Recommendations to Protect All Parties Interests in Liability Settlements

Recommendations to Protect All Parties Interests in Liability Settlements | Risk & Insurance | Involved in a liability settlement that could be impacted by the new Medicare set-aside reporting requirements? Here's some advice to help you get through it and stay within the letter of the law.

By JAMES POCIUS, an attorney and shareholder with Marshall Dennehey in Scranton, Pa., and an expert on Medicare and workers' compensation.

When a case is filed, it is now incumbent on the parties to immediately convey whether or not the plaintiff or claimant is a Medicare beneficiary. If not, the parties can proceed as they have always done. However, if the claimant is Medicare eligible, the reporting requirements will be triggered and Medicare's interests must be taken into account.

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Once it is determined whether or not a claimant is a Medicare beneficiary, you must now determine whether or not the case involves only past medical payments or if it also includes future medical damages.

If the case involves only past medical payments, a letter to the Coordination of Benefits Contractor requesting Medicare's conditional payments should immediately be forwarded. Once those conditional payments are determined, the parties can settle the case and eliminate Medicare's interests by paying any outstanding conditional payments.

FUTURE MEDICAL CARE

In cases that involve future medical care, the situation becomes more difficult. My initial recommendation is to forward the settlement documents and a Medicare set-aside proposal to Medicare for review. If the agency agrees to review it, as in workers' compensation cases, you will get a letter back that binds the agency to a certain amount. This amount is then placed into a Medicare set-aside account and, as part of the settlement, is funded. The case can then be closed and Medicare's interests have been taken into account.

If Medicare will not review the settlement, it is incumbent on the parties to come up with a solution that will take Medicare's future interests into account. I would suggest a Medicare set-aside review by a competent provider in order to determine what Medicare's future interests might be in the case. Thereafter, the parties, as part of the general settlement, could provide a Medicare set-aside account. This could be administered either by the plaintiff or a trustee.

The settlement documents would then bind the plaintiff to use the set-aside money in a separate account only for future Medicare expenses. As in workers' compensation, the settlement documents should also require a plaintiff to track the Medicare set-aside money through an annual accounting. In this way, when the money is used up, the plaintiff would go over this accounting with Medicare and request that Medicare begin payments.

This is the method used by the agency when Medicare set-asides are approved in workers' compensation cases. I see no reason why this method could not be used in liability cases when the parties set up their own trust account.

COURT-APPROVED ARRANGEMENT

Another alternative to bind the parties with a private set-aside arrangement would be to have the court approve the arrangement, much like a minor's settlement. In this way, there would be a judicial order compelling the plaintiff to use those monies as designated, and if the plaintiff did not do so, the plaintiff could be held in contempt of court. If the plaintiff violated a court order and disbursed the funds, it is also possible that it could be considered Medicare fraud.

April 1, 2009

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