Liability Medicare Set Asides – How to be compliant

Most defendants have started to mandate, as part of the release language, that the plaintiff choose one of two below options for addressing Medicare’s future interests, without exception in return for payment of the settlement monies:

1. Plaintiff agrees to get a letter from the treating doctor that, as of the date of settlement, all accident-related medical care has been provided/completed[1]. This is a viable solution to avoid any possible future denial of injury related Medicare covered services.
2. Plaintiff agrees to do a Medicare Set-Aside and agrees not to bill Medicare for any future care related to the subject accident until the set-aside is exhausted.

To illustrate this point, below is an actual email (redacted) from a defense attorney to the plaintiff attorney that highlights such a tactic by the insurance carriers. This case involved a $15,000 global settlement on an auto accident. This email is a perfect example of what is becoming the norm for Medicare-eligible plaintiffs.

Dear Plaintiff’s Attorney,

I apologize for the delay in getting back to you.  I have conferred with my client on this issue, and due to your client’s Medicare eligibility, my client is obligated under the laws previously mentioned to protect Medicare, which includes the treating physician certification requirement or doing a Medicare set aside.  This is a legal obligation and therefore I am not authorized to remove these terms from the Release.  The treating certification can simply be in the form of a letter that tracks the language in the CMS Memo.

Thank you,

Defense Attorney

Application

One could argue that most liability cases that settle for $15,000 or less do not fund future medicals when all damages are considered; therefore, there is no need to consider a liability set-aside for any case that resolves under $15,000. In the case example involving the email from defense counsel, the client had reached maximum medical improvement (MMI) and had completed all the accident-related care. The settlement was delayed for months before the attorney contacted us for assistance because the attorney did not want to jeopardize his client’s Medicare benefits. Ultimately, we were able to provide template language to the attorney for the treating doctor to specify that the care was completed at the time of the settlement. If the circumstances had been different and this plaintiff had required future care in this example, then the parties could have done an analysis of the future medical expenses compared to the net recovery to calculate the MSA amount. An MSA does not always involve getting a full report done with a comprehensive medical review; it simply means setting aside monies based on all the facts of the case.  To avoid these types of delays post-settlement, one idea for attorneys to consider is to have consensus by the settlement parties on release language (including any/all Medicare language) prior to going to mediation. That way, there are no unwanted delays in receiving the settlement funds once the case had been resolved.

No Medicare Set-Aside

There are situations when a no-treatment attestation letter by a treating physician is not applicable whereby future medicals are not funded. This is a prime example: we were retained on a policy limits case that resolved for a total of $500,000 whereby a husband and wife were hit by a drunk driver after leaving a restaurant. As a result of the accident, both became paraplegics. The past liens were greater than $1 million and the future damages exceeded $25 million. Even though the release language stated that it was a release for past, present and future damages, there were simply no monies leftover to fund any future medicals. In this scenario, we were able to put together a “No MSA” letter for the plaintiff, indicating the same and that Medicare’s future interests were adequately considered. The file was documented to indicate why nothing was set-aside. The release language also memorialized that there were no settlement funds paid out for future medicals.

Conclusion

There is no black and white approach to addressing MSP compliance on liability settlements. Plaintiff’s counsel should insist on controlling the MSA process from start to finish as they are the ones who have legal malpractice risks and personal liability if, in fact, they fail to properly advise their client regarding the Set-Aside issue.

[1] On September 29, 2011, CMS issued a memorandum indicating there is no need for a liability Medicare Set-Aside and that its interests would be satisfied if the treating physician certified in writing that treatment for the alleged injury related to the liability insurance had been completed as of the date of settlement