Dorothy Clay Sims on TLV Podcast

In Episode 21 of Trial Lawyer View, Jason D. Lazarus had an insightful conversation with Dorothy Clay Sims, a well-known trial lawyer and author based in Florida. During the podcast, they discussed a range of topics related to her career as a trial lawyer, including her work on behalf of individuals with disabilities, her approach to debunking expert witnesses, and some of the key themes from her book, Exposing Deceptive Defense Doctors.

One of the most interesting aspects of the conversation was the way in which Dorothy’s personal experiences helped to shape her career as a trial lawyer. As she explained, her brother was born with Down syndrome and, growing up, she became acutely aware of the challenges that individuals with disabilities face in society. This experience motivated her to pursue a career in law, with a particular focus on representing those who are often overlooked or marginalized.

During the podcast, Dorothy also discussed her approach to dealing with expert witnesses in medical malpractice cases. As she explained, many defense experts use tactics such as selective testing or cherry-picked data to support their clients’ arguments. However, by thoroughly investigating their methods and exposing any flaws or biases in their approach, Dorothy has been able to successfully challenge their testimony and win cases for her clients.

Finally, the conversation turned to Dorothy’s book, Exposing Deceptive Defense Doctors. In the book, she provides a detailed guide to the tactics used by defense doctors, as well as practical tips for how trial lawyers can effectively challenge their testimony in court. She also emphasizes the importance of building a strong relationship with clients and developing a deep understanding of their individual needs and concerns.

Overall, Episode 21 of Trial Lawyer View provides a fascinating insight into the life and work of Dorothy Clay Sims. Her dedication to fighting for the rights of individuals with disabilities, her innovative approach to dealing with expert witnesses, and her practical advice for trial lawyers make her a true inspiration to anyone working in the field of law.

Learn more here.

Synergy’s Workers’ Compensation Medicare Secondary Payer Advice Column

October 14, 2021

Rasa Fumagalli JD, MSCC, CMSP-F

As we reflect on the 20th anniversary of the devastating September 11, 2001, terrorist attacks on US soil and all the lives lost, we cannot forget the heroic efforts of all the first responders and workers involved in the clean-up of the devastation sites. Since then, many have developed a whole host of health conditions due to the exposure to toxic chemicals and the gruesome nature of the work. This month’s “Since You Asked” column will address the interplay between workers’ compensation claims, the World Trade Center (WTC) Health Program, and the Medicare Secondary Payer Act.

Question:

My client sustained a workers’ compensation injury during the clean-up of the World Trade Center Ground Zero site. Should I have a Medicare Set-Aside proposal submitted to CMS for review or is there a different process for this? 

Answer:

The clean-up of the September 11, 2001 devastation sites exposed many workers to dust and toxic chemicals for a prolonged period. This resulted in the development of respiratory illnesses as well as different cancer types and other conditions.  No cost medical monitoring and treatment for certain medical conditions may be available through the federal World Trade Center (WTC) Health Program for qualified workers that provided rescue, recovery, debris clean up or related services after the 9/11/2001 attacks during the period between 9/11/2001 and 7/31/2002. By way of background, the WTC Health Program was developed in connection with the passage of the James Zadroga 9/11 Health and Compensation Reauthorization Act. The Act is named after a New York City police officer who developed a respiratory disease after his prolonged exposure to dust at the WTC Ground Zero Site. The WTC Health Program is administered by the National Institute for Occupational Safety and Health (NIOSH) and is funded through 2090. Details regarding eligibility and enrollment into the WTC Health Program may be found here.

Workers that are enrolled in the WTC Health Program may also have a companion workers’ compensation case. The coordination of benefits between the WTC Health Program and the workers’ compensation plan is addressed in the WTC Health Program’s “Policy and Procedures for Recoupment Lump-Sum Workers’ Compensation Settlements” (Policy) guide that was last revised on July 7, 2016. When a settlement releases an employer/insurer from responsibility for future medical expenses, the WTC Health Program will seek to recover its cost of providing health care and pharmacy benefits “either from the member or from the individual/entity designated to administer any set-aside established to pay for future medical expenses.” The WTC Health program “will follow best practices for WC recoupment as outlined by the Centers for Medicare & Medicaid Services (CMS) in its “Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide.”

The Policy guide also provides information on how to estimate the amount of money to be set aside to protect the WTC Health Program. If CMS reviewed and approved a WCMSA for expenses related to the same conditions that were certified for treatment under the WTC Health Program, the CMS determination will be given deference.  The funds in the CMS reviewed WCMSA however must be used to reimburse the WTC Health Program annually for the cost of the treatment that was provided in the case. The Policy Guide also provides for the submission of proposed set-asides to the WTC Health program for review.

In your case, I would recommend that you determine whether your client qualifies for the WTC Health Program. This would then guide you in deciding how to address future injury related medical expenses in a settlement that closes out future medical care.

Understanding Structured Settlements and Medicare Set-Asides

October 14, 2021

Samantha Webster

Settlement – What to Consider for a Medicare Set-Aside (MSA)

When settling a case involving a current Medicare beneficiary and before finalizing, it is important to understand what actions need to be taken to consider Medicare’s interest. What does this all mean and what are the three most important things to consider?

    1. Medicare Set-Aside Decision

The threshold question is whether an MSA needs to be considered or not.  That turns on Medicare eligibility.  If they are eligible, then the next question is whether future medicals are funded.  If the answer to both questions is yes, then a set-aside allocation should be considered.  After determining that the injury victim is a current Medicare beneficiary (or even has a reasonable expectation of becoming Medicare eligible within 30 months) and that future medical treatment is needed for their injuries, the question is what is the cost of future injury-related Medicare-covered care. To determine the amount, either the defense or plaintiff need to request preparation of a Medicare Set-Aside allocation report identifying all future injury-related care and expected costs.

Once the decision is made on the amount necessary to cover future injury-related care, the final things to consider are what, if anything will be set aside in a formal MSA; how will the MSA account be funded and how will the MSA be managed?

    1. How is the MSA Account Funded?

Once the MSA allocation is complete and a decision is made to set money aside for future Medicare-covered services, the injury victim has two options to fund the MSA account. The first is a lump sum. From the settlement proceeds, the full specified sum according to the allocation report or the CMS approval is placed into the Medicare Set-Aside account by the injury victim. The full amount of the allocation is placed into the account and available to pay for injury-related care. The benefit of this funding option is all the funds are placed into the MSA account at once. The downside is that the settlement proceeds directly to the injury victim are reduced by the full amount of the allocation, and the funds may sit in the MSA account untouched for years or until appropriate injury-related care is needed. If and when the account is fully exhausted (the balance is taken to zero), Medicare resumes paying for the injury-related care.  The biggest downside is that there is fully exhaustion of the entire set-aside amount before Medicare will pay for any future injury-related care instead of annual temporary exhaustion using a structured settlement.

The second option is to fund the MSA with a structured settlement. The allocation report or the CMS approval generally will provide specific structured settlement annuity parameters. The parameters include an initial cash deposit made to establish the account (seed) followed by a series of annual payments over time. Periodic payments from a structured settlement annuity replenish the account annually. The duration of the periodic payments is specified in the allocation report or CMS approval and is based on the life expectancy of the injury victim.  The benefit of using a structured settlement to fund a Medicare Set-Aside is the cost savings for the injury victim. The savings can result in additional cash from the settlement in the pocket of the injury victim that is available for other uses. There really is no downside to using a structured settlement annuity to fund an MSA. It is all upside since a structured settlement with a rated age means less has to go into the set aside for a shorter duration.  Additionally, temporary exhaustion on an annual basis is possible which means Medicare will resume paying for the injury-related care each year after the annual amount is exhausted until the account is replenished with the next structured settlement payment.

    1. How is the MSA Account Managed?

Once the decision is made about how the MSA will be funded, the last critical item to be decided during settlement is how the set-aside will be administered. There are very specific requirements for administration of a Medicare Set-Aside as outlined by the two options available are self-administration and professional administration. With self-administration, the injury victim maintains control of the MSA account but is also responsible for paying all bills, at the correct rate, from their providers for injury-related care, tracking all payments from the MSA account, annual attestations (as required), and reporting depletion or exhaustion of the account. While CMS provides a helpful resource in the form of a Self-Administration Toolkit, the administration of the MSA may be a daunting task for many injury victims.[1] For injury victims who want to maintain control over their MSA account but are uncertain about meeting the requirements for self-administration, there are neutral, third-party companies who can offer some relief in the form of self-administration assistance.

For those injury victims concerned about the many requirements of administration and prefer help, there are numerous companies offering professional administration services. The professional administrator vendor employs a team of professionals to manage the custodial account created on behalf of the injury victim. The vendor has a clear understanding of the requirements for administration of the MSA account including the need to maintain records of every transaction, adequately reporting depletion or exhaustion, and other requirements. Additional benefits provided by the professional administration vendors may include helping injury victims find care, knowing the appropriate Medicare-approved rates for care, and receiving potential discounts on treatment and prescriptions. In certain cases, professional administration using a Medicare Set-Aside trust might be a preferred solution due to the longevity of a trust arrangement and additional legal protections of having a fiduciary.  For those injury victims who may be dual-eligible (Medicare and Medicaid eligible), it is necessary to have professional administration through a Special Needs Trust since the MSA needs to be wrapped in an SNT in this situation.  The benefit of a trust arrangement for someone on Medicaid and Medicare is keeping both benefits and having the fiduciary duty of the Trustee along with an MSA administrator.

Piecing it All Together

When settling cases involving someone who is a Medicare beneficiary or someone who might be in the near future, it is important to determine whether there is a need to consider Medicare’s interest.  If you determine there is a need, then doing an analysis of the future Medicare-covered injury-related care (an allocation) is a recognized method of doing.  Once you do an allocation, the next question is whether to fund a formal MSA.  If you do, then consideration should be given as to whether it is done with a lump sum versus a structured settlement annuity.  Most times, the benefit of funding via a structured settlement will make it the overwhelmingly logical choice.  Once funding decisions have been made, then the last question is how the set-aside will be administered.  Typically, these are really good reasons to professionally administer an MSA due to the complexities of doing self-administration.

That probably sounds complicated but having an expert on your side makes it a whole lot easier.  Synergy’s team of experts can provide guidance on these difficult issues making it a simple decision for your client to make.  Synergy can consult with the client about these issues, prepare a Medicare set-aside allocation report, provide funding options and assist with professional administration options.  It is part of our MSP 360 suite of services and a way for law firms to have an end-to-end solution for MSP compliance.

[1] Helpful information regarding self-administration and a link to the Self-Administration Toolkit can be found here: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Self-Administration

Primary Payer Status Shifts from Liability Carrier to Plaintiff Post-Settlement

Rasa Fumagalli JD, MSCC, CMSP-F

In Penelope Stillwell v State Farm Fire and Casualty Co., et al. case (2021 WL 4427081), a plaintiff attempts to impose primary payer status on a liability insurer post-settlement via a qui tam action in federal district court. The U.S. District Court, Middle District of Florida, Tampa Division addressed in this recent decision Stillwell’s complaint under the False Claims Act (FCA) and the MSP Act, the basis of the qui tam action. The essence of the claim against the insurer, State Farm, was that “by failing either to settle for an amount exceeding the expected medical expenses or to provide in the settlement some other mechanism to pay future medical expenses, the insurers failed to discharge their primary-payer responsibility and remain primary payers for post-settlement medical expenses.”  US District Judge Steven D. Merryday dismissed the Stillwell’s complaint with prejudice for a failure to state a claim under the FCA and MSP.

The underlying case involved an Indiana state court negligence action for injuries sustained by William Stillwell, a Medicare beneficiary, during a fall. Although the homeowners’ association, property management and landscaping company insurers reached a settlement agreement with the Stillwells for the lump sum of $200,000, the Stillwells refused to execute the settlement documents since the settlement didn’t include a Medicare Set-Aside to cover William’s expected future medical expenses that were estimated to be $700,000. The Indiana trial court’s determination that the settlement was enforceable, was affirmed by the Indiana Court of Appeals. The terms of the settlement agreement reflected the insurers agreement to pay Medicare’s conditional payments directly from the settlement agreement. After the settlement, CMS demanded reimbursement of $29,509.33 in conditional payments after procurement costs were deducted.

After the losses in the Indiana state courts, the Stillwells sued the insurers under the FCA arguing that the insurers failed to discharge their primary payer responsibility since the settlement was less than the estimated future medical expenses. They also argued that the insurers should remain primary payers for post-settlement medical expenses and that their failure to report this responsibility to the Centers for Medicare & Medicaid Services (CMS) caused William’s physicians to falsely bill Medicare. The defendants argued that the Stillwells became the primary payers for post-settlement care after enforcement of the settlement agreement. Challenges to the pleadings were also raised.

In considering these arguments, the District Court noted the lack of CMS rules for post-settlement futures in liability settlements when compared to the rules for workers’ compensation settlements. The District Court’s opinion went out of its way to explicitly point out that “CMS has decidedly avoided regulating private liability settlements that include a Medicare beneficiary.”  It declined to impose any such obligations since establishment of such rules belongs to the legislature or executive branches.

Stillwell also argued that the insurers hid their status as primary payers from CMS since they failed to report the Total Payment Obligation to Claimant (TPOC) settlement under their Section 111 Mandatory Insurer Reporting obligation. The Court found no support for this assertion since CMS had notice of the settlement based on the resolution of the conditional payments. Similarly, Stillwell’s claim that the insurers failed to complete Section 111 reporting of an Ongoing Responsibility for Medical (ORM) post-settlement was unfounded since there is no such reporting obligation for liability insurers for post-settlement medical expenses.

The Court also considered Stillwell’s claim that a settling party must consider Medicare’s interests by selecting one of the following mechanisms: the creation of a Medicare Set-Aside, an apportionment of part of the settlement for future medical expenses, a payment of a portion of the settlement into the Medicare Trust Fund or the proposal of an alternative plan to CMS. In examining these options, the District Court noted that there was no law that required the creation of a Medicare Set-Aside to cover future medical expenses in a liability case. Since a party may use the entire settlement to pay for post-settlement Medicare covered treatment, there was also no obligation to apportion funds from the settlement. Regarding Stillwell’s claim that the settlement should have included an amount that covers expected future medical expenses, the Court noted no substantive duty to include this in a personal injury claim settlement. Under the terms of the settlement agreement, the Stillwells became primarily liable for any future injury-related medical expenses. Since the Stillwells were responsible for post-settlement medical care, the insurers had no ORM to report.

The remaining arguments in the case focused on whether Stillwell’s FCA claims sufficiently alleged causation and a conspiracy between the insurers to violate the FCA and submit false claims or statements to Medicare. The Court found the claims were insufficient and warranted dismissal. Although Stillwell prevailed on her argument that her complaint was not a shotgun pleading, her action was dismissed with prejudice for failing to state a claim.

Take Away

Since William Stillwell died before the second amended complaint under the False Claims Act (FCA) and MSP Act was submitted, his need for any ongoing post-settlement medical care was moot. Rather, it appears that Penelope Stillwell’s FCA may have been motivated by a financial incentive along with a desire to force the Court to provide guidance regarding the consideration of Medicare’s interest in post-settlement injury-related care in a liability settlement.

It is clear that the Stillwells didn’t understand that the settlement of the case would make William the primary payer for any post-settlement injury-related care. Although his estimated future medical treatment would be about $700,000, liability settlements are compromise settlements that involve many more elements of damages than those found in workers’ compensation settlement. In light of this, it would be extremely rare to have a liability settlement include the full value of the estimated future medical care or even include an apportionment in the first place.

A discussion of the MSP Act and its potential impact on a settlement is a proactive way to prevent MSP confusion. Discussing the ramifications of the MSP with injury victims prior to settlement is important to avoid issues such as this and prevent the need to be in a federal district court post-settlement.

Learn more about Synergy’s MSP Compliance Services here.

Tom Edwards on TLV Podcast

In episode 20 of Trial Lawyer View, Jason D. Lazarus, the host and CEO of Synergy, had an intriguing conversation with Tom Edwards of Edwards & Ragatz, P.A. During the interview, Tom discussed his journey to becoming a trial lawyer and how his firm prioritizes a compassionate legal process.

Tom began college with the intention of pursuing a career in medicine, but after becoming disenchanted with the medical field, he found his passion in law. He became interested in medical malpractice litigation because it provided an opportunity to help people who had been wronged by medical professionals. This dedication to helping others has been a driving force throughout his career and is reflected in the way his firm handles cases.

One of Tom’s most noteworthy cases resulted in a $228M judgement, the largest in Florida history at the time. He discusses the details of this case and how it impacted his clients’ lives. He emphasizes the importance of trial lawyers making a positive impact by changing someone’s life or by making a systemic impact with each case they handle.

In addition to discussing his cases, Tom also talks about his involvement in various trial organizations, including the Florida Justice Association (FJA) and the American Board of Trial Advocates (ABOTA). He emphasizes the importance of being a part of these organizations and how they provide opportunities for growth and development as a trial lawyer.

Throughout the conversation, Tom emphasizes the importance of compassion in the legal process. He believes that his firm’s approach sets them apart and allows them to provide the best possible representation for their clients. He also shares some insights on how trial lawyers can stay passionate and motivated in their careers.

Overall, the conversation between Tom Edwards and Jason D. Lazarus is not only informative but also inspiring. It showcases the importance of empathy and compassion in the legal profession, and the impact that trial lawyers can have on their clients’ lives.

Learn more here.

The Economics Behind the Highest Paying Structured Settlements

September 30, 2021

Josh Pettingill, MBA, MS, MSCC

All structured settlements are not created equal. There is a strong possibility you are leaving money on the table for your client with your existing settlement consultant or worse, relying on the insurance carrier’s structure broker. In this brief article, I will explain some of the methods we employ to obtain the highest payouts on structured settlements.

To read more, download the article below:

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Brett Turnbull on TLV Podcast

In Episode 19 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus had a conversation with Brett Turnbull of Turnbull, Holcomb & LeMoine, PC. Turnbull talked about his journey from pursuing an international finance career to becoming a trial lawyer. He also shared how he balances his family life while working on cases across the country. Turnbull’s passion for helping people led him to his current career in personal injury law.

Turnbull’s entrepreneurial spirit played a significant role in his career as a trial lawyer. He shared how his desire to have more control over his work and be his own boss led him to start his own law firm. Turnbull emphasized that running a law firm is not only about practicing law, but also involves handling the business side of things. He also talked about how his firm’s team approach allows them to provide the best possible representation to their clients.

During the conversation, Turnbull discussed his methodology for preparing clients when giving their testimony. He explained that it is important to prepare clients for both the direct and cross-examination, as well as how to handle tough questions. Turnbull shared that his firm takes the time to get to know their clients and their stories to present a compelling case in court.

The conversation also touched on Turnbull’s litigation against large corporations, where he shared his experience going up against well-funded defendants. Turnbull explained that his firm’s approach is to focus on telling their clients’ stories and presenting a human side to the case. He emphasized the importance of staying true to one’s values and fighting for what is right, even if it means taking on powerful opponents.

In summary, Turnbull’s passion for helping people and his entrepreneurial spirit have driven his successful career in personal injury law. His methodology for preparing clients for their testimony and his emphasis on telling their stories have led to successful litigation against large corporations. Turnbull’s commitment to his values and his clients make him a valuable addition to the trial lawyer community.

In Episode 19 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus speaks with Brett Turnbull of Turnbull, Holcomb & LeMoine, PC. They talk about how he balances family life while working cases across the country, how he went from pursuing an international finance career to being a trial lawyer, and how the human side of the profession drives his career. They also discuss how his entrepreneurial spirit led to him forming his own law firm, his methodology for preparing clients when giving their testimony, and his litigation against large corporations.

Learn more here.

Beware of “Conscious Ignorance” Exception to Mutual Mistake Challenge to a Contract

September 9, 2021

Rasa Fumagalli JD, MSCC, CMSP-F

The American Bar Association’s Model Rules of Professional Conduct provide a blueprint for attorneys to follow when representing clients. The first Rule and arguably one of the most important ones, outlines a basic expectation in the client-lawyer relationship. Rule 1.1 states: “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.” The Comments section of this Rule notes that competent handling of a particular matter includes “inquiry into and analysis of the factual and legal elements of the problem and use of methods and procedures meeting the standards of competent practitioners. It also includes adequate preparation.” American Bar Association (ABA), Model Rules of Professional Conduct, 2020.

An attorney’s failure to make an inquiry into conditional payments is addressed in Forbes v. Benton County Agricultural Society, No. 20-1250, 2021 WL 1907130 (Iowa Ct. App. May 12, 2021). This action came before the Court pursuant to Plaintiff’s appeal of the district court’s order granting a summary judgment to the defendant.  The Court of Appeals affirmed the district court’s order finding that the settlement agreement was valid, and that Plaintiff bore the risk of the mistake that was made in the settlement.

The underlying case involved a negligence action filed by Forbes in 2019 against the Benton County Agricultural Society (hereafter Ag. Society) for his fall that occurred while leaving the fairgrounds in August of 2017. The fall resulted in a head injury that required emergency surgery. During the settlement negotiations, the defense attorney extended an initial settlement offer of $10,000.00 noting Forbes’ excellent recovery. She further advised that Forbes’ actual medical bills totaled $2,732.00, for which Tricare had a subrogation interest. She did not believe that Forbes had any out-of-pocket expenses or that medical providers had any additional charges.

Forbes’ attorney made a counteroffer of $12,500.00 to settle the case noting that he would pay the Tricare lien of $2,732.00 from the settlement. The offer was accepted by the defense attorney on the condition that the negligence action be dismissed with prejudice. She also advised that the settlement releases would include provisions requiring Forbes to “satisfy any subrogation interests and liens.” Since Medicare must be provided with information regarding any settlement with a Medicare beneficiary plaintiff, Forbes’ attorney was asked to complete an insurer information sheet for the reporting. He was also advised to request a final conditional payment demand letter from Centers for Medicare & Medicaid Services (CMS). Shortly thereafter, Forbes’ attorney returned the completed information sheet to the defense, advised that he would “get rolling on the clearance letter from CMS,” and requested that the settlement check be payable to his firm.

Defense followed up with Forbes’ attorney regarding the status of the conditional payments since their Medicare inquiry revealed that Forbes was a current Medicare beneficiary. She also advised that her client required the amount of the final conditional payment demand from CMS before the settlement check was issued. Forbes’ attorney responded several weeks later and advised that CMS had identified $25,482 in conditional payments.  Since he was surprised by this amount, he assumed that the Ag. Society would rather litigate comparative fault rather than reimburse Medicare for the conditional payments.

In response to Forbes’ assumption that the Ag. Society now wished to litigate the matter, the Ag. Society amended its answer to the negligence action to include the affirmative defense of compromise and settlement. A motion for summary judgment to enforce the settlement agreement was also filed.

Forbes’ attorney objected to the enforcement of the settlement agreement arguing that the agreement was voidable based on a mutual mistake. He also argued that there was no “meeting of the minds” since the defense sought a final demand letter from CMS before the settlement check was issued. The defense countered this by claiming the mistake was unilateral and that Forbes could have investigated the conditional payments prior to making a settlement demand in the case.

The district court granted the summary judgment, finding that there had been a meeting of the minds in reaching the settlement agreement. Although the contract was based on a mistaken assumption by Forbes, the settlement agreement was binding and enforceable.

The Court of Appeals agreed with the district court after considering the facts in the light most favorable to Forbes. In considering Forbes attorney’s argument that there was no “meeting of the minds” about the conditional payment terms, the Court reviewed the various communications between the parties. It noted that Forbes’ offer to settle his case for $12,500 was accepted by the defense. The defense’s requests for additional information to ascertain Forbes’ Medicare status and for the conditional payment clearance letter were acknowledged by Forbes when he returned the information and provided the defense with instructions on where to send the settlement check. These exchanges between the parties do not show any genuine material factual dispute about the agreement that could be litigated.

The Court next considered Forbes attorney’s claim that the settlement agreement was voidable because it rested on the erroneous mutual assumption that the only lien in the case belonged to Tricare and was in the amount of $2,732.00. Although the Court agreed that a mutual mistake may allow the party adversely affected to seek an annulment of the contract, it noted the Restatement Second of Contracts § 154 outlines the exceptions to this principle. According to the Restatement, there are three situations when the adversely affected party should bear the risk of the mistake. In this case Forbes‘ attorney met two of the three exceptions. He met the “conscious ignorance” exception in that he was aware when he agreed to the settlement that he had limited knowledge about the potential Medicare payments. Despite this, he went forward with the agreement and assumed the risk of the mistake. Since he had access to his client’s medical records, he could have investigated the existence of conditional payments.

The second exception allows a court to allocate the risk of the mutual mistake to the adversely affected party. The Court found that the district court was reasonable in assigning the risk of the mistake to Forbes’ attorney since he had the opportunity and the burden to inquire about the status of the medical bill payments given the nearly two-year period between the accident and the negligence suit. The $12,500 settlement agreement was found to be binding and enforceable.

Analysis

This case serves to highlight the impact of the Medicare Secondary Payer Act on a settlement involving a Medicare beneficiary plaintiff. 42 U.S.C. § 1395 Y(b)(2)(a). An understanding of the relevant provisions and procedures related to conditional payments would have prevented the parties from negotiating on false assumptions. In this case, an inquiry into the final conditional payment amount could have been made through the Medicare Secondary Payer Recovery Portal within 120 days of settlement. The figure could have also been reviewed in advance of final settlement and disputed. Furthermore, when assessing the known liens or reimbursement claims in a case, an amount that seems artificially low given the nature of the treatment should prompt further inquiry into the existence of other liens.

It is also important to note that a conditional payment demand that exceeds the settlement amount should always be reduced by Medicare. If Medicare does not have to take legal action to recover, Medicare regulations state: “If Medicare payments equal or exceed the judgment or settlement amount, the recovery amount is the total judgment or settlement payment minus the total procurement costs.” 42 C.F.R. 411.37(d). If no procurement costs or attorney’s fees are reflected on the final settlement detail documentation provide to Medicare at the time of settlement, Medicare will not reduce the amount of their conditional payment demand. Attorneys should be aware of this should they seek to reduce or waive their fees. This case may also be one that would benefit from a financial hardship waiver or compromise request to CMS.

If MSP compliance issues fall outside of your area of expertise, Synergy’s team is here to serve your needs. We have a deep team of experts that can help make sure you close your file compliantly.  Let Synergy be your guide to ensure your client is protected and your practice is safeguarded against potentially devastating government-enforced consequences or mistakes such as the one discussed in this blog post.

 

Synergy’s Workers’ Compensation Medicare Secondary Payer Advice Column

September 9, 2021

Samantha Webster

Structured settlements may be used to fund a Workers’ Compensation Medicare Set-Aside (WCMSA). Samantha Webster, Synergy’s Director of Case Management, addresses two common questions that come up about funding of a WCMSA with a structured settlement annuity.

Question #1:

“Are there different structured settlement options to fund a Medicare Set-Aside and what is the difference?”

Yes, there are different types of structured settlement payment plans that can fund a Medicare Set-Aside.  After an initial cash deposit is made to start the Medicare Set-Aside account (seed), a structured settlement will make annual payments to replenish/ add to the account.  The most common structured settlement option offered by the carrier is a temporary life payment stream.  With a temporary life payment stream, the annual payments to the MSA account are payable only as long as the injury victim is alive and for a maximum number of years (the life expectancy used for the MSA allocation).  If the injury victim dies before reaching the maximum number of years, the payments stop. There are no structured settlement payments payable to their beneficiaries.  A great alternative, but higher cost, is a period certain payment stream.  With a period certain payment stream, the annual payments to the MSA account are paid for a certain number of years (generally the life expectancy used for the MSA allocation).  Every payment is “guaranteed,” which means that in the event of the injury victim’s death before all payments are made, the remaining payments would go to designated death beneficiaries or the injury victim’s estate.  While there are other options, these are the two most common.

Question #2:

“My client’s CMS-approved MSA is being funded with a structured settlement, but the payments do not add up to the total on the CMS approval, is that acceptable?”

CMS will provide parameters for the funding of an approved MSA using a structured settlement.  In providing the initial seed amount and the annual payments, CMS rounds the numbers down.  In doing so, the initial seed/deposit and the sum of all annual payments may be less than the total amount approved.  If an MSA is funded with a structured settlement and the proposal follows the recommendation of CMS with regard to the initial seed/deposit and the annual payment amount, CMS will consider the MSA as being fully funded.  If you or your client are concerned about the discrepancy, you can add the difference to the seed or ask your settlement planning professional to include the difference in the annual structured settlement payment stream.  Both options will allow your client to match the total CMS-approved MSA amount.

Example:

CMS Approved MSA                $345,687.00

Initial seed/deposit                 $48,549.00

Annual Payments                    $14,149.00

Duration per CMS                   21 years

In this case, the seed/deposit plus the annual payments equals $345,679 which is $9 less than the CMS-approved MSA.  To relieve any concerns, $9 can be added to the seed/deposit or the annual payments can be increased to $14,149.43.