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Welcome to Synergy’s blog page dedicated to the topic of Medicare compliance. Our team of Medicare experts share their InSights and knowledge on the latest developments and best practices for law firms to stay compliant with the MSP. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complex world of Medicare compliance. Our blogs provide practical tips and advice for ensuring that your clients receive the medical care they need while complying with Medicare’s requirements. Let our experts guide you through the intricacies of Medicare compliance and help you stay on top of the latest developments in this rapidly-evolving field.

October 18, 2022

By: Rasa Fumagalli, JD, MSCC, CMSP-F

Medicare has struggled over the years to provide rules clarifying existing Medicare Secondary Payer (MSP) compliance obligations when it comes to post-settlement injury-related care that is released in a liability settlement. Their first attempt at proposed rulemaking took place in 2012 and resulted in the notice of proposed rule being withdrawn in 2014. Their most recent attempt, which began in December of 2018, sought to provide a proposed rule that “would clarify existing Medicare Secondary Payer (MSP) obligations associated with future medical items related to liability insurance (including self-insurance), no fault insurance, and workers’ compensation settlements, judgments, awards, or other payments.”[1] Although this notice of proposed rule had been delayed many times over the years, it was finally withdrawn on October 13, 2022.

Medicare’s withdrawal of the notice of proposed rule does not give settling parties a free pass when it comes to Medicare Secondary Payer compliance issues. So where does this leave parties settling liability cases involving Medicare beneficiaries? The answer, as always, lies in the Medicare Secondary Payer Act. The Act states that Medicare is prohibited from making payments for services “to the extent that payment has been made or can reasonably be expected to be made under any of the following: (i) workers’ compensation; (ii) liability insurance; (iii) no-fault insurance.”[2] Further guidance comes from the May of 2011 CMS Region VI Stalcup memo and the CMS September of 2011 Benson memo which both provide insights into Medicare’s position when it comes to shifting the burden to Medicare post settlement.[3] Unlike accepted workers’ compensation settlements, liability settlements have different considerations and require a more nuanced analysis of the potential impact of the MSP Act on a settlement. Although a Medicare Set-Aside allocation may be appropriate in a certain case, there are many settlements where other options are more appropriate.

The Medicare trust fund remains in dire financial straits. Medicare’s decision to withdraw the notice of proposed rule might mean that a greater focus will be placed on the Section 111 Total Payment Obligation to Claimant (TPOC) reporting resulting in increased denials of post-settlement injury-related claims. For the time being, our recommendation is as always make sure that your client is educated about the potential impact of the MSP on payment for future injury-related care post settlement. Consulting with experts and having the issues explained to an injury victim are best practices. Then ultimately, you want to document your file about what has been done to educate the client and their final decision. If a denial of care occurs in the future, you then have documentation of what was done and why.

Medicare is analogous to Medicaid at settlement meaning just like the obligation to advise a Medicaid beneficiary about the availability of a special needs trust, you need to explain to your client about the possibility of establishing a set-aside. As commentators have suggested, a lawyer must “ensure his client is informed about the options of structured settlements, trusts and the effect of the judgment or settlement on the client’s public benefits.”[4] The same is true for Medicare beneficiaries. Making sure a client receives proper counseling about the form of settlement is required by the Rules of Professional Conduct.[5]  

We will continue to monitor this issue and keep you advised of further developments. Synergy’s team of MSP compliance experts is here to assist you in navigating the murky waters of MSP compliance.

[1] Miscellaneous Medicare Secondary Payer Clarifications and Updates (CMS-6047), RIN: 0938-AT85.

[2] 42 C.F.R. § 411.20; see also 42 U.S.C. § 1395y(b)(2)(A).

[3] Memorandum from Sally Stalcup, MSP Regional Coordinator, CMS, Medicare Fee for Service Branch, Division of Financial Management and Fee for Service Operations (May 25, 2011), available at; Memorandum from Charlotte Benson, Acting Director, Financial Services Group, Office of Financial Management, Department of Health & Human Services, Centers for Medicare & Medicaid Services, to Consortium Administrator for Financial Management and Fee-for-Service Operations, Medicare Secondary Payer—Liability Insurance (Including Self-Insurance) Settlements, Judgments, Award, or Other Payments and Future Medicals – INFORMATION (Sep. 30, 2011), available at

[4] Bernard A. Krooks & Andrew H. Hook, Special Needs Trusts: The Basics, The Benefits and The Burdens, 15 ALI-ABA Est. Plan. Course Materials J., 17 (Dec 2009).

[5] See Model Rules of Prof’l Conduct, R. 1.0(e) and 2.1.

Rasa Fumagalli, JD, MSCC, CMSP-F

Personal injury settlements rarely make an injury victim whole. In light of this, cost management decisions factor into the strategy of the case. For example, while both life care plans and medical cost projection reports may be used as support for a settlement demand, their costs are very different. Life care plans may range anywhere from on the low end $10,000 to $20,000 or more, while medical cost projections are much more economical. The decision on which report to select may depend on the nature of the injuries, the expected range of settlement of the case, available coverage and time constraints associated with the settlement negotiations.

A comparison of the two reports is reflected in the below chart. Although both reports provide support for a demand of future injury-related medical care, the life care plan will usually be based on an in-home visit and interview with the injury victim. The medical cost projection, on the other hand, is based on information that is provided by the attorney handling the matter. Both reports are based on a review of medical records, but the life care plan report may also look to information gained through a conversation with a treating physician. Life care plans often have addendums that address lost earnings, replacement costs of household services and home modifications, while medical cost projections do not. In deciding which of these reports is appropriate to increase the value of the case, an attorney should avoid using a sledgehammer to crack a nut.

Life Care Plan (LCP)Medical Cost Projection (MCP)
Medical costsMedical costs
Durable medical equipment/suppliesDurable medical equipment/supplies
Physician/specialist visitsPhysician/specialist visits
Rehabilitation/physical therapyRehabilitation/physical therapy
Future surgeries/proceduresFuture surgeries/procedures
Home health careHome health care
Long term careLong term care
Transportation mileageTransportation mileage
Assessment of lost incomeN/A
Assessment of loss of earning capacityN/A
Estimate of home modificationsN/A
Estimate of vehicle modificationsN/A
Estimate of cost of replacement of household services that can no longer be performedN/A
Vocational therapyN/A
Based on in-home visit and interview with injury victimBased on intake packet provided by injury victim’s attorney
Review of medical recordsReview of medical records
Contact with physiciansN/A
Average cost: $15,000Synergy’s cost: $2,500


In the right case, don’t miss the opportunity to hit the defense hard early on by quantifying the future medical damages suffered by your client. You don’t have to spend tens of thousands of dollars on a life care plan to do this. Instead, let Synergy prepare a Medical Cost Projection (MCP) report quickly, based upon existing medical records (costs $2,500.00). That way you can quickly present evidence of future medical expenses and include the future medical cost projection report in your initial demands so you can settle cases earlier on.  Contact Synergy today to learn more about how our MCP report can simplify the negotiation of future medical care for your case.

Life care plans may range anywhere from on the low end $10,000 to $20,000 or more.

August 11, 2022

Evelynn Passino, J.D.

For clients with public benefits, closing out their case is not as simple as issuing a check for their net recovery. If the client has Medicare or will be eligible soon, then steps must be taken to comply with the Medicare Secondary Payer (MSP) Act. If the client has means-tested benefits, such as Medicaid or Supplemental Security Income (SSI), then additional steps may be necessary to ensure their recovery and eligibility for those benefits is protected.

Means-Tested Benefits

In cases where the client has means-tested benefits, their settlement recovery may be a countable resource, which means that receipt of those funds may cause them to be ineligible for their benefits. It is important to understand that not all public benefits programs operate the same way. For example, SSI, while it is a federal program, has state-specific nuances because some states supplement SSI benefits. Programs such as Medicaid, Section 8 benefits offered by the US Department of Housing and Urban Development (HUD), and the Supplemental Nutrition Assistance Program (SNAP) are administered on a state or local level, creating variations in how these programs work. Each program has its own eligibility requirements, which can include both categorical qualifications (such as being disabled, over 65, etc.) and financial qualifications. The financial qualifications may place limitations on income, assets, or both. Generally, means-tested benefits programs will exclude certain assets from being counted, such as a home, vehicle, and personal effects. Cash is almost always a countable resource and having too much of it available will cause the client to lose his or her benefits.

It is critical to know which benefits the client has so that educated decisions can be made about how to handle the recovery. Getting copies of the client’s benefit cards and award letters is recommended. If the client no longer has their award letters, which outline what benefit the client qualified for, these can usually be requested from the office administering the benefit. Some programs, such as the Social Security Administration, offer these online.[1]

Preserving Means-Tested Benefits

If a client is in danger of having more resources than they are allowed under their government program, then there are actions they can take to protect their benefits. One option is to use the money to purchase exempt resources, like a home or vehicle, or use the money to improve those resources, such as adding accessibility features to their car or adding a wheelchair ramp to their home. They may also want to pay down debts; however, they should be careful about this where there is not a clean paper trail, such as money loaned between family members. Paying back a person in those circumstances could appear (to the government) like a gift, which will be counted as a transfer for less than fair market value and may trigger transfer penalties resulting in ineligibility.

If the client is disabled, then another option is to deposit the money in a special needs trust (SNT). An SNT, when created and administered in compliance with 42 U.S.C. § 1396p(d)(4)(a-c), is typically not a countable resource, although programs differ as to how they can be used and what they can pay for. An SNT can be funded with either first-party money (such as a personal injury recovery) or third-party money (such as inheritance or other gift). An SNT can be created for an individual and managed on their behalf by a trustee of their choosing (called a standalone trust), or a person can join a pooled trust, which is an existing trust administered by a non-profit association. Generally, pooled trusts are faster to set up and lower in cost due to them being administered by a non-profit. Standalone trusts, however, can be customized, and the client has more control in choosing their trustee. In either case, if the client is receiving Medicaid, then Medicaid has a right to be paid back from the balance of the trust when the beneficiary dies (this is known as “Medicaid payback”).

Lastly, the client always has the option to forgo their benefits but should exercise caution in doing so because some benefits are difficult to re-qualify for if the client changes their mind later. They should also be careful if intending to preserve some benefits and not others. For example, some clients are willing to lose their SSI benefits after a settlement because they expect to have cash from the recovery available but want to continue receiving Medicaid benefits. In most states, a person qualifies for Medicaid automatically once they qualify for SSI, and this is how many on Medicaid access this benefit; however, the reverse is also true, that if a person loses eligibility for SSI then they also lose Medicaid. If they lose SSI-related Medicaid, there may be another Medicaid program they can qualify for, but they should confirm this before taking action that will jeopardize their SSI benefits.


The MSP Act (42 U.S.C. § 1395 y(6)(b)) works to preserve the Medicare trust fund by ensuring that Medicare does not pay injury-related claims when another person or entity is liable. The Centers for Medicare and Medicaid Services (CMS) does this by seeking reimbursement on injury-related claims that accrued prior to settlement and asserting that Medicare’s interests be considered for claims which can be expected in the future.

Conditional Payments

CMS is notified of an accident through Mandatory Insurer Reporting (MIR), which is required by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. This reporting is done by liability insurers, no-fault insurers, workers’ compensation plans and insurers, and self-insured organizations. This puts CMS on-notice so they can begin tracking injury-related claims which they will seek reimbursement for at settlement. If a conditional payment is not repaid, CMS can take action against any of the entities responsible for payment, including the plaintiff’s law firm, and can seek double damages. 42 U.S.C. § 1395y(b)(2)(B)(iii); 42 U.S.C. § 1395y(b)(3).

Future Interests

MIR includes notification to CMS when the case settles, giving Medicare notice of the injuries and ICD-10 codes applicable to the case. Medicare’s preferred method for considering its future interests is through the creation of a Medicare Set-Aside (MSA). An MSA begins with an allocation, which is a report summarizing the expected injury-related care and prescriptions that would otherwise be covered by Medicare for the remainder of the Medicare beneficiary’s life. The allocation projects the cost of such care at the usual and customary prices where the injury victim lives. In worker’s compensation cases, there is a voluntary process for CMS to review the allocation in cases where certain thresholds are met. For someone who is a Medicare beneficiary at the time of settlement, this review may occur if the settlement exceeds $25,000. If the client has a reasonable expectation of being eligible for Medicare within 30 months (such as those who have applied for Social Security Disability Insurance), then CMS will only review the MSA if the settlement amount is more than $250,000. There is currently no review process for liability and no-fault cases.[2] CMS’ expectation is that the injury victim will set aside the amount of money in the MSA allocation and use this money to pay for Medicare-covered, injury-related services and prescriptions until exhaustion. CMS will resume normal coverage when the account has been properly exhausted, even if additional injury-related care is needed after that time.

It is important to note that the MSP Act does not explicitly require that an MSA be created or how much it is to be funded.[3] CMS has provided some guidance about when an MSA is not necessary, such as when the settlement, judgment, or award does not fund future medical costs or when the injury victim’s treating physician certifies that no further injury-related treatment is needed.[4]

Medicare’s enforcement mechanism regarding future medicals is to deny claims that are injury-related if they determine the Medicare beneficiary did not consider Medicare’s interest at the time of settlement. This provides additional room to argue how much is appropriate for an MSA or if an MSA is even advisable. What makes sense for a particular client will depend on their risk tolerance. If a client is risk-averse, they will probably want to fully fund a set-aside and administer it correctly to reduce the risk that Medicare will ever deny a claim. On the other end of the spectrum, some clients choose not to fund an MSA because they are adamant about not getting further injury-related treatment or they prefer to “roll the dice” and keep billing Medicare for injury-related care until Medicare denies it. For clients who are in the middle, they may want to fund an MSA, but not in full. One option is to reduce the MSA based on the value of damages suffered relative to the settlement amount obtained.


If a client decides to fund an MSA, then they need to decide how to fund it. MSAs can be funded by lump sum or by structured settlement annuity. The annuity is often preferred because it allows the MSA to be fully funded with less money out-of-pocket. It can also create a scenario where the MSA is temporarily exhausted, in which case Medicare will resume normal coverage until the next annuity payment is deposited into the MSA. Lump sum funding makes more sense when the MSA is smaller, and an annuity would not be advantageous.


The next step is determining how to administer the MSA. This depends on the client’s capacity, willingness, and whether they have means-tested benefits. For clients with capacity and no means-tested benefits, one option is to self-administer their MSA. This means they will take the recommended amount from their settlement, place it in a separate account, and pay any Medicare-covered, injury-related bills from this account. It requires some work on the client’s part to manage the account, keep records, and report to CMS (if required).[5] For those who do not want the hassle of administering their own account, there are companies that offer professional administration. These companies take custody of the MSA funding, provide the Medicare beneficiary with a card they can show when receiving injury-related care (similar to an insurance card), and handle all payments, recordkeeping and reporting. Generally, they can also get fee discounts for their clients on various services using their networks, which help the MSA last longer. There is a fee for these services, which unfortunately cannot be paid from the MSA funds. These companies often also have self-administration assistance services at a lower cost for those who wish to self-administer, but want some help with certain aspects, or want to take advantage of the network discounts.

If the client is dual-eligible, meaning they have both Medicare and Medicaid (or other means-tested benefits), then it is important to determine whether the MSA will be a countable resource for them. In most states and under most programs, it is countable, meaning the money in that account is treated like any other cash the client has available to them; however, some programs have begun to create exemptions for counting MSAs, so it is worth exploring where your state stands on this. If the MSA will be countable, then self-administration is not an option, and the MSA should be professionally administered and held in a special needs trust.  


When a client has public benefits, it is important to understand which benefits they have, how those programs work, and what options are available. If they want to preserve their benefits, then there are likely to be some steps they need to take to ensure no interruption in the services they receive. It is helpful to get experts involved who understand these programs and can make sure the client makes an informed decision, whatever that decision may be.

Synergy Settlement Services works with clients every day to help them understand their obligations under the Medicare Secondary Payer Act and how to preserve eligibility for their benefits. Call Synergy today at (877) 242-0022 to learn how we can help.


[2] Memorandum from Sally Stalcup, MSP Regional Coordinator, CMS, Medicare Fee for Service Branch, Division of Financial Management and Fee for Service Operations (May 25, 2011), available at

[3] Id.

[4] Id.; Memorandum from Charlotte Benson, Acting Director, Financial Services Group, Office of Financial Management, Department of Health & Human Services, Centers for Medicare & Medicaid Services, to Consortium Administrator for Financial Management and Fee-for-Service Operations, Medicare Secondary Payer—Liability Insurance (Including Self-Insurance) Settlements, Judgments, Award, or Other Payments and Future Medicals – INFORMATION (Sep. 30, 2011), available at

[5] CMS offers a self-administration toolkit for those who wish to handle this themselves:

For clients with public benefits, closing out their case is not as simple as issuing a check for their net recovery.

July 21, 2022

Rasa Fumagalli, JD, MSCC, CMSP-F

Netflix’s new baking competition show “Is it Cake” challenges judges to identify which of two identical objects is edible and which is not. Attorneys settling cases involving work-related injuries may find themselves similarly perplexed when it comes to whether a work-related injury will be treated as a workers’ compensation or liability case for purposes of the Medicare Secondary Payer Act (“MSP”). Depending on who the employer is at the time of a work-related injury, some injured employees may be covered by programs that are required under federal law. Depending on the nature of the program, the MSP compliance obligations will either be handled as a workers’ compensation or liability settlement.  For example, the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) that provides benefits for work-related injuries sustained by certain maritime and dock workers is viewed as workers’ compensation insurance when it comes to MSP compliance issues. On the other hand, the Federal Employers Liability Act (“FELA”) which provides benefits for railroad employees, who sustain injuries due to the negligence of a railroad carrier, is viewed as liability insurance when it comes to MSP compliance issues.  (See MSP Manual, Chapter 1, Section 10.4)

Both liability and workers’ compensation settlements are impacted by the MSP Act. The MSP is comprised of a series of statutory provisions intended to reduce federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay. The MSP Act and supporting regulations specifically state that Medicare is precluded from making payments for services “to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following (i) workers’ compensation; (ii)liability insurance; (iii) no-fault insurance. (42 U.S.C.§1395y(b)(2)(A)(ii), 42 C.F.R.§411.20 (a)(2)). A primary payer’s responsibility for payment may be demonstrated by “a judgment, payment conditioned upon the beneficiary’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer’s insured or by other means…” (42 C.F. R§411.22(b)). The parties first and foremost should ensure that pre-settlement injury-related payments (conditional payments) made by Medicare are reimbursed to the appropriate Medicare Trust Fund. In addition, and in light of the MSP, settlements that close out future injury-related medical benefits should avoid cost shifting the post-settlement injury-related care onto Medicare.

The MSP compliance distinction between a liability settlement and a workers compensation settlement is an important one since it may impact the way parties address post settlement injury related care. The Centers for Medicare and Medicaid Services (“CMS”) has issued a great deal of guidance when it comes to workers’ compensation settlements that close out future injury related medical. The Workers’ Compensation Medicare Set-Aside Arrangement (“WCMSA”) Reference Guide (“Guide”), Version 3.7, 6/6/2022, explains that parties should take Medicare’s interest, with respect to future medicals, into account by including a WCMSA into the settlement terms. The WCMSA should contain sufficient funds from the settlement to cover the total cost that will be incurred for future injury related Medicare covered treatment. CMS encourages parties to seek CMS approval of the proposed WCMSA when the settlement meets CMS’ internal workload review thresholds. The benefit to CMS’ review and approval of the proposed amount is the certainty in knowing that Medicare will become the primary payer for any injury-related services that exceed the properly exhausted CMS determined WCMSA. Although the Guide also states that CMS approval of a proposed WCMSA amount is not required, Section 4.3 notes that CMS may treat the use of non-CMS approved products as “a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.” Non-CMS approved products are MSA reports that are not submitted to CMS for review.

 If CMS concludes that there was an improper cost shift, it may deny payment for injury-related services until it is provided with attestation of appropriate exhaustion equal to the total settlement, less procurement costs and paid conditional payments.  The parties may overcome this denial by showing   CMS, at the time of the WCMSA exhaustion, that both the initial funding of the MSA was appropriate and the funds were used properly.

To understand the importance of the differences between whether a work injury is treated as workers’ compensation versus liability case in the context of the MSP, consider a FELA settlement.  FELA is treated as a liability settlement for purposes of the MSP due to its differences from the typical workers’ compensation case.  Although a FELA settlement involves a work-related injury, the railroad employee must show that his/her injuries were, due in whole or in part, to the negligence of the railroad. This burden of proof is different than the burden of proof in a typical workers’ compensation case. In most jurisdictions, for a workers’ compensation case, a worker must only show that he suffered an accidental injury, which arose out of and in the course of his employment.  There is no need to show negligence. 

Once a settlement agreement is reached in a FELA case, the parties should consider the potential impact of the MSP Act on the settlement. If the railroad employee is a Medicare beneficiary at time of settlement, Medicare will be given notice of the settlement under Section 111’s Mandatory Insurer Reporting obligation. The notice of settlement may result in the potential risk of Medicare denying post-settlement injury-related care. If the railroad employee has completed his injury-related treatment and no further treatment is indicated, the beneficiary may wish to obtain a written certification from the treating physician to that effect. Pursuant to CMS’ 9/30/2011 Memo, there is no need for a liability MSA when the treating physician makes this certification.  

If, however, the beneficiary continues to treat for his injuries, or will need future injury-related care, an MSA might be considered to avoid any potential issues with Medicare denying post-settlement injury-related care.  While a workers’ compensation settlement will usually fully fund the WCMSA, the liability MSA may at times consider the relative value of each of the elements of damage being compensated in the settlement (pro-rata apportionment).  This apportionment approach considers the ratio between the total potential case value and the net settlement. Parties may also choose to fully fund the liability MSA. The decision of how much, or how little, risk to assume when it comes to post-settlement injury-related care is one that should be made by the beneficiary and documented in the attorney’s file.

Conditional payments, payments made by Medicare for injury-related care provided prior to settlement, must also be addressed in connection with a settlement. In a workers’ compensation case, conditional payment recovery is handled by the Commercial Repayment Center (“CRC”). The CRC seeks to pursue recovery directly from the workers’ compensation insurer carrier while the case is open. Once the case settles, the conditional payment recovery will move from the CRC to the Benefits Coordination and Recovery Center (“BCRC”) since the beneficiary is now the identified debtor. Since a FELA settlement is viewed as a liability settlement, the BCRC will handle the conditional payment recovery and seek recovery from the beneficiary debtor. Payments made by a Medicare Advantage Plan (“MAP”) must also be addressed. Information regarding the MAP payments is provided by the relevant insurance carrier themselves and not the BCRC/CRC.

While one work injury case may look just like any other, your MSP compliance approach may depend on whether CMS views the case as liability or workers’ compensation.  A thorough understanding of the differences and risks of various approaches is necessary in order to avoid any unexpected consequences of inaction.

Contact Synergy Settlement Services to discuss the way our MSP compliance team may assist you.

Attorneys settling cases involving work-related injuries may find themselves similarly perplexed when it comes to whether a work-related injury will be treated as a workers’ compensation or liability case for purposes of the Medicare Secondary Payer Act (“MSP”).

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.

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.


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.



The Synergy Settlements team will work diligently to ensure your case gets the attention it deserves. Contact one of our legal experts and get a professional review of your case today.

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