Isaac v. Paramount Pictures – California Workers’ Compensation Appeals Board

Medicare Set-Aside Blog on September 1, 2011
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California Workers’ Compensation Appeals Board Panel recently set aside an order by a WCJ approving a C&R exclusive of Medicare addendum memorializing MSP compliance efforts that were taken by the parties given that CMS approval of the proposed WCMSA was not available. In response to a Petition for Reconsideration, the WCJ explained that she declined to approve Addendum B because she did not have jurisdiction to limit Medicare’s recourse against the defendant, applicant or their counsel, based on an understanding or agreement between defendant and applicant. Defendant filed a verified response reiterating the memorialization of the due diligence efforts and pointing out that Labor Code §5003 does not expressly limit the information included in the C&R. The Appeals Board Panel set aside the order and noticed its intent to approve the C&R inclusive of Addendum B, explaining that because CMS approval was not available that it appeared appropriate to include the addenda to address what the parties had done and what the expectations were with regard to the Medicare issue. Furthermore, the agreement of the parties to resolve the claim appeared dependent upon inclusion of the addenda and the applicant’s acknowledgment of his obligations with respect to the Medicare issue.

Despite the panel’s acknowledgment that the addenda cannot bind Medicare, what the C&R does accomplish is outline the parameters of this particular settlement under state workers’ compensation law. Clearly there were issues of compensibility, supported by the low dollar settlement, so the fact that an MSA was necessary at all is questionable. However, given that the regulations state that if an allocation is made for future medical expenses, then Medicare is excluded from payment to the extent of that allocation, it was actually the parties through that agreement to create an MSA that triggered the MSP obligation. It is therefore only appropriate that the terms of that agreement with respect to the Medicare issue be memorialized within the C&R.

Most importantly, the case demonstrates the length (and expense) that parties to WC settlements will endure to make sure that the Medicare issue is resolved. For a $25K settlement, the carrier paid probably $3K for the $5,864.45 MSA analysis and defense costs all the way through getting the original C&R set aside. To spend $10-$15K to protect the finality of $25K – where’s the risk management in that? Because we continue to fear this issue and so many refuse to take the time to really understand it, we continue to pay excessive amounts of money for efforts that the panel appropriately pointed out do not necessarily bind Medicare. There’s got to be a better way.

Melvin Isaac  v. Paramount Pictures (2011) 13 WCAB Rptr. 13,218