Tag Archives: Court Rulings

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.

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.