At the 2016 NAMSAP Annual Conference, a panel provided an overview of how CMS is handling liability Medicare set-aside arrangements. The panel was:
- David Cherry – Cherry Injury Firm
- Roy Franco – Franco Signor, LLC
- Thomas Spratt – NuQuest
There are significant differences between workers’ compensation and liability Medicare set-asides. Workers’ compensation benefits are statutory and often includes potential exposure for lifetime medical treatment. Liability coverage can be mitigated by contributory negligence, and it is ultimately subject to the policy limits.
Another challenge in the liability allocation is the concept of equity; whether the claimant was “made whole” by the settlement. If the claimant only recovered a small percentage of their damages, should CMS be entitled to a lien on that entire amount for an allocation or should their interests be reduced? This is an issue that has been debated in the courts.
Case law allows attorney fees to be removed from consideration when calculating the amount of settlement funds accessible by Medicare. The courts supported the argument that the attorney’s efforts also benefited Medicare by securing the funds.
There are many other elements that can reduce the funds CMS can assert a lien on. If part of the settlement is apportioned to “pain and suffering” or “loss of consortium” then Medicare has no right to those funds.
Based on comments from CMS and others, it appears the claimant has the sole responsibility to protect Medicare’s interest in a liability settlement. Unless there is a trial and a verdict rendered, liability is always dispute and the defendant cannot be held liable to CMS in those circumstances. However, there is concern that the carrier will always be the target because they are viewed as the “deep pockets” so it is in all parties interest to ensure Medicare’s interests are protected.
One part of the debate with liability claims is legal issues vs practical issues. Whether or not there is a valid secondary payer in liability claims is up for debate for many reasons. From a legal standpoint, only the courts can ultimately determine that a defendant has legal liability for future medical payments. Most litigation does not end up in a trial so you end up having to address Medicare’s interests from a practical standpoint. The plaintiff and defendants have to work together on this issue.