1-23-12; Alternative methods to avoid a future headache with Medicare

As everyone involved with settlements involving injuries to persons is now keenly aware, Medicare is paying attention and will be looking for the money, whether it be in the form of reimbursement for conditional payments already made or in the form of denying future care until appropriate settlement funds have been exhausted.

Every week we receive questions and meet confusion with regard to what exactly “protects Medicare’s interests”.  Per a recently discussed memo, a definitive statement from the treating MD which indicates no further treatment will be needed is likely to be a solid method—but what to do if that isn’t applicable? You create an MSA to protect the interests.  But how do you know if CMS will agree that their interests were protected if the claim doesn’t meet their review thresholds?

In a recent case, a DOJ action was filed to confirm same. In GUIDRY, ET AL. V. CHEVRON USA, INC.,  Branden Guidry was allegedly injured in a workplace accident while he was employed by Kelley Completion Services (KCS) and assigned to work on a Chevron structure located on the Outer Continental Shelf, where he fell into a hole, with one leg in the hole and one leg on the platform. As a result of the accident, Guidry was diagnosed with a disc herniation and underwent low back surgery.

Guidry and his wife, individually and on behalf of their minor children (hereinafter “Guidry”), filed suit against Chevron U.S.A., Inc. and Danos & Curole Marine Contractors, LLC. Guidry’s third-party claims were eventually settled amicably after lengthy negotiations. The defendants agreed to pay Guidry the sum of $975,000. In consideration for a settlement approved by OWCP under §908(i) releasing the claims brought under the LHWCA, KCS’s insurer agreed to pay Guidry $50,000 and to waive its intervention and any lien it might have had.

Part of the consideration for all of the settlements was that Guidry would be responsible for protecting Medicare's interests under the Medicare Secondary Payer Statute (MSP). Although the parties wanted the Medicare Set Aside (MSA) approved by Centers for Medicare and Medicaid Services (CMS) for purposes of complying with the provisions of the MSP, and the commensurate regulations, the parties were concerned that the settlement could not be finalized and cited the delay associated with obtaining approval from CMS and the fact that approval may not ever be forthcoming.

In an effort to avoid lengthy delay or rescinding the settlement altogether and to achieve compliance with the provisions of the MSP, Guidry filed a motion for declaratory judgment seeking (1) approval of the settlement, (2) a declaration that the interests of Medicare are adequately protected by setting aside a sum of money determined by the court to fund any of Guidry's future medical expenses related to the injuries claimed and released in this lawsuit, and (3) an order setting that amount aside from the settlement proceeds and depositing it into an interest-bearing account to be self-administered by Guidry.

An MSA determination was made for a total of $77,204 and the court found that sum of $77,204.16 was appropriate for costs which would be otherwise covered by Medicare, reasonably and fairly took Medicare's interests into account in that the figures are based on reasonably foreseeable medical needs. Additionally, since CMS provided no other procedure by which to determine the adequacy of protecting Medicare's interests for future medical needs and/or expenses in conjunction with the settlement of third-party claims, and since there is a strong public interest in resolving lawsuits through settlement, the court found that Medicare's interests had been adequately protected in the settlement within the meaning of the MSP. (USDC WDLA, December 28, 2011) 2011 U.S. Dist. LEXIS 148942.

This may sound like old news to anyone who was present for one of the many seminars KCA conducts in which Shawn Biery provided an update on MSA issues as we have noted the potential for a declaratory action to be filed in the event that there was clear concern regarding a significant settlement which didn’t meet CMS threshold guidelines. Now we have an example that this is indeed an appropriate potential method. We wouldn’t suggest the expense in settlements which include minimal issues, however when large amounts are in play—there is an alternative.

For any questions regarding Medicare Set-Asides, CMS review thresholds or other Medicare related issues with regard to your settlements, you can reach Shawn R Biery, J.D. MSCC  via email at sbiery@keefe-law.com or via phone at 312-756-3701.