UNCATEGORIZED

B. Josh Pettingill

There is mounting evidence that the Centers for Medicare and Medicaid Services (CMS) will establish formal guidelines for liability MSAs in the imminent future.  Medicare Secondary Payor compliance related to future medical care is an issue that can’t be ignored but that doesn’t necessarily mean setting up a Medicare Set-Aside on every case involving a Medicare beneficiary.  The following post will highlight several real-world case studies in order to educate plaintiff attorneys on how to eliminate or reduce any Medicare Set-Aside issues for liability claims.

Key Takeaways

  • Medicare Secondary Payor Compliance is serious business and shouldn’t be ignored as evidenced by recent DOJ actions against personal injury law firms.
  • There is no black and white solution as it relates to MSP compliance and futures.
  • Plaintiff attorneys must control the MSA process if they want to avoid unwanted delays.
  • A treating physicians’ attestation indicating the care is completed is the only CMS approved way to avoid an MSA.
  • Plaintiff attorneys must be vigilant about the release language for their client’s protection of Medicare benefits.

Introduction

Most defendants have started to mandate, as part of the release language, that the plaintiff choose one of two below options for addressing Medicare’s future interests, without exception in return for payment of the settlement monies:

  1. Plaintiff agrees to get a letter from the treating doctor that, as of the date of settlement, all accident-related medical care has been provided/completed[1]. This is a viable solution to avoid any possible future denial of injury related Medicare covered services.
  2. Plaintiff agrees to do a Medicare Set-Aside and agrees not to bill Medicare for any future care related to the subject accident until the set-aside is exhausted.

To illustrate this point, below is an actual email (redacted) from a defense attorney to the plaintiff attorney that highlights such a tactic by the insurance carriers. This case involved a $15,000 global settlement on an auto accident. This email is a perfect example of what is becoming the norm for Medicare-eligible plaintiffs.

Dear Plaintiff’s Attorney,

I apologize for the delay in getting back to you.  I have conferred with my client on this issue, and due to your client’s Medicare eligibility, my client is obligated under the laws previously mentioned to protect Medicare, which includes the treating physician certification requirement or doing a Medicare set aside.  This is a legal obligation and therefore I am not authorized to remove these terms from the Release.  The treating certification can simply be in the form of a letter that tracks the language in the CMS Memo.

Thank you,

Defense Attorney

Application

One could argue that most liability cases that settle for $15,000 or less do not fund future medicals when all damages are considered; therefore, there is no need to consider a liability set-aside for any case that resolves under $15,000. In the case example involving the email from defense counsel, the client had reached maximum medical improvement (MMI) and had completed all the accident-related care. The settlement was delayed for months before the attorney contacted Synergy for assistance because the attorney did not want to jeopardize his client’s Medicare benefits. Ultimately, Synergy was able to provide template language to the attorney for the treating doctor to specify that the care was completed at the time of the settlement. If the circumstances had been different and this plaintiff had required future care in this example, then the parties could have done an analysis of the future medical expenses compared to the net recovery to calculate the MSA amount. An MSA does not always involve getting a full report done with a comprehensive medical review; it simply means setting aside monies based on all the facts of the case.  To avoid these types of delays post-settlement, one idea for attorneys to consider is to have consensus by the settlement parties on release language (including any/all Medicare language) prior to going to mediation. That way, there are no unwanted delays in receiving the settlement funds once the case had been resolved.

No Medicare Set-Aside

There are situations when a no-treatment attestation letter by a treating physician is not applicable whereby future medicals are not funded. This is a prime example: Synergy was retained on a policy limits case that resolved for a total of $500,000 whereby a husband and wife were hit by a drunk driver after leaving a restaurant. As a result of the accident, both became paraplegics. The past liens were greater than $1 million and the future damages exceeded $25 million. Even though the release language stated that it was a release for past, present and future damages, there were simply no monies leftover to fund any future medicals. In this scenario, Synergy was able to put together a “No MSA” letter for the plaintiff, indicating the same and that Medicare’s future interests were adequately considered. The file was documented to indicate why nothing was set-aside. The release language also memorialized that there were no settlement funds paid out for future medicals.

Conclusion

There is no black and white approach to addressing MSP compliance on liability settlements. Synergy has created a litmus test for attorneys to screen cases and to determine whether an MSA is an appropriate solution. To download that document, click here. Plaintiff’s counsel should insist on controlling the MSA process from start to finish as they are the ones who have legal malpractice risks and personal liability if, in fact, they fail to properly advise their client regarding the Set-Aside issue. Synergy frequently can justify why there is no need for an MSA or greatly reduce the MSA obligation. These savings are real dollars that go directly to the injury victim instead of Medicare.

Synergy provides no cost consultations to attorneys; please contact us if you have any questions that we can help you with at (877) 242-0022 or schedule a consultation here.

[1] On September 29, 2011, CMS issued a memorandum indicating there is no need for a liability Medicare Set-Aside and that its interests would be satisfied if the treating physician certified in writing that treatment for the alleged injury related to the liability insurance had been completed as of the date of settlement

To learn more about Liability Medicare Set-Asides MSAs Case Studies watch our educational video below.

It is a very common practice for insurance carriers to negotiate catastrophic workers’ compensation claims using offers in the form of both upfront cash to the claimant and a structured settlement. At a minimum, any case involving a Medicare set aside will typically be funded with a structured settlement annuity. AIG, Berkshire Hathaway, and USAA not only have property and casualty companies which ensure the employers, but they also have their own in-house structured settlement programs. If they can get the claimant to agree to a structured settlement with their own company, they may see additional financial benefits at the expense of the claimant.  This is why it is imperative for attorneys who represent injured workers to have their own settlement consultant to ensure that if any settlement offers are made in the form of a structured settlement, that the claimant will, in fact, get the largest payout available from the highest rated company/companies.

In a recent case, we were asked to attend a settlement conference for a paraplegic where AIG was the excess carrier. There was a $550k WCMSA and the claimant was receiving 12 hours a day of attendant care. Every offer made during the mediation contained a structured settlement payout for not only funding the WCMSA obligation but also for the attendant care for the lifetime of the claimant. The case ultimately resolved for $3.0 million, of which $1.25 million was used to fund a structured settlement. What is important to note is that Synergy was able to hold AIG’s feet to the fire regarding what companies to use for funding the structured settlements. We were able to put nearly $88k in additional dollars directly in the claimant’s pockets in the form of a cost savings to purchase those same structured settlements since the employer/carrier’s structure broker was only quoting AIG. Prior to mediation, we had priced out the entire annuity marketplace and knew that New York Life and Pacific Life had the best rates respectively, not AIG. We were able to leverage that information for the benefit of our clients.

There is a difference between a settlement consultant/planner and a structured settlement “broker”. A broker sells structured settlement annuities while a settlement consultation/planner is an expert who provides a “settlement plan”.   A settlement consultant should have an arsenal of options for the claimant to consider as part of any settlement plan. A structured settlement is generally the cornerstone of any settlement plan for a catastrophic workers’ comp claim, but it cannot be the only component for consideration by the injured worker. A qualified expert should also have extensive knowledge in dealing with trusts, Medicare Set-Asides, MSP compliance as well as public benefit protection. Most importantly, they should have the experience in assisting both claimants and claimant’s attorneys on catastrophic workers’ compensation cases.

At Synergy, we frequently attend settlement conferences/mediations either in person or by phone at NO COST to the attorney or injured worker. Our expert settlement consultants can quarterback the settlement process as part of a holistic settlement team approach. This approach may include utilizing our certified Medicare set aside specialists, certified financial planners, nurse allocators, economists, subrogation analysts, or public benefits attorneys to provide direct support before, during and after the negotiations. Don’t rely upon the employer/carrier’s “structure specialist”. Those “specialists” are brokers and are there to protect the employer/carrier, not the claimant and the claimant’s attorney. The earlier Synergy gets involved in the settlement process, the better equipped you will be to recover maximum available dollars. Call us today to show you how we can help increase the value of the case, protect your firm/your client and assist in getting catastrophic claims to the finish line expeditiously when dealing with CMS or Medicare eligible claimant.

Reprinted with permission from Roger Baron

In Durham v. Prudential Insurance, 2012 WL 3893604 (S.D.N.Y. Aug. 28, 2012), the Court was requested by the ERISA Insurer to uphold the “discretionary clause”  of the SPD, but the plan document did not contain a “discretionary clause.”  This Court applied the Supreme Court’s ruling in Cigna v. Amara and held that “the SPD cannot confer discretion.  Accordingly, the appropriate standard of review is de novo.”  This opinion provides as follows:

Prudential argues that the SPD should be considered in determining the standard of review. The SPD’s language is clear about Prudential’s discretion. However, the Supreme Court recently held that “statutorily required plan summaries (or summaries of plan modifications)”—like the SPD—may not be enforced as if they are the terms of the plan itself. CIGNA Corp. v. Amara,131 S.Ct. 1866, 1877 (2011).

Prudential suggests that the SPD nonetheless should be considered part of the Plan because it is contained in the same bound booklet as the Group Insurance Certificate. “However, an insurer is not entitled to deferential review merely because it claims the SPD is integrated into the Plan. Rather, the insurer must demonstrate that the SPD is part of the Plan, for example, by the SPD clearly stating on its face that it is part of the Plan. A contrary decision would undermineAmara.” Eugene S. v. Horizon Blue Cross Blue Shield of N.J., 663 F.3d 1124, 1131 (10th Cir.2011). Here, the SPD expressly provides that it is not part of the Group Insurance Certificate.

To view the opinion, click HERE

Reprinted with permission from Roger Baron

In Durham v. Prudential Insurance, 2012 WL 3893604 (S.D.N.Y. Aug. 28, 2012), the Court was requested by the ERISA Insurer to uphold the “discretionary clause”  of the SPD, but the plan document did not contain a “discretionary clause.”  This Court applied the Supreme Court’s ruling in Cigna v. Amara and held that “the SPD cannot confer discretion.

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