Tag Archives: workers’ compensation

CMS Issues Final Rule Establishing Conditional Payment Appeals Process Pursuant to the SMART Act

We previously had posted a blog that CMS had issued a proposed rulemaking regarding an appeals process to be utilized by applicable plans for conditional payment disputes. For background on the rulemaking and to view our prior blog, please click here.

Today, CMS issued a final rule implementing provisions of the Strengthening Medicare and Repaying Taxpayers Act (the SMART ACT), which establishes a right of appeal and formal Medicare Secondary Payer (MSP) appeals process for applicable plans, for situations where the Secretary seeks to recover payments from applicable plans. Applicable plans include liability insurance (including self-insurance), no-fault insurance, and workers’ compensation laws or plans. The SMART Act further requires that the Medicare beneficiary who received the items and/or services in question be notified of the applicable plan’s intent to appeal.

CMS has not yet published the final rule in the Federal Register. Once the final rule is published, we will provide more specific feedback and guidance on the final rule.


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.

CMS Publishes Self Administration Toolkit for WC Medicare Set Asides

Insurance LawOn March 21, 2014, CMS published its first Self Administration Toolkit for Workers Compensation Medicare Set Aside Arrangements (WCMSA). CMS had previously provided significant leadership on WCMSA administration matters through the several Policy Memos and Reference Guide it had published over the preceding 14 years. However, this was their first attempt at focusing on self administered WCMSAs, providing suggested or recommended letters and forms to be used throughout the process.

On January 5, 2015, CMS published a new, amended version 1.1 of the Self Administration Toolkit for WCMSAs. The Toolkit is broken down into 14 sections: Introduction, Setting Up the WCMSA Bank Account, How Your MSA is Funded, Using the Account, What to Tell Your Health care Providers, reviewing and Paying Your Bills, Keeping Records, Annual Attestation, Reporting Changes, Inheritance, Where to Get Help, Letters and examples, and Glossary.

Section 1, Introduction, makes it clear that a Medicare beneficiary may self administer his or her WCMSA. If so, the Toolkit will help him or her manage the account appropriately, satisfy Medicare’s interests related to future medical care, and assure Medicare will pay for future costs when the WCMSA is exhausted or depleted.

Section 2, Setting Up the WCMSA Bank Account, indicates that the beneficiary must deposit the WCMSA money in its own account, separate from any other accounts he or she may have. The account must be an interest bearing account, insured by the Federal Deposit Insurance Corporation (FDIC).

Section 3, How Your WCMSA is Funded, provides that the WCMSA may be funded either lump sum or structured. If structured, the first check should cover the first 2 years of treatment. All monies, whether paid lump sum or structured, should be deposited into the WCMSA account.

Section 4, Using the Account, outlines what medical and prescription expenses can be paid out of the WCMSA account. As has been communicated by CMS previously, WCMSA account funds can only be used to pay for medical treatment and prescription drugs related to the WC injury that are Medicare covered.

A beneficiary may also use the WCMSA account to pay for cost of copying documents, mailing fees and postage, any banking fees related to the account, and income tax on interest income from the account.

A beneficiary may not use the WCMSA account to pay for fees for trustees, custodians, or other professionals hired to administer the account, expenses for administration of the WCMSA, attorney costs for establishing the WCMSA, and Medicare co-payments and deductibles.

Section 5, What to Tell Your Health Care Providers, advises the beneficiary to notify his or her health care providers about the WCMSA so that such providers bill the beneficiary directly, and the beneficiary is then able to pay such bills out of the WCMSA account.

Health care providers may bill for medical care at full actual charges, or work comp fee schedule, depending on how the WCMSA was set up. Prescription medications should be billed based on Red Book Average Wholesale Price.

If a health care provider bills Medicare for work related treatment, the health care provider is responsible for refunding any payments received from Medicare for bills related to the treatment of the work comp injury. Such bills may then be paid to the health care provider from the WCMSA account.

Section 6, Reviewing and Paying Your Bills, reminds beneficiaries that they should review health care provider bills to make sure they are billing only for those items and services related to the WC injury and covered by Medicare.

Section 7, Keeping Records, makes it clear that the beneficiary needs to keep clear and accurate records of everything done with the WCMSA account, as these records will be used to determine if account funds were spent properly.

It is recommended that the beneficiary keep track of transaction date, check number, health care provider name, date of service, description of service, amount paid, deposit amount, and account balance.

Although beneficiaries should keep itemized receipts or proof of each payment, bank statements, and tax records, he or she will not submit these annually unless Medicare request such proof.

Section 8, Annual Attestation, requires the Medicare beneficiary to send an attestation every year, no later than 30 days after the anniversary date of the WC settlement, to Medicare Benefits Coordination & Recovery Center (BCRC) stating that the WCMSA funds were used appropriately.

The attestation must include the total spent for medical services, the total spent for prescription drugs, grand total of expenditures, total of interest income the account earned, and the balance of the WCMSA account at the end of the calendar year.

When the WCMSA account has no money left in it and there are no further deposits expected, the account is depleted or exhausted. Within 60 days of such depletion, the beneficiary must send the BCRC a final attestation letter indicating that the account has been completely exhausted. If Medicare is satisfied that the WCMSA funds have been spent appropriately, Medicare will pay for future treatment related to the work injury.

Section 9, Reporting Changes, reminds beneficiaries that if they move, he or she should send the new address to the bank that holds the WCMSA funds. If beneficiaries do not feel confident administering the WCMSA, they may seek advice from a lawyer or organization, or may appoint a representative to administer the account.

If for whatever reason Medicare entitlement is lost, the WCMSA funds may not be released, as such funds may be only be used to pay for future medical care related to the claim until exhausted.

Section 10, Inheritance, indicates that if death occurs before the WCMSA account is exhausted, the estate must pay for medical services provided before death so long as such expenditures are related to the work comp claim and are Medicare allowable. If there is money left after all bills are paid, the funds may be distributed according to the last will and testament, the settlement agreement, or state inheritance laws.

Section 11, Topics Unique to Structured WCMSA Accounts, provides that if there are structured funds left at the end of the year, such funds must remain in the account and carried forward to the following year, so that the beneficiary will then be able to use all funds to pay for medical care related to the WC claim.

If there is excess money any year thereafter, those funds must be carried forward too, on an ongoing basis, until all funds accumulated over the beneficiary’s life are appropriately used up, or inherited upon beneficiary’s death.

If however funds run out before the next structured payment or deposit is received, the beneficiary must send an attestation letter to the BCRC indicating that the account is temporarily depleted. The beneficiary should communicate this to his or her health care provider so they can then send the outstanding bills to Medicare until the next annual deposit to the WCMSA account is received.

If not yet a Medicare beneficiary, but have other insurance, the beneficiary should submit such bills to that insurance to pay for the WC injury until the WCMSA is funded again. If there is no other insurance, the beneficiary will have to pay out of pocket for such bills until the WCMSA is funded again.

Section 12, Where to Get Help, provides telephone numbers and web sites to assist beneficiaries with this process.

Section 13, Letters and Examples, offers sample documents and letters on all components of the WCMSA administration process, including letters for medical providers, pharmacy providers, lump sum annual attestation, exhausted lump sum account, structured annual attestation, temporary exhaustion structured attestation, permanent exhaustion structured attestation, and transaction record.

Section 14, Glossary, introduces terms and definitions commonly used or found throughout the WCMSA administration process.

The toolkit can be found at http://cms.hhs.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/Self-Administration-Toolkit-for-WCMSAs.pdf. Accurate and proper administration of WCMSA funds is key to the success of the MSP program. It is clear, based on these latest attempts by CMS, that administration of WCMSAs is becoming a more significant component of the larger and always evolving and complex landscape of MSP compliance. As a result, adherence to these rules is highly encouraged.

29106aeRafael Gonzalez is Vice President of Strategic Solutions at HELIOS in Tampa, Fl. HELIOS is a national leader in MSP settlement solutions, including Mandatory Insurer Reporting, Conditional Payment Resolution, and Medicare Set Asides. HELIOS is the only national MSP compliance company providing pharmacy, medical providers, and durable medical equipment services as part of its MSA Professional Administration program services, thereby offering comprehensive, total-care solutions that mitigates risk and controls costs throughout the lifecycle of the claim. You may contact Rafael at rafael.gonzalez@helioscomp.com, or at 813.612.5592.

Louisiana Appellate Court Sets Aside Settlement Based on Confusion Over MSA

On October 27, 2014, the Louisiana Court of Appeal, First Circuit, published its opinion on McCarroll v. Livingston Parrish Council and Louisiana Workers Compensation Corporation, concluding that since all parties believed that the MSA amount could be used to pay for Mr. McCarroll’s surgery and that Medicare would pay for the surgical costs exceeding the MSA amount, there was no error in the Workers’ Compensation Judge’s finding that defendants’ misunderstanding regarding the MSA was a misrepresentation sufficient to set aside the settlement order of approval. Essentially, the settlement was set aside because there was no meeting of the minds between the parties as to what the MSA would pay for and what Medicare would pay for.

Wendell McCarroll was injured in a work-related accident on December 22, 2003, while employed with the Livingston Parish Council (Council). The Council’s workers’ compensation insurer, Louisiana Workers’ Compensation Corporation (LWCC), began paying medical and indemnity benefits soon thereafter. Mr. McCarroll treated with various doctors, including Dr. Lori Summers, who recommended cervical fusion surgery in July 2008.

Mr. McCarroll initially declined the surgery. Thereafter, in November 2008, LWCC began negotiating a settlement with Mr. McCarroll’s attorney. In early January 2009, the parties agreed to the terms of a settlement, including a MSA. The MSA projected future medical treatment and prescription drug treatment in the amount of $98,684.00. That amount was broken down into an estimate of $44,129.00 for future medical payments and $54,555.00 in future prescription costs. Of the $44,129.00 amount, $21,793.00 was allocated for Mr. McCarroll’s recommended surgery.

The MSA was to be funded through an annuity with seed money in the amount of $32,045.00 and an annual payment of $4,759.91 for a maximum of fourteen years. The MSA was submitted to CMS for review and approval. The MSA was approved by CMS on February 2, 2009.

Sometime after reaching settlement, Mr. Mccarroll decided to proceed with the cervical fusion surgery. LWCC was contacted by the hospital for approval of the surgery. Because of the pending settlement, the request was denied as not needed.

Concerned about the cost of the surgery, Mr. McCarroll’s attorney asked LWCC for an additional $10,000.00. In response, LWCC offered an additional $5,000.00, and Mr. McCarroll accepted that amount.  On February 10, 2009, $5,000.00 was approved for non-covered Medicare expenses.

Mr. McCarroll underwent the cervical fusion surgery on February 16, 2009. Apparently, there were complications, and Mr. McCarroll remained in the intensive care unit for an extended period of time. On March 2, 2009, Mr. McCarroll executed the Settlement Agreement and Release. The settlement documents were approved by the OWC on March 9, 2009.

Although not specifically spelled out in the appellate opinion, it looks like Medicare was billed but denied payment for the surgery because surgery was performed before settlement of the case was actually approved by the OWC and therefore remained the responsibility of the employer/carrier. Although unclear from the appellate opinion, since Medicare believed the cost of surgery was the responsibility of the primary payers, Council and LWCC, Mr.  McCarroll was also unable to use the MSA funds to pay for the surgery costs.

Two years later, on March 10, 2011, Mr. McCarroll filed with the OWC a Petition to Enforce Settlement Agreement or, in the Alternative, to Nullify Court Approval of March 9, 2009. In his petition, Mr. Mccarroll asserted that Medicare had refused to pay for any medical expenses that were incurred prior to the March 9, 2009 approval of the workers’ compensation settlement and that LWCC had refused to pay for any medical treatment from late January 2009 up to the March 9, 2009 approval of the settlement. Mr. McCarroll requested an order from the OWC ordering payment by LWCC of all medical expenses incurred prior to March 9, 2009, or, in the alternative, an order annulling the March 9, 2009 settlement agreement.

The matter went to trial on April 24, 2013. On June 17, 2013, written reasons were issued and a judgment signed by the OWC. The judgment vacated the settlement approved by the OWC on March 9, 2009. The Council and LWCC appealed.

The defendants contend that the OWC manifestly erred in vacating the settlement approved by the OWC on March 9, 2009. The defendants maintain that the cost of Mr. McCarroll’s expected future surgery was funded as part of the settlement. They assert that the clear language of the settlement resolved the entire claim and included past, present, and future medical and indemnity benefits. Because the cost of the cervical fusion surgery was included in the MSA, the defendants contend they are not responsible for anything further.

Mr. McCarroll contends, however, that not only did he think that LWCC and Medicare would pay for the costs of his surgery, but that LWCC also believed that the surgery would be paid out of the MSA, with any additional costs covered by Medicare. Mr. McCarroll asserts that the OWC correctly vacated the approval of the settlement because neither party anticipated that his surgery would not be covered by Medicare and the MSA and that he would be responsible for the costs of his surgery. Therefore, the settlement did not reflect a meeting of the minds.

Mr. McCarroll testified that when he signed the settlement agreement he thought that his medical expenses would be paid by Medicare or the MSA.  He stated that he would not have signed the agreement if he knew that he would have been responsible for the payment of any of his medical expenses.

The court concluded that it could not say that the OWC manifestly erred in vacating the Order of Approval signed on March 9, 2009. The OWC set the approval aside finding that all the parties believed that the MSA amount could be used to pay for Mr. McCarroll’s surgery and that Medicare would pay for the surgical costs exceeding the MSA amount. As a result, the appellate court found that a reasonable basis existed for the factual finding of the OWC, and could not find that it was clearly wrong. Accordingly, the court finds no error in the OWC’s finding that LWCC’s misunderstanding regarding the MSA was a misrepresentation sufficient to set aside the order of approval. For these reasons, the June 17, 2013 OWC judgment vacating the settlement approved on March 9, 2009, was affirmed.

This case is yet another reminder to litigants of the need to be absolutely clear and precise when settling a case where an MSA is involved. Very specifically, in addition to addressing the issues and concerns brought about by the possibility of a counter-higher by CMS, parties must address with specificity the time interval between submission of the MSA to CMS, what happens if the MSA is not approved as proposed, and if approval of the settlement by the work comp judge or court is required, terms regarding any medical bills incurred during this time period. Whether at mediation or hearing, litigants, their attorneys, mediators, and adjudicators must pay attention to such details in order to prevent results like those here. Helios can assist with recommended settlement language that addresses such concerns.