Assistant U.S. Attorney Robert Trusiak of the Western District of New York develops protocols for Liability Medicare Set Asides.
On May 6, 2011 Assistant U.S. Attorney Robert Trusiak issued protocols for Liability Medicare Set Asides for the Western District of New York. The protocols are vastly different from the procedures that have now become commonplace for Medicare Set Asides in workers’ compensation cases and in select liability settlements. If the protocols were to be applied across the country, they would provide a framework for liability set asides but would at the same time fundamentally change the landscape of Medicare Secondary Payer Compliance with regard to futures.
The substance of the protocols is as follows:
“Application for Medicare Secondary Payor (MSP) compromise with regard to Medicare concerning future medical treatment must be made jointly by the Medicare beneficiary, or his representative, and the primary plan. Prior to any application filed with the U.S. Attorney’s office for the Western District of New York (WDNY), Medicare must have been notified of the pending liability claim, the settlement of same and the letter from the Medicare Secondary Payor Regional Contractor (MSPRC) that the conditional payment obligation concerning repayment for historical medical items and services related to the tort was resolved or provide adequate assurance to that effect.
The application for MSP compromise concerning payment for the future medical items and services related to the tort shall include:
1. A copy of the MSPRC letter stating the matter concerning repayment for historical medical items and services related to the tort was reviewed and resolved or provide adequate assurance to that effect.
2. Proposed Liability Medicare Set-aside Arrangement[i] concerning payment for the future medical items and services related to the tort (LMSA).
3. An agreed copy of the settlement agreement subject to completion of the MSP obligations.
4. A joint statement from the applicants that warrants the following:
a. The value of the agreed settlement equals or exceeds $350,000.00.
b. The plaintiff is a Medicare beneficiary as that term is defined under 42 C.F.R. §400.202.
c. The Centers for Medicare and Medicaid Services (CMS) was requested to approve the LMSA, but no substantive response has been received for at least 60 days from the date of the letter to CMS; and
d. An affidavit from the preparer of the LMSA that it is true and correct based on the Medicare beneficiary’s medical records and the injuries being released as well as in conformance with the WCMSA submission checklist as published by CMS. See https://www.cms.gov/WorkersCompAgencyServices/Downloads/samplesubmission.pdf.
Subsequent to the application by the U.S. Attorney’s Office for the WDNY, the U.S. Attorney may request additional information from the parties, including, but not limited to, a request for an additional LMSA(s), and upon receipt of all required information, issue a Release. The release issued by the U.S. Attorney’s Office for the WDNY will compromise the LMSA obligations related to the settlement, judgment, award or other payment.
Exclusions: The WDNY MSP Protocol is not available for liability cases involving mass torts. This protocol confers no substantive rights and may be used or withdrawn at the unilateral discretion of the United States Attorney’s Office of the Western District of New York. This is a voluntary process and not policy of the CMS.”
According to Jeff Signor with Franco Signor LLC, a Medicare compliance firm, the protocols were developed in concert with a group of local and national practitioners seeking to “arrive at a way to secure a level of certainty when settling larger exposure cases that involve a Medicare beneficiary wherein future medical treatment is anticipated related to the settling tort.” Mr. Signor went on to point out that the protocols are in their infancy and may change depending on volume and need. Lastly, he highlighted the importance of at least one office within our federal government recognizing the importance of this issue and the need for finality when settling cases with Medicare beneficiaries.
The protocols outlined above by their terms are completely voluntary. The process may be used for single event liability settlements but not mass tort settlements. They set a $350,000 settlement value threshold before the process may be utilized. They also require submission to CMS of a MSA allocation and review rejection by the appropriate CMS office. The protocols are not CMS policy and according to the release “confers no substantive rights and may be used or withdrawn at the unilateral discretion of the United States Attorney’s Office of the Western District of New York.”
So what does all of this mean? In my eyes, it means very little if the case does not happen to have its venue in the Western District of New York. What it does illustrate is the tremendous problem created by CMS’s insistence upon compliance with the MSP as it relates to future medical for Medicare beneficiaries in liability settlements without any guidance whatsoever. The guidelines created for the workers’ compensation system, while frequently used for liability settlements; don’t address some very problematic issues peculiar to liability settlements. The first issue is “small” liability settlements where a set aside simply isn’t practical. As an example, take a slip and fall case for a elderly plaintiff that is Medicare eligible who is receiving a $15,000 settlement but may need a hip replacement in the future due to the fall. How do you deal with that scenario? Clearly the settlement proceeds aren’t sufficient to set anything aside. The second issue is caps on damages, policy limits and liability issues. The problem in liability settlements is that cases are compromised every day for limited amounts of money given factors present in the case. For example, if you have a $100,000 policy limits settlement with future Medicare covered services in excess of $300,000 a fundamental problem is created. The set aside would exceed the total gross recovery to the injured victim. There are currently no approved methods of apportioning settlement proceeds. There should be.
The lack of clarity regarding liability set asides is causing very real impediments to settling cases. It is also making settlement documents more complex with the potential to create liability for all of the parties. The time has come now for CMS to issue guidance. I don’t believe it makes sense to have assistant US attorneys across the country creating different protocols. Furthermore, I am not entirely sure that CMS would be bound by the protocols established by a US Attorney’s office. Perhaps the fact that Assistant US Attorney Robert Trusiak has taken the time to create this protocol will cause CMS to finally issue guidance in this murky area. Until CMS takes action, there will not be a comprehensive set of guidelines that can be used uniformly across the country when settling liability claims with Medicare beneficiaries.
[i] Set-Aside Arrangement – An administrative mechanism used to allocate a portion of a settlement, judgment or award for future medical and/or future prescription drug expenses. A set-aside arrangement may be in the form of a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA), No-Fault Liability Medicare Set-Aside Arrangement (NFSA) or Liability Medicare Set-Aside Arrangement (LMSA).