Medicare Set Aside (MSA) Considerations in Florida Workers’ Compensation Cases

Chess.jpgThis past week our firm settled a workers’ compensation case for $892,000. Included in the settlement package was a Medicare Set Aside. Importantly, while the workers’ compensation carrier had not obtained CMS approval prior to the settlement, the carrier guaranteed that it would cover any CMS required payments above those proposed. (The carrier also agreed that if CMS required less than the proposed amount, the Claimant would keep the difference.)

Without this guarantee, the case would not have settled. While the settlement was abundantly fair, the Claimant could not chance having to pay out-of-pocket to CMS more than was proposed. Moreover, he wanted the peace of mind of finality that only the guarantee could buy. The proposal was not a complete shot in the dark for the carrier, so the guarantee was not a big risk. The MSA proposal was generated by the carrier’s own experts, with backgrounds in medicine and billing, and extensive experience with CMS. Having been-there and done-that, the carrier’s team did not expect any big surprises. Nevertheless, the guarantee was a big deal for the Claimant. (Also helpful is that the carrier agreed to pay a private company — Medivest — to manage the Medicare Set-Aside. This is the way to go. Managing a Set-Aside is beyond the capabilities of most individuals and if done wrong, money will be wasted and Medicare benefits jeopardized.)

In cases where the Claimant has substantial future medical needs, it is important for Claimant’s attorneys to remember that the amount CMS is willing to approve for the MSA Set-Aside is often a small fraction of the actual cost of future medical expenses. For example, in the settlement mentioned above, the carrier’s exposure for future medical expenses was 15-20 times greater than the amount CMS will approve. Congress allowed this flexibility by understanding the importance to private business of being able to settle cases. (See, 42 C.F.R. §411.46, 42 C.F.R. §411.47 and §3407.7, or 42 C.F.R. §411.54, et seq., of the Medicare Intermediary Manual.) If MSAs had to equal full exposure, cases would be too costly to settle. Without being able to settle cases, the insurance industry would come to a grinding halt. This would harm the economy. The alternative was to make taxpayers shoulder some of the exposure. This is what happens when Set-Asides are approved for less than full exposure.

This knowledge can be used by Claimants’ attorneys to obtian more money for their clients. They should not be fooled into thinking that the MSA money equals or even approximates actual exposure. Armed with this knowledge, Claimants’ attorneys should be able to exact from the carrier a solid percentage of the actual exposure in a lump sum payment to the Claimant. The carrier will be thankful that it was able to save money by getting the Claimant to agree to accept Medicare instead of workers’ compensation.

To maximize recovery on this premise, the Claimant’s attorney must lay the groundwork by establishing the carrier’s true exposure. In our case, I was able to get the main treating doctor to put in writing that his patient would require attendant care, physical therapy and additional surgeries in the future. I bolstered the doctor’s opinions with medical articles, and my own opinions based on experience and common sense. (I am a firm believer in providing defense lawyers and insurance adjusters with regular bits of information as a way of conditioning them to pay solid money. In most instances, I’d rather they have time to mull over the information than springing it on them at the last minute, such as during mediation. Caveat: Some information is better held back until mediation or trial itself.)

If the groundwork is solid, the carrier may quibble but the quibbling is only being done around the edges.

Our client’s transition from workers’ compensation to Medicare will be seamless. He will continue to receive medically necessary care without a hitch. At the same time, we were able to provide him and his family with a degree of financial security that would not otherwise be available had the workers’ compensation case remained open. Interestingly, while the carrier paid more than it had hoped to pay, it walked away from the settlement feeling that it had saved money from its exposure.

Knowing the law and laying the proper groundwork made the settlement a win-win situation.

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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.

While prompt resolution of your legal matter is our goal, our approach is fundamentally different. Our clients are “people” and not “cases” or “files.” We take the time to build a relationship with our clients, realizing that only through meaningful interaction can we best serve their needs. In this manner, we have been able to best help those requiring legal representation.