Louisiana Appellate Court Dismisses Claim Brought Almost 3 Years After Approved Settlement Based on CMS Demanding Higher MSA

LawOn November 5, 2014, the Louisiana Court of Appeal, 3rd Circuit, published its opinion on Hunter v. Rapides Parish School Board, denying Ms. Hunter’s claim to have the employer fund the higher-than-proposed MSA approved by CMS. The Court concluded:

  • Ms. Hunter admitted she knew that the School Board was going to send the Medicare Set Aside to CMS for approval; and
  • Acknowledged there was nothing in the settlement paperwork obligating the School Board to fund a more expensive MSA if CMS did not approve the MSA that she and the School Board had agreed upon; and
  • Ms. Hunter failed to point to any error in the judgment dismissing her claim.

Eliza Hunter injured her low back on March 20, 2001, when she missed a step and fell at the school where she worked. She later filed a workers’ compensation claim against her employer, the Rapides Parish School Board (RPSB), and Claims Administrative Services (CAS), RPSB’s third-party administrator. Over the next several years, RPSB paid Ms. Hunter indemnity benefits totaling $63,786.80 and medical benefits totaling $80,792.54.

More than 9 years later, in October of 2010, Ms. Hunter and the RPSB agreed to settle the matter in return for the RPSB paying Ms. Hunter a lump sum of $19,000.00 and establishing a Medicare Set-Aside Account (MSA) valued at $79,937.77. The parties then presented the Workers Compensation Judge (WCJ) with a Joint Petition and Compromise Settlement Agreement. The WCJ signed an order approving the agreement on October 12, 2010.

Although the opinion does not indicate whether Ms. Hunter was a Medicare beneficiary at the time of settlement, as per the Centers for Medicare and Medicaid Services’ (CMS) recommendations, the RPSB submitted the proposed MSA to CMS for approval. CMS rejected the proposed MSA, instead requiring that the MSA be valued at $94,265.00. Although the opinion does not spell out the exact terms of the agreement, the RPSB opted to keep medical care open and continue to pay Ms. Hunter’s medical expenses as they accrued rather than fund the $94,265.00 MSA.

Without any mention of what had transpired in the interim period of time, almost three years after the WCJ had approved the settlement agreement, on November 6, 2013, Ms. Hunter filed a Disputed Claim for Compensation against the RPSB and CAS seeking to force them to establish the $94,265.00 MSA approved by CMS. The RPSB and CAS responded by filing an exception of no cause of action and/or no right of action. After a hearing, the WCJ granted the exception and dismissed Ms. Hunter’s claim by judgment dated February 3, 2014. She timely filed an appeal.

Pro se, on June 23, 2014, Ms. Hunter filed a pleading with the appellate court entitled “BRIEF REQUESTING AN ORDER TO ENFORCE JUDGMENT.” Therein, she sought to have the court enforce the order signed by the WCJ on October 12, 2010, approving the Joint Petition and Compromise Settlement Agreement entered into by Ms. Hunter, the RPSB, and CAS. In her brief, Ms. Hunter did not assign any error in either the October 12, 2010 order or the February 3, 2014 judgment. Instead, she alleged that CAS “ceased paying her medical expenses” in 2009. She also alleged that CAS denied her request to authorize one of its approved pharmacies to approve a prescription written by her primary care physician in March of 2014.

Although the opinion does not indicate whether the School Board (or its TPA) or Medicare had denied any medical care related to the industrial low back injury, in essence, on appeal, Ms. Hunter seeks to have the court review and enforce the October 12, 2010 order. However, the appeal rights on that order have long expired. Consequently, although Ms. Hunter failed to include any assignments of error in her brief, because Ms. Hunter timely appealed the February 3, 2014 judgment granting RPSB’s and CAS’s exception of no cause of action and/or no right of action pro se, the court decided to “consider the merits of her appeal despite the improper form of her appellant brief.”

Appellate courts are courts of record that neither can receive new evidence nor review evidence that is not in the record. Evidence attached to memoranda and that is not properly and officially offered and introduced does not constitute evidence and cannot be considered, even if it is physically in the record. Accordingly, the court is precluded from considering the exhibits attached to Ms. Hunter’s appellant brief to the extent that the information contained therein was not otherwise a part of the appellate record.

In Williamson v. Liberty Mutual Insurance Co., 12-148 (La. App. 3rd Cir. 6/6/12), 92 So.3d 1218, the court affirmed, as amended, a judgment rendered by a WCJ in favor of a workers’ compensation claimant awarding him penalties and attorney fees after his employer failed to provide him with the money to purchase a MSA within thirty days of the approval of the parties’ settlement by the Office of Workers’ Compensation (OWC). The court noted that “there was no requirement to obtain CMS’s approval of the settlement agreement. Quite the opposite, the settlement agreement stated that the “employee understands that the receipt of this workers’ compensation settlement without CMS pre-approval may result in a loss of Medicare benefits for the work-related injury.”

According to the transcript of the January, 27, 2014 hearing on RPSB’s and CAS’s exception, Ms. Hunter admitted that she knew that the RPSB was going to send the settlement agreement to CMS for approval. She further acknowledged that there was nothing in the settlement paperwork obligating the RPSB to fund a more expensive MSA if CMS did not approve the settlement that she and the RPSB had signed. The court therefore concludes that the jurisprudence supports the February 3, 2014 judgment. As a result, the judgment rendered in favor of the Rapides Parish School Board, granting its exception of no cause of action and/or no right of action and dismissing Eliza Hunter’s claims is affirmed.

This is yet another example of how unclear settlement language can create havoc, even many years after the claim has been settled and approved. It is also another example of how CMS’ optional submission approval process fails to protect litigants. Helios can assist with specifically tailored settlement language and viable compliance alternatives to submitting your MSA to CMS for approval.

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