10-4-11; What if they submitted an MSA and CMS didn’t approve or reject?

In one of the odder rulings we have read in some time, in Billy Smith, Plaintiff vs Marine Terminals of Arkansas, Defendant and American Home Assurance Company, Intervenor (Case No. 3:09-CV-00027-JLH, issued August 9, 2011), Claimant Smith was involved in an accident on April 14, 2006, working as a truck driver aboard a floating barge owned and operated by his employer. He injured his right hand when his co-worker closed a crane bucket on it. Plaintiff filed claims under the Longshore and Harbor Workers’ Compensation Act (LHWCA) and the Jones Act.

Plaintiff had five surgeries to his right hand and was also treated for post-traumatic stress. The parties reached a settlement agreement in which Plaintiff was to accept $1,000,000.00 in exchange for a discharge of all claims against Defendants in the Jones Act liability case and all claims under the LHWCA against the employer. American Home Insurance, the workers compensation carrier, also agreed to waive its entire WC lien of $265,423.47 for past benefits.

This case came before the United States District Court for the Eastern District of Arkansas on Plaintiff’s self-styled “Motion to Determine the Medicare Set Aside Amount” in the case. At the time of the Motion, Plaintiff was receiving SSDI benefits and was Medicare eligible. As a part of the settlement, Plaintiff agreed to determine a Medicare Set-Aside (“MSA”) and seek submission of the MSA with the Center for Medicare and Medicaid Services (“CMS”) for approval. The overall settlement was conditioned upon obtaining U.S. Department of Labor DOL approval by the District Director of the settlement of the underlying LHWCA following approval of the MSA, pursuant to Section 908(j) of the LHWCA.

An MSA allocation was prepared by a vendor in the amount of $14,647.00. The MSA was submitted to CMS for review and approval March 17, 2011. CMS decided not to review the MSA submission, claiming they were overwhelmed with work. The inability of CMS to review and timely approve the MSA potentially jeopardized the reasonable settlement in this claim.

The Federal Court found the vendor-determined MSA of $14,647.00 and the supporting rationale were a reasonable estimate and determination of the Plaintiff’s future injury-related, Medicare-covered treatment. The Court also noted there was no evidence Plaintiff or any party was attempting to shift the payment of such future expenses for the treatment to the federal government or Medicare. CMS’ failure to consider and review the MSA was also noted in the holding. Unless and until this matter is further appealed, it may be possible to get MSA’s approved either by CMS or a Federal District Court who is fully advised in the premises.

Our law partner, Shawn R. Biery, J.D. holds the M.S.S.C. certification and is one of the top MSA experts in the U.S. If you have questions or concerns about such issues, please feel free to contact Shawn at sbiery@keefe-law.com.