Louisiana Appellate Court Agrees Claimant Committed Fraud, Forfeits All Future Benefits, Including Medicare Set Aside Annual Structured Funds

Stethoscope and GavelOn December 23, 2014, the Louisiana Court of Appeal, 1st Circuit, published its opinion on Shropshire v. Anco Installation, finding that because claimant deliberately misrepresented the facts of his settlement negotiations for the purpose of obtaining additional benefits, all workers’ compensation benefits, including future settlement monies and Medicare set aside funds, are forfeited.

Mr. Shropshire was employed by ANCO. He alleged he suffered permanent injuries in an accident on October 23, 1998, while in the course and scope of his employment with ANCO. ANCO disputed whether an accident occurred and whether Mr. Shropshire was unable to perform the duties of his occupation.

In June 2010, Shropshire, ANCO and its workers’ compensation insurer entered into a compromise agreement, “Joint Petition for Authority to Compromise Workmen’s Compensation Claim.” The Order of Approval was signed by the workers’ compensation judge (“WCJ”) on June 25, 2010. The documents included language that recited Mr. Shropshire was to receive $5,381.00 per month for twenty-six years “to settle the future medical aspect part of the claim.” Other documents however reflected that the payment was to be $5,381.00 per year, not monthly.

Neither ANCO nor its insurer ever paid Mr. Shropshire $5,381.00. In July 2012, Mr. Shropshire filed a Form 1008 Disputed Claim for Compensation with the OWC seeking a monthly payment, to which he alleged he was entitled. ANCO and its insurer answered, asserting that the payment of $5,381.00 per month was a typographical error and that the Order should be amended to reflect payments due of $5,381.00 per year.

The matter came for hearing before the OWC in February 2014. The WCJ found the payments per month to be a typographical error and amended the Order of Approval to substitute the word “annually” in place of the word “monthly” everywhere the word “monthly” appeared in the settlement agreement and Order of Approval dated June 25, 2010. The WCJ also held that Mr. Shropshire willfully made false statements and representations for the purpose of obtaining additional benefits, in violation of La. R.S. 23:1208. Accordingly, the WCJ voided the annuity set up to pay the settlement and relieved third parties and their assignees from further obligation to pay Mr. Shropshire.

The WCJ addressed two issues at the trial on the merits: (1) the amendment of the Order of Approval judgment due to a typographical error; and (2) fraud pursuant to La. R.S. 23:1208.

First, the WCJ had to decide whether the settlement agreement and Order of Approval contained a typographical error; that is, whether the structured payments for Mr. Shropshire’s medical benefits were to be made monthly or annually. After hearing from the witnesses and considering the documentary evidence in the record, the WCJ held that “considering all the evidence, especially the Medicare Set Aside information, and the testimony of the witnesses, it was clear to the Court there was an error in the settlement documents and the payments were agreed to be paid annually, not monthly.”

The WCJ, pursuant to La.C.C.P. art. 1951, which provides that a modification of a judgment can be made at any time to alter the phraseology of the judgment, but not the substance, or to correct an error of calculation, amended the June 25, 2010 settlement agreement and Order of Approval to substitute the word “annually” in place of the word “monthly” everywhere the word “monthly” appeared in those documents. This court concludes it is unable to say the WCJ erred in determining the settlement agreement and Order of Approval contained typographical errors, as the WCJ’s ruling is reasonable and supported by the record.

Next, the WCJ had to decide whether Mr. Shropshire committed fraud pursuant to La. R.S. 23:1208. Section 1208 forbids any person from willfully making false statements or representations to obtain workers’ compensation benefits. La. R.S. 23:1208(A). Upon a determination of fraud by a WCJ, a person in violation of Section 1208 forfeits any right to workers’ compensation benefits. La. R.S. 23:1208(£). To this extent, the WCJ found “Mr. Shropshire’s testimony totally unbelievable, failing to contain any element of truth in this regard. The Court was clearly convinced Mr. Shropshire fabricated the story about an additional settlement negotiated between him and Mr. Maher for the purpose of obtaining benefits clearly unsupported by any other documentation. Mr. Shropshire attempted to convince the Court his deposition testimony was falsely transcribed as well.”

As a result, the WCJ found he deliberately misrepresented the facts of his settlement negations for the purpose of obtaining additional benefits, as it was very clear from the medical records, all records surrounding the settlement negotiations, including a notation in Mr. Shropshire’s own handwriting, as well as Mr. Maher’s testimony, he would never have remotely been entitled to $5,000 a month in medical expenses. Due to Mr. Shropshire’s deliberate misrepresentation of the settlement negotiations, the WCJ concluded all workers’ compensation benefits were forfeited from the date of the deposition, August 13, 2013 forward.

Based on the record, the Court here is unable to say the WCJ erred in determining that Mr. Shropshire committed fraud pursuant to La. R.S. 23:1208, as the WCJ’s ruling is reasonable and supported by the record. As a result, based on the foregoing, the February 24, 2014 final judgment of the Office of Workers’ Compensation is affirmed.

As this case clearly shows, Medicare Set-Aside work is not done simply because the parties have settled the case and funds have been disbursed. At Helios, given our superior medical, pharmacy, claims, and legal expertise, MSA post-settlement work not only includes professional administration of MSA account funds, or assisting the Medicare beneficiary with self administration, but also includes post-settlement legal issues, billing disputes, fee schedule discrepancies, annual accounting to CMS, temporary and permanent exhaustion of MSA funds, and assistance with any remaining funds in the MSA account after claimant’s death.

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