Tag Archive for 'Medicare set aside'

DISTRICT COURT REVIEWS AND APPROVES PARTIES' LMSA

Published on October 6, 2011 in Uncategorized. Closed Tags: , , , , , .

In a recent order by the United States District Court for the Eastern District of Arkansas, the court approved the parties’ Liability Medicare Set Aside (“LMSA”) amount to cover the plaintiff’s future medical treatment for accident-related injuries that would otherwise be covered by Medicare.  The plaintiff had sued seeking damages associated with a permanent and disabling injury to his right hand while working as a truck driver aboard a floating barge.  The parties reached a settlement agreement where plaintiff agreed to compromise and discharge all claims against defendant in the liability suit and all claims under the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq., against the employer and workers’ compensation carrier in exchange for a total payment of $1,000,000.00. 

The plaintiff was a current recipient of Social Security Disability benefits, and therefore, he was Medicare eligible.  To protect Medicare’s interest in the settlement, the parties agreed to establish an LMSA and retained the Garretson Resolution Group to determine an LMSA amount to cover the future cost of plaintiff’s accident-related medical treatment.  The proposed LMSA was submitted to CMS for approval, but CMS refused to review it due to “workload issues.”  Instead, the parties filed a motion with the court to review and approve the proposed LMSA.  The court approved the proposed LMSA finding that the parties had reasonably considered and protected Medicare’s interest in the settlement and that the LMSA amount fairly and reasonably took Medicare’s interest into account. 

It seems likely that CMS will refuse to review the majority of LMSA’s submitted for third-party liability settlements.  By having a court review and approve a proposed LMSA, parties can obtain some assurance that the amount set aside is sufficient and meet their good faith obligations.

Date of Decision: August 9, 2011
Smith v. Marine Terminals of Arkansas et al., No. 3:09-CV-00027 (E.D. Ark. Aug. 9, 2011).

ONE CMS REGIONAL OFFICE'S POLICY ON LIABILITY MEDICARE SET ASIDES

Published on September 6, 2011 in Uncategorized. Closed Tags: , , , .

While there are no formal guidelines with respect to Liability Medicare Set-Asides (LMSAs), a regional CMS office recently released a memo that addresses the issue. The memo was prepared by Sally Stalcup, MSP Regional Coordinator of the Region VI office, which covers Arkansas, Louisiana, New Mexico, Oklahoma and Texas. Stalcup explains that Medicare’s interests must be protected in settlements involving Medicare beneficiaries but that CMS does not mandate a specific mechanism to protect its interest. Stalcup also notes that the law does not specifically require a “set-aside” in any situation. Stalcup, however, emphasizes that the law requires that the Medicare Trust Funds be protected from payment of future services regardless of whether it involves a Workers’ Compensation and liability case. Stalcup notes that CMS prefers set-asides because they offer the best protection for both Medicare and the Medicare beneficiary.

Stalcup explains that anytime a settlement, judgment or award provides funds for future medical services, it can reasonably be expected that those monies are available to pay for future services “related to what was claimed and/or released in the settlement, judgment, or award.” Therefore, Medicare should not be billed for future services until the funds in the set-aside are exhausted. Medicare’s right of recovery, and the prohibition from billing Medicare for future services, extends to all those services “related to what was claimed and/or released in the settlement, judgment, or award” and not just services related to the actual injury/illness that is the basis of the case.

According to Stalcup, the fact that a settlement, judgment, or award does not specify payment for future medical services does not mean that they are not funded. The only time Medicare recognizes the parties’ allocation of liability payments to non-medical losses is when a court has reviewed the facts of the case and determined that there are no future medical services.

Stalcup explains that attorneys are going to have to decide, based on the specific facts of each case, whether there is funding for future medicals. If so, the plaintiff’s attorney should ensure that those funds are in fact used to pay for otherwise Medicare covered services related to the claim. Stalcup also recommends that defense counsel or the insurer document that they notified plaintiff’s counsel and the Medicare beneficiary that the settlement funds future medicals, which obligates them to protect the Medicare Trust Funds. While CMS does not review or sign off on counsel’s determination of whether there is a recovery for future medical services as a routine practice, regional offices may review submitted set-aside proposals, especially in cases involving a large recovery.

In order to determine what is necessary to comply with the Medicare Secondary Payer Act, counsel must find out whether the case involves a Medicare beneficiary or a plaintiff with a “reasonable expectation” of becoming a Medicare beneficiary within 30 months. If the case involves either of these, there will be a potential Medicare set-aside issue.

NEW JERSEY SUPERIOR COURT HOLDS THAT SAME STANDARD APPLIES TO MSAs IN BOTH WORKERS’ COMPENSATION AND THIRD-PARTY LIABILITY CASES; ATTORNEYS’ FEES MAY BE DEDUCTED FROM MSA

Published on July 26, 2011 in Uncategorized. Closed Tags: , , , .

As further support that Medicare Set-Asides (MSAs) are necessary to protect Medicare’s future interest in third-party liability cases, the New Jersey Superior Court recently held that there was no reason to apply a different standard to set asides created with money obtained from third-party liability claims than it applies to set asides created with money obtained from workers’ compensation claims.  See Hinsinger v. Showboat Atlantic City, 2011 N.J. Super. LEXIS 96, at *3 (Jan. 21, 2011).  The court explained that the statutory and policy reasons for creating MSAs in both situations are the same: to protect the government from paying medical bills for which the beneficiary has already received money from another source.  Further, the court held that the same regulations and directives that apply to set asides created in workers’ compensation cases apply to third-party liability cases.

The court also considered whether Medicare regulations allow an attorney to recover fees for a judgment or settlement obtained on behalf of a client in a civil suit from the MSA.  After the plaintiff prevailed at trial, the parties settled the matter for $600,000.  Because the plaintiff only recently became eligible for Medicare, Medicare had not yet made any conditional payments.  Therefore, the only issue was the protection of Medicare’s future interest.  In an effort to comply with the Medicare Secondary Payer Act, the parties agreed to allocate $180,600, the amount the jury had awarded for projected actual medical costs, to an MSA.  Subsequently, the plaintiff’s counsel sought permission to withdraw a portion of his fees from the money allocated to the MSA.

The court found that 42 CFR § 411.37, which provides for a pro-rated reduction of attorneys’ fees from the total amount of conditional payments due to CMS, could also apply to funds obtained for future medical expenses obtained in a civil action.  The court reasoned that its decision to apply 42 CFR § 411.37 was in line with general principles of equity due to the fact that plaintiffs’ attorneys work on behalf of Medicare to secure funds to pay future medical expenses Medicare would otherwise pay.  Accordingly, the court held that attorneys’ fees incurred to procure a settlement or judgment may be deducted from the money allocated to an MSA.

It is unclear whether Medicare will provide coverage after the plaintiff’s reduced MSA is exhausted or whether Medicare will require the plaintiff to spend the amount deducted in attorneys’ fees.

LOUISIANA DISTRICT COURT DETERMINES SET ASIDE AMOUNT TO PROTECT MEDICARES INTERESTS

Published on January 14, 2011 in Uncategorized. Closed Tags: , , , , , .

After an evidentiary hearing, the United States District Court for the Western District of Louisiana recently determined the amount of future medical expenses to set aside from settlement proceeds in order to protect Medicare’s interest in compliance with the Medicare Secondary Payer Act, 42 U.S.C. 1395y.  In December of 2009, David Wayne Benoit became disabled when he injured his back and hip in an accident while working aboard a towboat.  Due to Benoit’s status as a seaman, Big R Towing paid maintenance and cure benefits under the general maritime law.  Benoit’s doctors agreed that Benoit needed back surgery and one of his doctors recommended he undergo a left hip replacement.  Big R Towing filed a declaratory judgment on the issue of whether maintenance and cure was owed for the recommended left hip replacement.  Benoit filed a counterclaim seeking damages under the Jones Act, 46 U.S.C. § 688(a), which allows seamen to bring actions against ship owners for negligence. 

At a settlement conference, the parties agreed to settle the case for $150,000.00.  Because Benoit was receiving Social Security disability benefits, as part of the consideration for the settlement, the parties agreed that Benoit would be responsible for protecting Medicare’s interests under the Medicare Secondary Payer Act.  The parties made an oral motion for the court to determine Benoit’s future medical expenses in order to set aside funds to protect Medicare’s interests.  With the consent of the parties, the court held a hearing in open court in which health care providers testified regarding Benoit’s future medical expenses.

In an opinion and order dated January 5, 2011, the court found that the settlement amount represented a reasonable compromise to avoid the uncertainty and expense of trial.  Based on information provided by the health care providers, the court determined that Benoit’s future medical expenses arising out of the December 2009 accident were $52,000.00 – $32,000.00 for the back surgery and $20,500.00 for a left hip replacement and that the medical expenses would not materially change if Benoit opted not to have surgery on his left hip and, instead, sought palliative treatment. 

In concluding that the parties “have reasonably considered and protected Medicare’s interests in the settlement of this matter,” the court held that Medicare was a secondary payer to the extent Benoit incurred Medicare-covered expenses, in the past or in the future, arising out of the accident and injuries alleged in the lawsuit.  Further, the court concluded that Benoit was obligated to reimburse Medicare for all conditional payments made before settlement and all medical expenses submitted to Medicare before the date of the order.  Since it was “reasonably expected” that Benoit may become a Medicare beneficiary in the future, the court ordered Benoit to set aside $52,500.00 to protect Medicare’s interest as the secondary payer for future medical expenses arising out of the injuries alleged in this lawsuit.

Date of Decision: January 5, 2011
Big R Towing, Inc. v. Benoit, et al., No. 10-538, 2011 U.S. Dist. LEXIS 1392 (W.D. La. Jan. 5, 2011).