No Medicare Set Aside Money for Undocumented Immigrant

Monday, January 20, 2014 | 0

The facts in the case of Ramos v. Becco Contractors, Inc. involve an accepted ankle injury of Jose Ramos. Ramos eventually sought benefits for permanent total disability and in doing so included a nine-digit number in the blank for his Social Security number on a form. The parties eventually reached an agreement where the employer, Becco, would pay Ramos $125,000 and:

[I]n addition, the [Employer] agrees to fund [a] [Medicare Set Aside] in the amount of $12,361.18. In the event the [Medicare Set Aside] as approved by [the Centers for Medicare and Medicaid Services, hereinafter CMS] exceeds this amount, the claimant agrees to provide additional funding from the settlement proceeds.

At a hearing to approve the settlement, Ramos testified through an interpreter his understanding of the MSA issue and duty to pay for future treatment from such funds. The trial court approved the settlement on June 1, 2009. Ramos subsequently became a naturalized U.S. citizen on Dec. 18, 2011.

The employer paid the principal amount of $125,000, but refused to fund the Medicare set aside or pay the amount to Ramos because upon submission of the Medicare set aside to CMS, it was discovered Ramos was not Medicare eligible. The number reported by Ramos as his Social Security number was only a taxpayer identification number and Ramos was not Medicare eligible until he became a naturalized citizen in December 2011.

Becco argued because Ramos misrepresented his status as a holder of a valid Social Security number and was ineligible for Medicare benefits at the time he filed his claim and at the time of settlement, the provision of the settlement agreement calling for funding of a Medicare set aside was unenforceable on account of Ramos’ misrepresentation of Social Security and Medicare eligibility.

The trial court held the MSA provision of the settlement agreement was unenforceable, noting the incorrect Social Security number was a material misrepresentation of fact by Ramos and the employer was relieved of any requirement to fund the MSA or pay the equivalent sum to Ramos.

On appeal Ramos argued he did not appreciate the requirements for Medicare eligibility and the parties were mistaken in this regard with there being no intentional misrepresentation on his part. The Appellate Court sustained the order of the trial court, noting the parties settled the case based upon what appears to be, at best, a mutual misapprehension of Ramos’ eligibility for Medicare benefits. However, at the hearing on approval of the settlement agreement, Ramos acknowledged his understanding:

(1) The Medicare set-aside provision would be submitted to CMS for approval, and

(2) He would not receive the payment of the Medicare set-aside funds unless or until CMS approved.

Due to the fact Ramos agreed the Medicare set-aside would not be paid without CMS's approval, and CMS's approval of the Medicare set-aside provision was not obtained, the court held Ramos may not now complain of the employer’s failure to pay the Medicare set-aside.

Essentially the court found a condition precedent, CMS approval, and because this condition was not met, the MSA did not need to be funded. Without such language, it is possible the employer would have had to fund the MSA or pay the additional money directly to claimant, even though claimant was not eligible for Medicare at the time of settlement.

We can take away two main points from this case. First, we recommend the proper investigation into a claimant’s eligibility for Medicare be performed prior to settlement. Second, the settlement agreement language used is always crucial and especially so when MSAs are involved. A thought we had when reading this case is the situation in which the carrier or employer agrees to keep medical open until the approval of the MSA by CMS. If such language was included in the settlement contract language here, it appears Ramos would be entitled to continued medical treatment indefinitely because the MSA was never approved by CMS. The attorneys at KCBA deal with these issues on a daily basis and are more than happy to assist you with your MSA and settlement questions.

Matthew Ignoffo is an attorney for the Keefe, Campbell, Biery & Associates workers' compensation defense law firm in Chicago. This column was reprinted with permission from the firm's client newsletter.