TO SETTLE OR NOT TO SETTLE? THAT IS THE MEDICARE QUESTION

Presented to DRI TRUCKING LAW SEMINAR

February 16-17, 2012Jay Barry Harris, Esquire

FINEMAN KREKSTEIN & HARRISChuck Perry, Corporate Director of Claims

KNIGHT TRANSPORTATION

RECENT DEVELOPMENTS IMPACTING SETTLEMENTS

HARO VS. SEBELIUS

CMS cannot require prepayment of its interest while appeal or waiver is pending

Interest accruesPlaintiff’s counsel cannot be held

responsible for disbursing settlement proceeds

Primary payer can be held responsible

HADDEN VS. UNITED STATES

Medicare entitled to complete reimbursement

No fault allocationSettlements become more difficultImpact of Joint and Several Liability

BRADLEY V. SEBELIUS

Medicare not entitled to complete reimbursement

Medicare not entitled to any share of the surviving child’s claim

Chilling effect on settlements

CMS REGULATIONSAND ALERTS

$300 thresholdMed pay, gift cards, etc.Physical based traumaLump sumNo other benefits expectedMedicare has not issued a recovery

demand letterInsurer has not paid medical billsEffective September 2011

$5000 LIABILITY SETTLEMENT - FIXED PERCENTAGE OPTION

Pay Medicare 25% of the settlementPhysical based traumaMedicare has not issued a demand letterNo other payments anticipatedEffective November 2011

SELF-CALCULATED FINAL CONDITIONAL PAYMENT AMOUNT

Physical trauma based injury$25,000 maximum settlementDate of loss at least six months before

submission of proposed conditional amounts to Medicare

Treatment completedNo medical treatment in past 90 daysEffective February 2012

LIABILITY SET ASIDES ARRANGEMENT

Treating physician certifies treatment is completed as of date of settlement◦ Incur additional cost◦Who pays?

Submitting a certification for review and approval no longer necessary

Confirms notion that LMSAs are required in liability cases?

Effective October 2011

PRIMARY PAYER’S DILEMMA

Cannot assert Medicare’s right to reimbursement

Only U.S. government is authorized to assert Medicare’s right after demand letter issue

Cannot delay payment of settlement proceeds pending Medicare’s response

The Zaleppa and Wilson quandary

CONFIRMING MEDICARE STATUS

Pre-suit◦Authorization◦Obligation to unrepresented party◦Do not use information for any other purpose◦Safe harbor language

Litigation◦Discovery◦Motion to compel

MEDICARE’S INTEREST UNKNOWN AT SETTLEMENT

Request conditional paymentSet aside an amount to cover Medicare’s

interestHold harmless language in the release

PLAINTIFF DISPUTES MEDICARE’S INTEREST AT SETTLEMENT

Pay undisputed amount and escrow the remainder

Release language◦Medicare obligated to be paid in 60 days from

settlement◦Plaintiff provides Medicare’s final notice

within 45 days of receipt of settlement funds ◦After 45 days, primary payer pays Medicare

directly

PLAINTIFF DEMANDS FULL AMOUNT OF SETTLEMENT WITHOUT REGARD

TO MEDICARE’S INTEREST

Notify CMSPay undisputed amountSeek judicial involvementPay full amount with protective language

in the releaseRefuse to pay; continue the litigation

RESOLVING CASES WHERE FUTURE MEDICAL TREATMENT

IS UNCERTAIN

PLAINTIFF’S CONDITION GUARDED - RELEASE LANGUAGE

Maximum medical improvementIME report – no future treatment neededPlaintiff does not anticipate need for

future treatmentPlaintiff confirms that settlement monies

to be used for future treatmentNo attempt to shift burden to CMSCourt approval, if possible

PLAINTIFF AGREES TO LMSA

Evaluate all physician reports (plaintiff and defendant) and life care plans

Reduce future care to present valueSubmit to CMSSeek court approval◦Smith v. Marine Terminals of Arkansas◦Guidry v. Chevron

PLAINTIFF REJECTSNEED FOR LMSA

Educate plaintiff’s counselEvaluate need for LMSA by independent

third-partyNotify plaintiff’s counsel of need for

LMSASeek court approvalTake case to verdict

SOME SUGGESTED CLAUSES FOR LMSA RELEASE

Plaintiff’s injuries may be permanent and progressive and recovery uncertain

Plaintiff may need future treatmentPlaintiff will set aside monies to solely

pay for medical treatmentPlaintiff provides proof of set asidePlaintiff will not seek payment from

Medicare until set aside exhausted

SUMMARY

Monitor◦CMS Regulations and Alerts◦Case law◦Legislation

Release Language is Critical◦Maximize your client’s protection◦Document the good faith efforts