In what appears to be a pattern of Federal court decisions, the MSAMedicare Set-Aside industry is taking note of a trend whereby parties to liability lawsuits are opting for a Court’s review and approval of a proposed LMSALiability Medicare Set-Aside. It appears that United States Magistrate Judge C. Michael Hill, whose court resides in the Western District of Louisiana, Lafayette Division, is taking matters into his own hands due, most likely in part, to the lack of a formalized process and procedure by CMSCenters for Medicare and Medicaid Services when it comes to determining if the amount of a settlement sufficiently protects Medicare’s interests.
In March 2012, Judge Hill rendered an opinion in Frank v. Gateway Insurance Co., 2012 U.S. District Lexis 33581 (March 13, 2012), in which he concluded that the parties’ settlement amount reasonably protected Medicare’s interests. Just as in the Frank matter, CMSCenters for Medicare and Medicaid Services followed their standard procedure and declined to participate in a court hearing involving the determination of LMSAsLiability Medicare Set-asides, stating that only under limited circumstances would they provide an opinion. This practice appears likely to continue until CMSCenters for Medicare and Medicaid Services creates formal guidance for LMSAsLiability Medicare Set-asides or alters its policy on whether it will participate in judicial hearings where the adequacy of protecting Medicare’s interests is at stake. Until then, it seems that courts will be able to continue to stand in the shoes of CMSCenters for Medicare and Medicaid Services and provide a determination as to whether the particular liability settlement has properly considered Medicare’s interests.
CMSCenters for Medicare and Medicaid Services’ decision not to participate in these court proceedings may create issues in the future, if at some point the agency independently concludes that Medicare’s interests have not been protected in settlement documents. Will CMSCenters for Medicare and Medicaid Services give deference to the court’s determination when providing an opinion on the amount and need for a MSAMedicare Set-Aside when this has traditionally been an agency function of CMSCenters for Medicare and Medicaid Services? Does the fact that CMSCenters for Medicare and Medicaid Services voluntarily failed to appear or timely appeal the court’s ruling now prevent it from later raising this issue in a legal forum under a theory of res judicata? Additionally, are the courts further muddying the waters of the current state of MSPMedicare Secondary Payer Act compliance in liability settlements, or are the courts helping during this uncertain time when parties to a liability settlement are generally unable to receive security that they have protected Medicare’s interests? In the meantime, let us explore a recent case as an example of such a scenario.
In Bertrand v. Talen’s Marine & Fuel LLC.1, the plaintiff, Philip Bertrand (Bertrand), was injured in a workplace accident in December, 2007. Bertrand was employed with Talen’s Marine & Fuel LLC (Talen’s) as a captain on a tow boat. Bertrand hurt his lower back when a bathroom medicine cabinet fell off the wall. He twisted his back when he tried to catch the cabinet. Bertrand filed suit on August 10, 2010, seeking recovery for the damages that he sustained as a result of his workplace accident in 2007.
Bertrand’s lawsuit with the defendants was settled on January 6, 2012; however, Bertrand’s settlement with the defendants was conditioned upon approval of an MSAMedicare Set-Aside by CMSCenters for Medicare and Medicaid Services. On January 27, 2012, the parties filed a motion for declaratory judgment seeking: (1) approval of the settlement, (2) a declaration that the interests of Medicare is adequately protected by setting aside a sum of money determined by the court to fund any of Bertrand’s future medical expenses related to the injuries claimed and released in the lawsuit, and (3) an order setting that amount aside from the settlement proceeds and depositing it into an interest-bearing account to be self-administered by Bertrand.
When the court set the matter for an evidentiary hearing and sent a copy of the order to the U.S. Attorney’s Office in Lafayette, Louisiana, CMSCenters for Medicare and Medicaid Services advised it would not participate in the hearing. The hearing went forward without CMSCenters for Medicare and Medicaid Services, and the court received into evidence an LMSALiability Medicare Set-Aside that was prepared by an MSAMedicare Set-Aside vendor. The court also received all corresponding medical records which were pertinent to the calculation of the LMSALiability Medicare Set-Aside and the affidavit of the preparer of the LMSALiability Medicare Set-Aside. The LMSALiability Medicare Set-Aside called for $64, 866.88 to be set aside for future potential medical expenses that would be covered by Medicare and were related to the injuries claimed in the lawsuit, which the court found to be both reasonable and reliable.
Although the court noted that Bertrand was born in 1960 and would not obtain the age of 65 within 30 months of the date of the settlement, it went on to state that Bertrand will become an “entity who received payment from a primary plan,” and is therefore responsible as a primary payer for future medical items or services that would otherwise be covered by Medicare and therefore, the $64, 866.88 should be set aside in consideration of Medicare’s interest. The court additionally stated that Bertrand would be obligated to reimburse Medicare for any conditional payments. Between the LMSALiability Medicare Set-Aside and covering the conditional payment issue, the court concluded that Medicare’s interests were adequately protected in the settlement within the meaning of the MSPMedicare Secondary Payer Act and the case was settled.
From the facts of the opinion, it seems that Bertrand was neither a Medicare beneficiary or expected to become a Medicare beneficiary within 30 months of the settlement. Therefore, conditional payments should not have been a concern since it is not possible for Medicare to make payments for an individual who is not currently receiving Medicare benefits. Additionally, the general industry consensus is that an allocation is not necessary if the injured party is not currently receiving Medicare or expected to become eligible within 30 months, yet the parties as well as the court felt that an LMSALiability Medicare Set-Aside was appropriate to protect Medicare’s interests.
Either way, it seems that the parties in Bertrand went above and beyond to ensure that the settlement was MSPMedicare Secondary Payer Act compliant. This case is a great example of the extreme need for guidance from CMSCenters for Medicare and Medicaid Services with regard to future medicals in liability settlements. CMSCenters for Medicare and Medicaid Services is actually seeking to address this issue through their recent issuance of an Advance Notice of Proposed Rulemaking (ANPRMAdvance Notice of Proposed Rulemaking) on MSPMedicare Secondary Payer Act and Future Medicals, which was posted to the Federal Register on June 14, 2012. The ANPRMAdvance Notice of Proposed Rulemaking proposes several different options on how future medicals should be addressed in both liability and workers’ compensation settlements. For more information on the ANPRMAdvance Notice of Proposed Rulemaking, please read our recent blog posting.
1. [2012 U.S. Dist. LEXIS 78053 (U.S. Dist. Court, Western District of Louisiana, Lafayette Division. June 4, 2012)]↩
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