Three Ticking Time Bombs
in Every Settlement
Time Bomb #1: Medicare Compliance
by Jack Meligan,
Settlement Professionals, Inc.
Almost every day, I get calls from attorneys asking me to clarify some component of the settlement process. And, with 25 years in this business, you can be sure I've fielded a pretty wide variety of attorney questions. (Many I can't repeat in mixed company.) But I've never seen one subject spark as much confusion as this one... Medicare Set Asides.
Here are the Basics...
The 1980 MSP statute says you must "protect/consider" Medicare's interests in getting reimbursed for the "conditional payments" they made prior to settlement. If they don't get reimbursed, the 2003 law added enforcement provisions allowing Medicare to collect "double damages" from defendants. Yes, that's "double damages." In addition, Medicare can require that the plaintiff attorney reimburse. Yes, that's "you" (as in the attorney). Obviously, this makes plaintiff attorneys nervous, and defendants testy.
But there is some good news...
The law actually does not allow collection of double damages from the plaintiff attorney; only from the "payer" insurance carrier. (See 42 U.S.C, § 1395y(b)(2)(B)(iii))
And it gets better...
You are not required to create an MSA! In 2007, Medicare added a reporting requirement to the defense - not the plaintiff. The statute says "you must "consider" Medicare's "future interests", but your client is not required to create an MSA, as there is still no statutory or regulatory authority requiring that we do so. The standard may be met by consulting an expert and papering your life with notes or conversations, or better yet a letter.
Doug Brand, President & CEO of Medivest (a firm specializing in Medicare compliance for personal injury cases since MSAs were introduced in 1998), says, "MSAs are not required nor were ever required in Worker's Comp., General Liability nor any type of case. What is required is compliance with the law; the MSP Statute of 1980. The MSA is simply one way to satisfy Medicare's interests per this law. Although the MSA arrangement may be the best and preferred method of complying with this law, it may not be necessary in all cases. If the injured person is on Medicare at the time of settlement or is going to be within a reasonable time after settlement and they will need future injury-related, Medicare-covered treatment, goods and/or services, then that's when the MSA may be the best way to satisfy compliance."
Some attorneys are unnecessarily pushing clients into MSA's now, under the belief MSA's will soon be required anyhow, and rationalize "it is just another protection for client's funds." Think carefully on this, as this could be a source of, shall we say, future "client discontent". Be mindful under your state law of your duty to protect a client's liability recovery from incorrect claims and unnecessary charges.
As always, the easiest way to relieve yourself of the stress (and liability) associated with the settlement process, is to call in an experienced settlement planner. We can manage the entire process so you can focus on what you do best: win cases. And, I just happen to have the number of a good settlement planner you can call anytime: (800) 666-5584.
This story is based on a recent SPI Study on Plaintiff Attorney Liability.
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