Jump to full article: Law.com, 2008-11-07
Author: Billy Shields Daily Business Review
Intro: The Justice Department is involved in talks with several attorneys for sick smokers in an effort to collect federal income tax and Medicare money from a $580 million trust fund being distributed to members of a disbanded Miami class action, according to confidential memos obtained by the Daily Business Review.
The federal government's interest in the fund has some attorneys scrambling to determine the best way to proceed with distributing the money to sick smokers. Several contend that the fund is not a typical lawsuit judgment and is not subject to federal income tax or Medicare liens.
One of the memos written by a lawyer representing some smokers in negotiations with the federal government said Justice lawyers "are steadfast in their position regarding their right of recovery from these payments," and they don't plan to give any guidance on how much money they will seek until they find out how many Medicare recipients are receiving checks.
The goal of the negotiations is to reach "a fair, global compromise" and set a reimbursement figure that would satisfy Medicare claims in one lump sum, one memo said.
The federal government contends it should be able to recover any money spent providing health care to sick smokers who are recovering money for care they didn't pay for.
But some lawyers for smokers say the fund isn't subject to federal taxes or Medicare liens because the fund is not part of a judgment for monetary damages caused by any illness.
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Quotes from this article:
It's not a duck, and it's not a goose. We don't know what it is.
Fund trustee Miles McGrane III, on the $580 million trust fund being distributed to members of the former Engle class. The Justice Department is involved in talks with several attorneys in an effort to collect federal income tax and Medicare money from the fund.
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