Can we settle? Yes we can! Part 2 of 5

Medicare Set-Aside Blog on February 16, 2011 | Posted by

We have determined that a case can be settled in 49 out of 50 jurisdictions without CMS approval in hand (o.k. be precise there are some places you can never settle meds, or where there are reopening rights or only claims with certain DOL’s can be settled, but you get the point). So the first question that inevitably comes up is who pays for indemnity and medical while we are waiting on the WCRC and CMS to give two thumbs up?


In my opinion, that point of contention should be moot. The best practice is to get judicial approval of the agreed upon settlement amount and everyone goes their separate ways with the assumption that approval will eventually be forthcoming (look for a caveat to this statement in Part 4). In my experience most cases are approved as submitted or within a reasonable variance acceptable to all parties. Roughly nine out of ten claims fit this category. I see no reason to do all the hard work of agreeing on a settlement in principle and then hold up the flow of funds while waiting on CMS. Remember, there was a reason the case settled in the first place and both parties were in agreement.  Maybe the claimant needed money to settle some debts or the carrier was willing to pay a premium to take down reserves during a fiscal year. Whatever the case, a claim settles because there is a meeting of the minds at a specific point in time. That is a tough place to get to, a process that can take years, and I hate to see it all unravel at the last minute because of CMS.


The danger of “settling” without getting approved by a WC authority is that things have a way of changing over a six month waiting period. Good settlements get blown up all the time for reasons outside the other parties’ control. You have heard the old adage, the only good WC case is a settled WC case, and that applies from both the claimant and defense perspective. So settle the case on specific terms and let’s see what CMS comes back with. No need to wring hands and gnash teeth when nine times out of ten there is no issue.


If for whatever reason both parties do not wish to get judicial approval and would like to play CMS’ waiting game, I suggest that the parties pick a point in time where the carrier’s obligation ends and the claimant’s begins. The carrier can continue to make indemnity and medical payments indefinitely (a word that most accurately describes what it feels like to wait on CMS approval) so that the claimant has appropriate wage and medical support prior to the transfer of funds. Once the case is approved by CMS, it is easy to debit/credit the settlement accordingly. But there should not be an open ended liability where the carrier foots the entire bill and then double pays once the MSA is approved. The MSA includes funds based on the date it was prepared. So if it takes six months to approve an MSA, that is an extra six months of payments made by the carrier ( for example, consider the claim where the claimant underwent an SCS while case was being approved and CMS included the same treatment in the MSA). While most claimants probably wouldn’t mind this outcome, in fairness it should be part of a negotiated settlement with full disclosure and not an unwelcome slap in the face to the defense. That kind of thing just makes the next settlement all the more difficult.


Coming up next….what happens in the other 10% of cases? Can we settle? Yes we can! Maybe…