in plaintiff's hospital from February 2016 through 

May 2016 for care that was still attributable to the 1977 accident. Plaintiff billed 

defendant first, in the amount of $853,663. On September 20, 2016, defendant 

sent plaintiff a letter denying payment, stating "Medicare is the primary payer 

for the charges submitted. Please submit these charges to Medicare for 

consideration. Any denied charges may be resubmitted with Medicare's EOB 

for reconsideration." Subsequently, plaintiff submitted the bill to Medicare.

A National Standard Intermediary Remittance Advice form from Novitas 

Solutions lists a covered amount of $84,339.94 and patient responsibility, the 

deductible plus co-payment, of $12,236. Medicare remitted payment to plaintiff 

through Novitas Solutions for the covered amount of $84,339.94, stating the 

patient's responsibility was $12,236. Plaintiff submitted the remainder of the 

bill, $12,236 to defendant for payment.

Defendant wrote back denying plaintiff's request for $12,236 in 

connection with Mecouch's treatment, stating "as you know M[edicare] is 

primary for this patient, you billed M[edicare] and received payment and 

[b]alance [b]illing is prohibited, therefore, [defendant] will not be considering 
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your submission for payment." Defendant asserted billing primacy was 

Medicare, then Tricare,2and then defendant.

On January 3, 2018, plaintiff filed a complaint seeking payment of PIP 

benefits pursuant to N.J.S.A. 39:6A-4(a), from defendant, for the $853,663 it 

had incurred in expenses, asserting defendant "wrongfully failed and refused to 

pay plaintiff the aforementioned benefits as required by the laws of the State of 

New Jersey and the applicable automobile insurance policy." 3

Cross-motions for summary judgment were filed on July 15, 2019. And 

after reviewing the cross-motions, the court ruled that under N.J.S.A. 39:6A-4, 

defendant is responsible for Mecouch's PIP benefits covering the bodily injury

that resulted from the automobile accident and that no other limitations are 

contained in that part of the statute. The court stated all issues regarding 

entitlement to coverage concluded with the 1979 order and granted summary 

judgment in favor of plaintiff, while entering judgment against defendant in the 

amount of $769,323.06. The court also found that under the PIP statute, plaintiff 

2

 Defendant later conceded including Tricare was a mistake. 

3

 Mecouch assigned his right to receive direct payment of no-fault PIP medical 

expense benefits to plaintiff, and, pursuant to N.J.S.A. 2A:25-1, Lech v. State 

Farm Ins. Co., 335 N.J. Super. 254 (App. Div. 2000) and Tirgan v. Mega Life 

& Health Ins., 304 N.J. Super. 385 (Law Div. 1997), plaintiff asserted it had 

standing to litigate the issue of non-payment of the benefits against defendant.
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A-0603-19T1

is entitled to counsel fees because the claim was not properly denied. Plaintiff, 

the successful party, was entitled to the recovery of counsel fees under Rule

4:42-9(a)(6), which the court found to be $33,340.4

This appeal followed. With leave granted, amici curiae, Insurance 

Council of New Jersey and New Jersey Hospitals Association, also filed briefs. 

We review a grant of summary judgment de novo, applying the same 

standard as the trial court. Woytas v. Greenwood Tree Experts, Inc., 237 N.J. 

501, 511 (2019) (citing Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)). Summary 

judgment must be granted when "there is no genuine issue as to any material 

fact challenged" and "the moving party is entitled to a judgment or order as a 

matter of law." Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405-06 

(2014) (quoting R. 4:46-2(c)).

The Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 

286, 290 (Medicare statute), enacted a primacy structure wherein (1) the federal 

government was required to pay for covered medical services rendered to 

Medicare-eligible beneficiaries under section 101, except for workers'

compensation benefits, as provided by section 1862(b). This means Medicare 

4

 On November 14, 2019, plaintiff's representative Carpenter submitted an 

affidavit stating Novitas Solutions, acting as the fiscal intermediary, accepted 

plaintiff's refund to Medicare in the amount of $84,339.94 on August 8, 2019.
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was primary payer in all circumstances other than workers' compensation. 

Reaching such a goal was expressly recognized by Congress when it enacted the 

Medicare as Secondary Payer Act (MSP Act), 42 U.S.C. § 1395y(b)(2)(A), in 

1980, noting that the original version of the statute rendered Medicare "primary 

payor" for services to Medicare beneficiaries, except for workers' compensation. 

H.R. Rep. No. 96-1167, at 389 (1980).

Defendant, the responsible insurer under the 1979 court order was, and in 

fact continued to act as, the "primary payer" of Mecouch's accident-related 

medical expenses before Mecouch was Medicare-eligible. Afterwards,

defendant continued to do so for thirty-seven years.

In 1980, section (b)(2)(A) of the MSP Act made Medicare a secondary 

payer when payment has been made, or can reasonably be expected to be made, 

under a workers' compensation law or, among other things, no-fault insurance. 

This Act gave Medicare "residual rather than primary liability" for payment of 

services resulting from an injury sustained in an auto accident where payment 

could also be made under an automobile insurance policy. H.R. Rep. 96-1167, 

at 389 (1980). This federal report states that post-MSP Act, "[i]t is expected 

that Medicare will ordinarily pay for the beneficiary's care in the usual manner 

and then seek reimbursement from the private insurance carrier after, and to the 
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extent that, such carrier's liability under the private policy for the services has 

been determined." Ibid. The report further explains:

[u]nder present law, Medicare is the primary payor 

(except where a workmen's compensation program is 

determined to be responsible for payment for needed 

medical services) for hospital and medical services 

received by beneficiaries. This is true even in cases in 

which a beneficiary's need for services is related to an 

injury or illness sustained in an auto accident and the 

services could have been paid for by a private insurance 

carrier under the terms of an automobile insurance 

policy. As a result, Medicare has served to relieve 

private insurers of obligations to pay the costs of 

medical care in cases where there would otherwise be 

liability under the private insurance contract. The 

original concerns that prompted inclusion of this 

program policy in the law—the administrative 

difficulties involved in ascertaining private insurance 

liability and the attendant delays in payment—no 

longer justify retaining the policy, particularly if it is 

understood that immediate payment may be made by 

Medicare with recovery attempts undertaken only 

subsequently when liability is established.

[Ibid.]

The MSP Act was "designed to curb skyrocketing health costs and preserve the 

fiscal integrity of the Medicare system," Fanning v. United States, 346 F.3d 386,

388 (3d Cir. 2003), and was a "cost-cutting measure . . . designed to make 

Medicare a 'secondary' payer" when there was other insurance available, In re 
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Dow Corning Corp., 250 B.R. 298, 335 (E.D. Mich. Bankr. 2000) (quoting 

Health Ins. Ass'n of Am. v. Shalala, 23 F.3d 412, 414 (D.C. Cir. 1994)).

However, the MSP Act only applies to services related to accidents that 

occur on or after the effective date of December 5, 1980. See 42 C.F.R. § 

411.50(a) (stating the provisions of subpart (c), which explains how Medicare 

does not pay for services for which payment has been made or can reasonably 

be expected to be made under automobile no-fault insurance, do not apply to 

any services required because of accidents that occurred before December 5, 

1980); see also Colonial Penn Ins. Co. v. Heckler, 721 F.2d 431, 440 (3d Cir. 

1983) (stating the Secretary adopted the route more favorable to insurers and 

applied the MSP regulations to services required because of accidents that occur 

after December 5, 1980).

After the MSP Act made Medicare the secondary payer, "[i]f the primary 

payer has not paid and will not promptly do so . . . Medicare can conditionally 

pay the cost of the treatment." Stalley v. Methodist Healthcare, 517 F.3d 911,

915 (6th Cir. 2008). If Medicare pays for an item or service payable by the 

beneficiary's insurance, the payment is conditional and subject to 

reimbursement, and to recover a conditional Medicare payment, the United 

States "may bring an action against" the insurance company. Dow Corning, 250 
10 A-0603-19T1

B.R. at 336 (citing 42 U.S.C. §§ 1395y(b)(2)(B)(i) to (ii)). However, for costs 

arising out of accidents that occurred before December 5, 1980, the Centers for 

Medicare and Medicaid Services does not seek to recover payments.5

Therefore, Medicare was the primary payer before the MSP Act and the 

MSP Act permitted Medicare to remain the primary payer for injuries arising 

from accidents that occurred before December 5, 1980. Because of this, if 

Mecouch is indeed eligible for Medicare, which both parties assert he became 

eligible for twenty-four months after his accident, Medicare serves as the 

primary payer. While plaintiff argues defendant acted as if and seemed to 

believe it was the primary payer from 1977 until 2015, when it sent the lett er to 

Mecouch, defendant's mistake does not change the law. If anything, plaintiff 

likely reaped the benefits of this mistake in prior billings. 

5

 "[The Centers for Medicare and Medicaid Services] has consistently applied 

the [MSP] provision for liability insurance . . . effective December 5, 1980. As 

a matter of policy, Medicare does not assert an MSP liability insurance-based 

recovery claim against . . . payments where the date of incident . . . occurred 

before December 5, 1980." U.S. Dept. of Health and Human Servs., Center for 

Medicare and Medicaid Servs., Liability Insurance (Including Self-Insurance): 

Exposure, Ingestion, and Implantation Issues and December 5, 1980 (Aug. 19, 

2014), https://www.cms.gov/Medicare/Coordination-of-Benefits-andRecovery/Coordination-of-Benefits-and-Recovery-Overview/Non-GroupHealth-Plan-Recovery/Downloads/ExpIngestionImpRevisedOct11.pdf.
11 A-0603-19T1

Defendant asserts that when the trial court held the effect of N.J.S.A. 

39:6A-6, is to grant defendant an offset against the bill's full charges in the 

amount of the $84,339.94 Medicare payment, it was error because the federal 

law mandate of Medicare primacy is determinative of plaintiff's asserted 

entitlement to recovery from defendant and the trial court's construction of the 

No-Fault Act and the related ruling in plaintiff's favor yields a direct conflict 

between federal and state law, which requires the state law to yield, and which 

"ultimately . . . endorses a violation by [plaintiff] of federal law governing 

Medicare." We agree.

New Jersey's comprehensive no-fault statutory system is designed to 

ensure those injured in automobile accidents are compensated promptly for their 

injuries by immediate recourse to insurance or public funds; its goal is to ensure 

there are "financially responsible persons available to meet the claims of persons 

wrongfully injured in automobile accidents." Craig and Pomeroy, N.J. Auto Ins.

Law, § 1:1 (2021) (quoting Ross v. Transp. of N. J., 114 N.J. 132, 135 (1989) 

(quoting Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 371 (1966))). The 

purpose of the No-Fault Act "is to afford reparation or at least partial reparation 

for the objectively probable economic losses resulting from automobile 

accidents" and "requires prompt payment for medical expenses . . . to certain 
12 A-0603-19T1

classes of persons injured in an automobile accident without regard to 

negligence, liability or fault and without having to await the outcome of 

protracted litigation." Olivero v. N.J. Mfrs. Ins. Co., 199 N.J. Super. 191, 197 

(App. Div. 1985). "The PIP carrier is required under the [No-Fault Act] to pay 

all benefits when due." Aetna Cas. & Sur. Co. v. Para Mfg, Co., 176 N.J. Super. 

532, 535 (App. Div. 1980) (citing N.J.S.A. 39:6A-5 to -6; Solimano v. 

Consolidated Mutual Ins. Co., 146 N.J. Super. 393, 396-97 (Law Div. 1977)).

Under the collateral source rule, N.J.S.A. 39:6A-6, as it existed in 1977, 

the benefits of N.J.S.A. 39:6A-4 were "payable as loss accrues, upon written 

notice of such loss and without regard to collateral sources, except that benefits 

collectible under workmen's compensation insurance, employees['] temporary 

disability benefit statutes and [M]edicare provided under [f]ederal law, shall be 

deducted from the benefits collectible . . . ." Frazier v. Liberty Mut. Ins. Co., 

150 N.J. Super. 123, 129 (Law Div. 1977) (quoting N.J.S.A. 39:6A-6).

In Lusby v. Hitchner, we noted that the New Jersey Supreme Court made 

clear in Aetna Insurance Co. v. Gilchrist Bros., Inc., 85 N.J. 550 (1981), "the 

legislative intent in enacting no-fault was to make PIP benefits the immediate 

and primary source of medical expense payment except as otherwise provided 
13 A-0603-19T1

by N.J.S.A. 39:6A-6 . . . ." Lusby v. Hitchner, 273 N.J. Super. 578, 585 (App. 

Div. 1994).

However, both no-fault insurance and Medicare have gone through many 

changes since 1977. In short, the trial court's ruling cannot stand due to the 

current workings of Medicare, the adoption of fee schedules by Medicare, the 

non-adoption of in-patient hospital fee schedules by New Jersey's no-fault 

scheme, more recent interpretations of both, and federal preemption.

Based on our review of the record and the relevant statutes and 

regulations, the trial court's ruling impermissibly approves plaintiff's violation 

of federal law governing Medicare benefits, because plaintiff cannot accept the 

payment from defendant awarded by the trial court without violating its 

obligations under federal law as a Medicare-participating provider.

Plaintiff, as a participating provider, was required by federal law to bill 

Medicare and accept its disposition of the charges as payment in full under 42 

U.S.C. § 1395cc. This means the provider must bill Medicare only and the 

beneficiary can only be charged for deductible and co-insurance amounts. Holle 

v. Moline Pub. Hosp., 598 F. Supp. 1017, 1019-20 (C.D. Ill. 1984) (interpreting 

42 U.S.C. § 1395cc(a)(1)(A)). Federal law dictates that Medicare participating 

providers "are prohibited from trying to collect the remaining balance," which 
14 A-0603-19T1

is the difference between the billed costs of treatment and the Medicare 

reimbursement payments, and are contractually obligated to accept the Medicare 

reimbursement payments as a condition of their participation in the Medicare 

system. Froedtert Mem'l Lutheran Hosp., Inc. v. Nat'l States Ins. Co., 765

N.W.2d 251, 254 (Wis. 2009).

Medicare, in the present day, is administered by the CMS. Froedtert, 765 

N.W.2d at 253. CMS contracts with hospitals to provide patient care for 

Medicare beneficiaries under 42 U.S.C. § 1395cc, which requires participating 

providers, in exchange for receiving Medicare payments, to refrain from 

charging beneficiaries for "items or services" already paid by Medicare. Id. at 

253-54 (quoting 42 U.S.C. § 1395cc(a)(1)(A)); see also Holle, 598 F. Supp. at 

1019. The provider may only charge the beneficiary for deductible or coinsurance amounts. Holle, 598 F. Supp. at 1020.

In the Omnibus Budget Reconciliation Act of 1989, Pub. L. No. 101-239, 

103 Stat. 2106, Congress authorized the use of Medicare fee schedules to replace 

the previous methodology of customary, prevailing and reasonable charges. 

Under the new fee schedule method, participating hospitals were to charge each 

patient at the hospital's standard rates for the actual services rendered, and then 

Medicare was to reimburse the providers at the previously-contracted Medicare 
15 A-0603-19T1

reimbursement rates. Froedtert, 765 N.W.2d at 254. After Medicare has 

reimbursed the provider, the participating hospital is "prohibited from trying to 

collect the remaining balance—the difference between the billed costs of 

treatment and the Medicare reimbursement payments. Ibid. (citing 42 U.S.C. 

1395cc(a)(1)(A)). They are contractually obligated to accept the Medicare 

reimbursement payments as a condition of their participation in the Medicare 

system." Ibid. (citing 42 U.S.C. § 1395cc(a)(1)(A)). Participating hospitals are 

thus prohibited from what is referred to as "balance billing," for instance, 

"[u]nder its agreement with Medicare, the [h]ospital may not file a lien for 

amounts that represent charges for covered services for which Medicare has 

been billed by the provider, except for deductible or co-insurance amounts." 

Holle, 598 F. Supp. at 1021. "Payment of the provider's charges by Medicare 

extinguishes the beneficiary's debt to the provider." Ibid.

Here, after defendant informed plaintiff that Mecouch was covered by 

Medicare, plaintiff billed Medicare and Medicare remitted payment under its fee 

schedule. Thus, as a Medicare participating hospital, plaintiff was required to 

accept Medicare's payment as extinguishing Mecouch's debt except for the 

deductible and co-payment amounts. Plaintiff did so, billing defendant for the 

deductible and co-payment amounts, which defendant was required to pay on 
16 A-0603-19T1

Mecouch's behalf, but did not, something defendant now concedes was a 

mistake. Therefore, Medicare's payment extinguished Mecouch's debt except 

for the deductible and co-payment amounts, and plaintiff was not permitted to 

"balance bill" defendant for its total costs of treating Mecouch.

As explained on the Medicare website, when there is more than one payer, 

"coordination of benefits" rules decide which one pays first. U.S. Centers for 

Medicare & Medicaid Servs., How Medicare Works with Other Insurance, 

Medicare.gov, (last visited Oct. 22, 2020), 

https://www.medicare.gov/supplements-other-insurance/how-medicare-workswith-other-insurance. The "primary payer" pays first, up to the limits of its 

coverage, and the "secondary payer" only pays if there are costs the primary 

insurance did not cover. Id. Under 42 U.S.C. §§ 1395y(b)(2)(B)(i) to (iii), if 

the primary payer does not or cannot reasonably be expected to make payment 

promptly, Medicare may make a conditional payment, for which Medicare can 

later seek reimbursement from the primary payer, initiating legal action if 

necessary. However, if there is a dispute as to whether an individual is covered 

by Medicare, the insured must go through an administrative process and hearing

pursuant to 42 U.S.C. § 405(b).
17 A-0603-19T1

Here, Medicare, as the primary payer (because of the exception to the MSP 

Act for Mecouch's 1977 accident) would pay plaintiff up to its limits, now 

according to a fee schedule, and defendant would be required to pay the costs 

Medicare did not cover, the deductible and co-insurance, of $12,236. Even 

where Medicare is not the primary payer, the statutes provide that it is to make 

a conditional payment if the primary payer does not pay promptly, and then seek 

reimbursement from the insurance company later, if it turns out Medicare is not 

liable. Further, plaintiff is not permitted to bill defendant for the balance of its 

expended costs under 42 U.S.C. § 1395cc(a)(1)(A).

Thus, to require defendant to pay the over-$800,000 bill upfront, then to 

bill Medicare, interferes with Medicare's methods of paying first according to 

its fee schedule, as well as its prohibition on balance-billing, presenting a 

conflict with, and an obstacle to, the federal scheme. This sequence of payment 

would essentially be balance-billing, albeit in a reverse order, which is 

prohibited for participating hospitals that contract with Medicare. Accordingly, 

interpreting N.J.S.A. 39:6A-6, as applied to those cases that fall under the MSP 

Act exception, requiring the insurance company to pay first cannot stand as it 

presents a conflict with the federal statute barring balance billing, along with an 

obstacle to the federal method of utilizing Medicare as the primary payer, thus 
18 A-0603-19T1

implying preemption. Nor is it necessary to rely on this interpretation to 

effectuate the purpose of the New Jersey No-Fault Act: prompt payment 

regardless of fault. Therefore, Medicare will promptly pay, even where the MSP 

Act applies, and Medicare may make a conditional payment when the primary 

payer does not pay promptly. 

Lusby recognized that the MSP Act, rendering Medicare as a secondary 

payer for accidents after December 5, 1980, supersedes the "contrary provision 

of N.J.S.A. 39:6A-6," which Lusby stated "apparently" renders Medicare 

primary to no-fault. Lusby, 273 N.J. Super. at 585-86. The Lusby court noted 

under the Supremacy Clause of Article VI of the United States Constitution, 

"contrary provisions of state no-fault law are preempted by the federal [MSP 

Act]." Ibid. Here, as discussed, Mecouch's accident fell under an exception 

under the MSP Act, so the provision of N.J.S.A. 39:6A-6 that "apparently" 

makes Medicare primary is not pre-empted in this case.

The Lusby court also noted the workers' compensation carrier is primarily 

liable for any "benefits collectible" under the workers' compensation statute.

Lusby, 273 N.J. Super. at 585. In Talmadge v. Burn, decided in 2016, the court 

stated that workers' compensation "is the primary source of satisfaction of the 

employee's medical bills, as provided by the collateral source rule, N.J.S.A. 
19 A-0603-19T1

39:6A-6, which 'relieves the PIP carrier from the obligation of making payments 

for expenses incurred by the insured which are covered by workers' 

compensation benefits.'" Talmadge v. Burn, 446 N.J. Super. 413, 418 (App. 

Div. 2016) (quoting Lefkin v. Venturini, 229 N.J. Super. 1, 7 (App. Div. 1988)). 

"Where only workers' compensation benefits and PIP benefits are available, the 

primary burden is placed on workers' compensation as a matter of legislative 

policy by way of the collateral source rule of N.J.S.A. 39:6A-6." Ibid. (quoting 

Lefkin, 229 N.J. Super. at 9 (citing Gilchrist Bros., 85 N.J. at 550)).

In Lambert v. Travelers Indemnity Co. of America, also decided in 2016, 

we held that "workers' compensation benefits are the primary source of recovery 

for injuries suffered by employees in a work-related automobile accident," and 

because of that, "PIP insurers are relieved from the obligation to pay medical 

expenses under N.J.S.A. 39:6A-6." Lambert v. Travelers Indem. Co. of Am., 

447 N.J. Super. 61, 71 (App. Div. 2016). The Lambert court held "[t]he 

collateral source rule does not make workers' compensation insurance part of 

the PIP no-fault system; rather it shifts the burden of providing insurance from 

the automobile insurance system to the workers' compensation system." Id. at 

74. "Indeed, the statutory words 'deducted from' are most clearly understood as 
20 A-0603-19T1

shifting the insurance coverage from automobile insurance to workers' 

compensation insurance." Ibid.

Although these cases deal with workers' compensation, the practical 

application is the same for those situations where the MSP Act does not apply, 

such as here, where Mecouch's accident occurred before December 5, 1980. In 

this case, the burden is shifted from the no-fault PIP carrier to Medicare; 

Medicare takes the primary payer position; and Medicare pays according to its 

own fee schedule, separate from that of New Jersey no-fault insurance. See In 

re the Commissioner's Failure to Adopt 861 CPT Codes and To Promulgate 

Hospital and Dental Fee Schedules, 358 N.J. Super. 135, 150 (App. Div. 2003).

Then, the Medicare participating hospital must accept Medicare's fee schedule 

payment as extinguishing the beneficiary's debt other than co-insurance and 

deductibles, which are then covered by the PIP carrier. Interpreting N.J.S.A. 

39:6A-6 as to Medicare in the same way it is interpreted in Talmadge and 

Lambert as shifting the responsibility to Medicare is logical and efficient, and 

comports with and does not present a conflict or obstacle to the federal Medicare 

method of payment.

However, again, where there is no exception to the MSP Act, Medicare is 

the secondary payer and the PIP insurer would have to pay the bill according to 
21 A-0603-19T1

New Jersey no-fault fee schedules. Here, that would be the entire bill because

there is no fee schedule for inpatient hospital services.

Although the hospital expended over $800,000 in treating Mecouch, its 

contract with Medicare requires them to consider Mecouch's bill extinguished 

on Medicare's payment according to its fee schedule. It follows, then, that 

Mecouch only incurred expenses of the co-insurance and deductible amount of 

$12,236.

Even if defendant did mistakenly serve as primary payer for thirty-seven 

years, well after Mecouch likely became eligible for Medicare, that does not 

change the law, and if anything, plaintiff has benefitted from prior payments 

reflecting the fully-billed amount. Plaintiff received prompt payment from 

Medicare once directed to bill Medicare, but then chose to refund that amount

to pursue the fully-billed amount.

We reverse and remand to order defendant to pay $12,236 due from 

Mecouch's co-insurance and deductible after Medicare submitted payment to 

plaintiff, plus interest. Although plaintiff returned the Medicare payment, and 

it is possible that payment is no longer recoverable, doing so was plaintiff's 

choice in a bid to recover its fully-billed amount. We do not consider such 

payments defendant's responsibility.
22 A-0603-19T1

Going forward, Medicare should be billed primarily, with defendant liable 

to pay Mecouch's costs of co-insurance and deductible, afterwards. However, 

should Medicare find Mecouch is not covered under its program, defendant is 

liable for the amounts according to New Jersey's no-fault insurance scheme, 

which here, is the fully-billed amount, whether or not an appeal is brought to 

Medicare under Olivero and Para Mfg. The trial court must also determine 

appropriate fees and costs because plaintiff is now unsuccessful. But, similarly,

defendant is now only partially successful because it is still responsible to pay 

the $12,236 in co-insurance and deductible immediately, which it did not pay 

before.

Reversed and remanded for the entry of an order consistent with this 

opinion.