Oregon Federal Court Rejects US Arguments to Value Future Medical Expenses per MSA and Instead Awards Future Medical Damages per LCP

Stethoscope and GavelOn November 13, 2014, the United States District Court for the District of Oregon, Portland Division, published its opinion on Tucker  v. Cascade General, Inc. and the United States of America, concluding that despite the government’s argument that future medical expenses should be valued at less than the $334,840 CMS approved MSA, and that future prescription expenses should be valued at less than $154,964 AWP per Red Book, the court instead awards the full Life Care Plan projection of $614,341 as future medical care and treatment related to the claim at hand.

Philip Tucker was employed by Cascade General, Inc. as a longshoreman. The vessel Tucker worked on was owned by the United States. While in the course and scope of his employment, Tucker was severely injured when a hatch cover from the upper pump room fell through the hatch opening and struck him in the head while he was working below in the lower pump room. As a result, Tucker brought a §905(b) negligence action under the Longshore Harbor Workers Compensation Act (LHWCA) against Cascade General, Inc. and the United States to recover damages for personal injuries he  sustained resulting from the work related accident.

The United States and Cascade filed cross-claims against each other. Prior to trial, Tucker settled his claim against Cascade. Following a nine-day bench trial of Tucker’s case against the United States, the court rejected the government’s contention that it was absolved of responsibility to provide safe working condition in the vessel simply because some Cascade employees were aware of the dangerous nature of the hatch cover and were able to devise a procedure to safely remove the plates. The court found that a preponderance of the evidence supported the conclusion the upper pump room hatch cover was a very unusual and hazardous design. As a result, based upon the evidence presented at trial, the court concluded the hazard presented by the hatch cover was such that an experienced stevedore would not be able to carry on its cargo operations with reasonable safety to persons and property.

Therefore, the court concluded that the United States breached its duty to exercise ordinary care and turn over the vessel in such a condition that an expert stevedore could conduct its operations with reasonable safety. The court also found that the government did not exercise due care to protect Tucker from this hazardous condition. The court indicated damages to Tucker, including reimbursement for lost earnings and earning capacity; for past and future medical expenses; for other economic loss he sustained or was likely to sustain; and non-economics, such as pain and suffering and quality of life, he sustained or was likely to sustain, were valued in at $10,077,187. Based upon the substantial evidence presented at trial and the law governing Tucker’s claims in this case, the United States was held 50% responsible for the harm to Tucker and, accordingly, obligated to pay that share of his resulting damages.

As part of his general damages, and based on a Life Care Plan produced at the request of Tucker, he requested an award of $195,643 for past medical expenses and $614,341 for future medical expenses. The US objected to the amount requested for past medical expenses given that it was not the amount actually paid, but rather the amount billed prior to any adjustments or reductions made by the doctors. As a result, the court noted that it was unreasonable to seek reimbursement for amounts that were never paid and awarded $145,537, the amount actually paid.

Regarding future medical expenses, the United States argued that the $614,341 life care plan should be rejected, and instead reduced to approximately $141,810, the present value of future medical services and medications. Therefore, despite the fact that a $334,840 MSA had been approved by CMS on this case when the underlying claim was settled between Tucker and Cascade, and contrary to its own rules and regulations as established by policy memos and alerts, as well as by the WCMSA Reference Guide, the United States argued that future medicals should be reduced to significantly less than that which CMS had already established as the amount which would appropriately take Medicare’s interest into account.

If this was not acceptable by the court, the government then asked the court to use the medical costs projections in the CMS approved $334,840 MSA. The United States however asked the court to determine these future expenses per the MSA, with the exception of the cost of the seizure medications, for which the United States asked the court to instead accept the lower priced prescriptions projected by the Life Care Plan.

Although the opinion does not indicate, it is assumed that the $154,964 drugs projection in the MSA included prescriptions at Average Wholesale Price (AWP) per Red Book. However the Life Care Plan prescription projections used a different prescription fee schedule which produced a lower future medication projection. Therefore, contrary to its own rules and regulations as established by policy memos and alerts, as well as by the WCMSA Reference Guide, the United States argued that the prescriptions should be priced at something other than AWP.

Having heard and considered such arguments, the court concluded that the fees and charges set forth by the MSA did not provide a fair and comprehensive projection of the costs Tucker will incur for medical services over the course of his life and, as such, the court declined to rely upon the MSA to set Tucker’s future medical expenses. The court instead awarded the full Life Care Plan projection of $614,341 as future medical care and treatment related to the claim at hand.

Although not generally seen by employers/corporate defendants/insurers as a savings mechanism, a comprehensive, well researched, legally and medically based Medicare set aside can be used as a tool to reduce future medical exposure. When backed up by true legal and medical experts that focus and concentrate in MSA work, such expert review and testimony can and will make the difference between controlling future medical costs and runaway awards. At Helios Settlement Solutions, our legal and medical experts produce an industry wide respected product, walk you through the allocation process, and if necessary, provide expert testimony in state and federal administrative proceedings, and state and federal judicial proceedings to explain how such future expense allocations were reached.

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