On August 18, 2010, Missouri Layers Media published an article explaining how, in a Missouri WCMSA case, the inherent uncertainty of the Workers’ Compensation Review Center’s procedure and unfamiliarity with the Medicare Secondary Payer Act (MSP) can combine to create costly consequences.
Workers’ Compensation Medicare Set Aside Subjects Carrier to Motion to Enforce Settlement
Briefly, the parties to a workers’ compensation case agreed to settle the matter for $85,000.00 for the indemnity benefits and had projected what appears to be approximately $240,000.00 as a Medicare set-aside amount. The settlement paperwork submitted to the court apparently included language that the final settlement amount was to be determined and paid upon receipt of the MSA determination from CMS with no explanation as to what would occur should the CMS determination fail to match the defense’s future medical projection. Predictably, CMS determined that the parties’ MSA was $189,000.00 too low to protect Medicare’s interests. The carrier had resisted payment of the increased amount, according to the article, until a petition to enforce the settlement was filed.
The reported case illustrates critical points when attempting to settle a workers compensation case that involves a Medicare beneficiary or an injured worker with a “reasonable expectation” of Medicare eligibility within thirty (30) months of settlement. Without an express statement of the amount that CMS determines appropriate to protect Medicare’s interests, no certainty can be had. Settlement paperwork that establishes a settlement amount contingent upon a CMS allocation leaves the parties with no choice but to accept the CMS amount. CMS submission must be done well before a settlement of future medical benefits is negotiated. A set aside allocation, no matter how reasonable, that has not been previously reviewed and approved by CMS before settlement, is subject to increase or modification based upon a number of factors. While many would argue that those factors are, at times, arbitrary and inconsistent, there is virtually no reason why the parties to the case reported above ended up in such a sad situation. The Missouri example appears to show us that, despite the well entrenched workers’ compensation practice encouraging MSA submission, the litigants unprepared to deal with the CMS review process can expect problems in their cases.
Settlement Negotiation and Pre-Approved CMS Future Medical Cost Projection Can Alleviate Enforcement Woes
Several steps are recommended that may avoid the situation described in the Missouri case example. Settlement negotiation should be preceded by a realistic projection of future medical costs. CMS submission of a WCMSA can be made at any time in the litigation process. If the parties properly recognize that their case may impact Medicare’s rights as a secondary payer, Medicare should be dealt with early in the settlement process rather than as an afterthought. If the parties disagree with a CMS determination, settlement language must be crafted to determine which party will be responsible for an overage (if any) and how the difference in the amounts will be handled. Additionally, submitting settlement paperwork to a judge or hearing officer for approval prior to receiving a CMS determination of an appropriate amount or before receipt of a reasonable, defensible cost projection sets the stage for serious problems. Remember also that CMS submission is not required, even in workers’ compensation cases. In the Missouri debacle, the parties might well have agreed to settle based upon the projection provided. While their settlement may have been subject to later action by Medicare based upon the exhaustion of funds, the argument still could be presented that Medicare’s interest were taken into account and that the parties acted in good faith.
For litigants and practitioners, ignorance or inattention to the options available when dealing with CMS and Medicare compliance will result in workers’ compensation cases like the one described above. Likewise, failure to craft appropriate Workers’ Compensation settlement language may seriously impact your case.