Debate: Medicare Set Aside Trusts and Informed Consent

Saturday, December 6, 2003 | 0

Attorney George E. Corson IV, of the Law Offices of John D. Bredfeldt, posted the following inquiry to the Legal section of the workcompcentral.com Professional Forums. The editors felt the question by Mr. Corson, and the subsequent response by Ginger Volz of the Law Office of Myers & Black were timely given the recent amendment to the Medicare laws and renewed vigor instilled in the Centers for Medicare and Medicaid Services (CMS) for Secondary Payer reimbursement as a result.

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By attorney George Corson:

I am having serious issues with some of our large settlements. I am unable to formulate a scenario where a Carrier would be liable to Medicare following a Compromise and Release with an informed waiver of the Medicare Set Aside Trust (MSA) on the claim. I do not think that there is any issue that the applicant's attorney should encourage an MSA trust for an unsophisticated claimant with a large claim. Otherwise, the Applicant could find himself with a major setoff credit or denied treatment if the funds are not reasonably available following settlement.

However, I think in the absence of a fraud-level shifting of known current medical treatment, the Carrier would be pretty safe. If parties negotiated an otherwise fair C&R with a reasonable characterization of the settlement, it would seem contrary to public policy to void a global settlement.

Since many employers and carriers are deathly afraid of Medicare, many settlements are being seriously delayed. In addition, the defendants are paying $3,000 to $4,000 for medical workups from firms that probably could be done by a Nurse Case Manager (NCM) or Primary Treating Physician (PTP) with better results. Just ask what the claimant needs and break down what is covered by Medicare and what is not. The NCM or PTP could probably do an adequate and often better job faster and for less cost. I don't think it requires a special firm. I also don't think that CMS wants to review 10,000 settlements a year just because everyone is afraid to settle without them in the loop.

The questions are:

Has anyone actually had a file where Medicare completely ignored a valid C&R and obtained payment for post-settlement treatment from the Carrier? Or are we dealing with a new form of "Urban Legend" where an adjuster knows someone from hearsay conversation that thinks a recovery was made in the other part of the state or some other state?

By paralegal Ginger Volz:

I have been to many seminars on this issue. From the last I heard there is not one settlement against a carrier at this time where Social Security prevailed and enforced the double jeopardy clause against the carrier. The issue I think is not voiding the entire Compromise and Release but coming up against the "adequacy" of the medical care, which sometimes when you factor in life expectancy, cost of living adjustments, etc., does not add up for actual medical care unless the applicant is going to take the "Tylenol cure", once your C&R is finished.

The difference is we now have a friend in the government, CMS, reviewing every Medicare bill to see if it "might" be related to a work or personal injury where Social Security/Medicare was not intended to be the primary payer. The bill can then be rejected, investigated and ultimately returned to the applicant for payment. Essentially Social Security/Medicare goes for double indemnity. I do not believe CMS has succeeded yet, but I believe the state of the Medicare system has led us to this system and the issued advisory bulletins so that the system doesn't continue to break down when another primary payer was available.

There was a suit pending in Arkansas by CMA against a carrier I was working at seeking to open up all of their settlements back to the mid-1980s. This was the first suit filed against a carrier. Since I have left that carrier, I have not heard of their success in attempting to defeat the records request.

The only other suits I have heard of were against some applicant's attorneys who chose to settle out of court in Southwestern regions.

I do believe there is a lot of fear around this issue but given the double jeopardy clauses no one wants to be the double paying entity. However the costs of paying someone to value the Medicare issues, which you are stating at $3000 - $4000, is much higher than our current vendors. Also, this cost is ultimately deducted from the Medicare Set aside amount so it is not prejudicial against the carrier or the applicant.

I have to disagree that a NCM or PTP can do this job better, because they are not familiar with what is Medicare eligible and what the potential is over the applicant's lifetime -- most Medicare set-aside providers also use an age rating as well. I have been at companies who tried this approach and the NCMs and PTPs were coming in 5-9 times higher in dollars than the Medicare trust recommendations we were getting from a reputable vendor.

The interesting thing when I was a catastrophic adjuster is that applicants seem to value their case and then add on the Medicare set-aside amount, when I believed it should be deducted, as another payer had just become available to the applicant for lifetime care.

The next issue that I do not understand is why do applicant attorneys agree to settle without a Medicare set-aside trust? The applicant and his attorney actually need to have a fully informed consent under the current Medicare guidelines. You are supposed to give them the rules and regulations for administering the trust on their own - light reading for the sleep challenged, better than warm milk or heavy duty sleeping medications! For an applicant to self-administer requires that the applicant first apply the Medicare fee schedules, then the current workers' compensation schedules and then must provide an accounting for the adequacy of the money set aside for the medical care. Truthfully, how many applicants can accomplish this task? Just offhandedly, why are applicant attorneys risking the hit on their malpractice insurance?

What I know in a nutshell, what I think of the topic and why I keep going for those Medicare Set-Asides...don't want my name to be the bad case law.

Ginger M. Volz
Paralegal to Steven T. Myers, Esq.

George Corson can be reached by e-mail at corson@bredfeldt.com. Ginger Volz can be reached by e-mail at ginger@myersblack.com. This Forum thread can be read by clicking on Forums -->Professional Forums -->Legal -->Has Medicare Actually Voided a Settlement?.

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