MSAs – A disturbing trend
We have long maintained that an MSA is the same number, at any given point of time, whether procured by the plaintiff or defense. Thus, it is not a club to be used by either side when negotiating the value of a case. I like to say that during settlement negotiations it is plaintiff against defense. So it is perfectly reasonable and appropriate to present the best case possible in order to maximize/minimize a settlement for the benefit of a client/insured.
But when complying with the MSP, it is plaintiff AND defense against CMS. Both parties have exposure and both parties have an aligned interest in seeing that the claimant does not seek treatment from Medicare in the future.
We have been seeing a disturbing trend in liability cases where the plaintiff settles with one MSA and then frantically works to mitigate the cost of the MSA post settlement. It generally goes like this:
Defense procures an MSA based on the facts at the time of settlement. This may include a lifetime of narcotics and/or an anticipated surgery resulting in a relatively high MSA amount. Once the case settles, the plaintiff then goes to a friendly treating physician (generally the same one that has been treating the claimant during litigation) who suddenly opines that the surgery previously recommended is no longer medically necessary. Or the lifetime of OxyContin the plaintiff couldn’t live without can now be tapered or replaced by something far less costly( can you believe that in one case we handled the plaintiff tried to say that despite using narcotics for the last three years, the claimant would only need over the counter, anti-inflammatory medication going forward!).
So while the parties have settled on say a $300,000 MSA, the other side attempts to advance a $100,000 (or $10,000 MSA) as the appropriate number. And since most liability cases do not go to CMS for review, this strategy is proving effective in maximizing the unencumbered recovery to the claimant. It is also effective in opening up future exposure to the defense and the plaintiff attorney that believe he/she is looking out for their client’s best interests.
There are only two possible outcomes. One, the plaintiff really didn’t need all of the contemplated treatment and the basis for settlement was a fraud. Or, the claimant really does need a greater amount of treatment and now the settlement runs the very real risk of running afoul of the MSP.
So going forward, our policy is NOT to make any changes post settlement to a previously prepared MSA unless both plaintiff and defense agree to make the change. We will not be party to a plaintiff trying to pull a slight of hand post settlement in a misguided attempt to reduce the MSA. Ethical plaintiff lawyers would never ask us to be complicit in this act of fraud. But ethical plaintiff attorneys aren’t always the ones that get the good cases.
Advice: Advance whatever theories of medical treatment and economic loss you wish to advance during settlement negotiations (that’s what life care plans and economist reports are used for). But leave the MSA out of the valuation of a case and insist that terms of the MSA are spelled out in the settlement agreement and are binding on all parties. The goal of an MSA is to realistically protect Medicare’s interests in a settlement and ensure the plaintiff does not seek treatment from Medicare in the future. MSA companies are not to be used as dueling experts where one side is given an incomplete set of facts at settlement while the other is unjustly enriched post settlement by funds that were to be earmarked for another purpose.
PS: Is their anyone out there that disagrees with this position?