11-28-11; Medicare grabs their money back in a motor vehicle settlement and Plaintiff may get the short straw in the deal

In Hadden v. U.S., Medicare paid about $82,000 in medical bills to claimant after a motor vehicle accident, as he was and remains a Medicare beneficiary. Plaintiff Hadden sued and settled the claim against the company whose driver hit him in the accident. Defendant was were willing to pay him $125,000.00 to close all rights in the claim.

Medicare was willing to deduct attorney’s fees to recover their money, leaving them a net lien of about $62,000. Please note that would mean Medicare would get just under one-half of the entire settlement. It is our understanding Plaintiff’s attorney would also get legal fees on the remaining balance to be paid to Plaintiff Hadden over and above the Medicare lien recovery, so Plaintiff might receive as little as $25,000 of the $125,000 being paid. Obviously, personal injury lawyers don’t like such outcomes as the attorney would get as much or more in combined legal fees from Medicare and claimant, as claimant would receive himself. In this claim, we would estimate

·         Medicare would receive $62,000;

·         The attorney’s fees on that money were about $20,000;

·         There is about $43,000 of the original offer of $125,000 left after netting out Medicare’s recovery and fees related to the recovery;

·         Claimant would have to pay his attorney a 1/3 fee on that money, giving claimant about $28,666.67;

·         Attorney’s fees on $43,000 at 1/3 are $14,333.32.

If the above approximations are accurate, the payout about be:

·         $62,000 to Medicare;

·         $34,333.32 to the attorney who is actually working for both Medicare and Plaintiff;

·         $28,666.67 to Plaintiff Hadden.

Ouch.

At long last, the 6th Circuit Court of Appeals finally rendered their decision in the appeal on November 21, 2011, only 404 days after oral arguments were presented. It is no surprise to observers to note the majority followed the status quo and ruled in favor of Medicare. In their five page opinion, the court says little more than strict interpretation of the MSP gives Medicare a fairly opened ended, unquestioned right to recovery without the burden of equity considerations. This is the way that it has always been dating back to Zinman v. Shalala in 1995.

In all of its attempts to avoid the issue, observers feel this Federal Appellate Court’s ruling is somewhat troubling as they tried to create a basis for the decision on the distinction between liability and responsibility. The MSP states:

A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. . . .

One can assume responsibility or be made responsible by order of a court. Anything short of that does not equate to "responsibility" as some legal scholars view it. Insurance settlements represent financial transactions in which injured parties sell the right to bring legal claims against purported tortfeasors. Injured parties receives compensation in exchange for a release from liability in an amount commensurate with their likelihood of prevailing at trial--each right released carries a monetary value.

In this personal injury claim, it is important to note Kentucky is a pure comparative negligence state. Arguably the defendant driver was only minimally at fault given all he did was swerve to avoid a more significant catastrophe. Based on such facts, many view Plaintiff Hadden would have received a fair settlement. Critics feel Medicare should be satisfied taking the portion of compensation representative of medical expenses and then use its subrogation rights and seek the remaining balance directly from the defendant. Scholars feel the government will not assert its own claims against what it deems "responsible" primary payers, where it would actually have to prove its claims to reimbursement. They feel the government elects to wait until others have spent time and resources obtaining compensation and then just step forward and take what it wants regardless of the underlying issues.

In summary, we feel the industry should look to Medicare’s recovery as a “hard” lien that will not be subject to discounts based on relative fault. Everyone in the U.S. personal injury industry has to take notice and fall into line, unless and until the U.S. Supreme Court takes a test claim and reaches a different outcome.

If you want a cite to the ruling on the web, send a reply. We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog.

11-28-11; EEOC Intake, Relief Obtained and Charges Resolved Hit Record Highs in 2011—please consider KC&A to defend your company in EPLI claims at hourly rates that are lower than you might expect

The U.S. Equal Employment Opportunity Commission (EEOC) finished it fiscal year 2011 with a ten percent decrease in its pending charge inventory—this is the first such reduction since 2002 and achieved the highest ever monetary amounts through administrative enforcement, and received a record number of charges of discrimination, the agency reported in its annual Performance and Accountability Report filed today. Under the current administration, they have the funding and drive to punish/penalize U.S. business whenever possible.

The EEOC received a record 99,947 charges of discrimination in fiscal year 2011, which ended Sept. 30, 2011. This is the highest number of charges in the agency’s 46-year history. At the same time, EEOC staff also delivered administrative enforcement—they obtained more than $364.6 million in monetary benefits for victims of workplace discrimination. This is also the highest level obtained in the Commission’s history. Their fiscal year ended with 78,136 pending charges—a decrease of 8,202 charges, or ten percent. In previous years, the pending inventory had increased as staffing declined 30 percent between fiscal years 2000 and 2008. Due to EEOC’s enforcement programs in both the private and federal sectors, 5.4 million individuals benefitted from changes in employment policies or practices in their workplace during the past fiscal year.

The agency continued to build a national systemic enforcement program. At the end of the fiscal year, there were 580 systemic investigations involving more than 2,000 charges under way. EEOC field legal units filed 261 lawsuits—23 of which involved systemic allegations affecting large numbers of people; 61 had multiple victims (less than 20); and 177 were individual lawsuits.

The EEOC’s private sector national mediation program also achieved historic highs, obtaining more than $170 million in monetary benefits for complainants, and securing the highest number of resolutions in the history of the program—9,831.

At Keefe, Campbell & Associates, we are proud to advise our clients we have a strong focus on defending your rights before the growing imprimatur of this federal agency and its Illinois counterpart, the Illinois Department of Human Rights. What we see over and over are companies who hire very expensive corporate counsels at rates from $350-1,000+ per hour. Those defense attorneys run up a monster bill and then tell you to settle the dispute for a fraction of the legal fees they have already charged you.

In contrast, our hourly billing is at rates under $200 per hour and we get right to the point—our goal is to find out what, if anything, went wrong and how to fix it. We don’t need to take statements and depose everyone in your company for every imagined slight. We don’t run up massive bills and then tell you there is a problem and you need to settle. We will also do everything to use our experience and expertise to assist you to avoid claims in the future.

Please feel happy to reply or contact Gene Keefe at ekeefe@keefe-law.com to set up a meeting and discuss your overall EPLI or employment practices defense program at any time.

11-28-11; IL WC insurance-defense industry beware! Our IL Appellate Court, Workers’ Compensation Division issues a painful (and hefty) penalty/fee award for non-payment of TTD and TPD benefits...

Editor’s Comment: In Jacobo v. Illinois Workers’ Compensation Commission, 2011 IL App (3d) 100807WC (Nov. 16, 2011) the Workers’ Compensation Division of our Appellate Court reversed the Circuit Court’s denial of penalties/fees and asserted a new and very strict rule regarding the timely payment of benefits when there is no longer a pending dispute regarding the entitlement to such benefits.

This case involved a serious back injury whereupon 203 weeks of TTD was awarded, along with total and permanent disability benefits. The employer initially disputed the TTD, based on an IME. The Arbitrator awarded benefits. On the employer’s appeal, the Commission affirmed and adopted the Arbitrator's decision concerning the substantive award, except the Commission panel awarded the employer section 8(j) credit. The Commission also reversed the Arbitrator’s award of penalties/fees.

What is significant to this case thereafter is that, once the Commission decision was rendered, the employer did not file any further factual or legal challenges to the Commission's decision concerning medical expense, TTD, and PTD benefits. While the claimant appealed the Commission's decision, the only issue she contested on appeal was the Commission's denial of penalties/fees.

Therefore, all of the proceedings in the case moving forward concerned the separate issue of penalties/fees and did not concern the Commission's benefit award. After April 10, 2007, the amount of benefits to which the claimant was entitled was no longer contested. The undisputed nature of the benefits awarded was evidence by emails to and from the respective attorneys after the Commission award as well. The employer, however, did not pay the claimant’s award until June 24, 2009, asserting the claimant’s further appeal (in pursuit of penalties/fees only on the original case) meant the decision was not yet “final” and therefore, not due and owing while the claimant’s appeal proceeded.

The Appellate Court strongly disagreed with the employer’s position on this issue, citing its own prior ruling from 2002. In Zitzka v. Industrial Comm'n, the employer argued that it was not obligated "to pay any part of an award where there is a legitimate dispute over some portion thereof, in order to avoid 'piecemeal' payment of awards." The Commission rejected the employer's argument and granted the claimant's penalty petition. In upholding the penalty award, the Appellate Court found Respondent had “no legitimate reason to withhold payment of the undisputed awards." Likewise, in the present case, the Appellate Court found the employer had improperly withheld payment of the undisputed portion of the arbitrator's award, explaining Zitzka plainly established claimant's appeal of an issue unrelated to the substantive awards is not a "legitimate reason to withhold payment of the undisputed awards."

As further justification for its delay, the employer also argued claimant's appeal from the Commission's award did not specify the only issue on appeal concerned the Commission's denial of penalties. However, the record establishes the employer knew the penalties were the only issue on appeal at least by April 28, 2008, when claimant filed her brief in the Circuit Court, raising only the issue of penalties. Furthermore, the claimant never contested the award amount before the Commission, and that portion of the arbitrator's decision was affirmed and adopted by the Commission. It is a well-settled rule failure to raise an issue before the Commission results in its waiver following Greaney v. Industrial Comm'n. Therefore, the Appellate Court reckoned the employer knew full well the claimant could not seek any review of the substantive awards and the only issue she could raise on appeal was the issue of penalties/fees since she did not raise any issues with respect to the substantive awards before the Commission. Upon issuance of this ruling, the Appellate Court offered a sharply-worded criticism of the employer’s argument, asserting “the employer's feigned ignorance of what issues were contested in the claimant's appeal is not a reasonable justification to delay the payment of undisputed benefits.”

In an effort to leave no doubt about the rule, the Court concluded with these mildly chilling words; “We want to be clear on this point. Any portion of a claimant's benefits which are undisputed must be promptly paid or the employer will be subject to penalties and attorney fees under the Act.” It is our strong suggestion this statement be repeated during training, used as screen-savers, put on office posters—whatever it takes to indelibly highlight these important words from our esteemed justices for all members of your Illinois WC claims-handling staff, risk managers and defense attorneys, lest they suffer the same fate as the employer in this case. Even where appeals continue to be taken on one or more issues of a claim, the employer must make timely payment of any benefits that are no longer in dispute after each stage of litigation.

If you want the cite for the ruling on the web, send a reply. If you want to listen to oral arguments before the Appellate Court, they are on the web on October 19, 2011 here: http://www.state.il.us/court/Media/Appellate/Workers_Comp.asp

This article was researched and written by John P. Campbell, Jr. J.D. Please forward your thoughts and comments to John at jcampbell@keefe-law.com.