Declaratory Judgment When CMS’ Opinion Unavailable

Medicare Set-Aside Blog on June 12, 2012
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Dec actions for MSA determinations not available from CMS are becoming frighteningly common these days. These are the cases that are under threshold or are liability and CMS has declined to review because their workload prohibits it, so the parties ask the court for a declaratory judgment instead. The court sets the matter for an evidentiary hearing and invites the USA to participate, although it always politely declines, stating that “the Centers for Medicare & Medicaid Services (CMS) does not review or verify counsel’s determination of whether or not there is a recovery for future medical services or the determination of the amount to be held to protect the Medicare Trust Fund except under limited circumstances. Based on the limited information available in the complaint and relevant pleadings, CMS would neither participate nor review the parties’ determination of whether a set aside was needed or the amount of the set-aside with respect to the liability settlement.” Then the parties basically put on a show where they present the MSA prepared by a recognized MSA vendor, which both sides generally stipulate to the use of, and the court, lacking any real point of reference to dispute the amount, issues an order stating that Medicare’s interests have been protected.

In what other industry do both parties agree to the use of the same expert, yet still seek judicial validation that the expert is in fact correct? An expert is defined in Webster’s as “having, involving, or displaying special skill or knowledge derived from training or experience,” and it is that knowledge and experience that is needed in litigation because the attorneys and judges do not possess it. Judges are critical in adversarial situations where each side has its own expert and their opinions differ, but in MSA situations, we have yet to see a reported opinion where the court has been asked to actually make an MSA determination. The courts are currently being used to obtain the “judicial ruling on the merits” since CMS states that this is the only thing that will limit its recovery. Courts throughout the nation have been fairly liberal in granting this request despite having little experience with the subject matter to even question that which is presented. Unfortunately, this is an enormous waste of judicial resources that the court system does not have to spare, particularly when the courts are not adding any value to the exercise.

There is no statutory or regulatory support for CMS’ overreaching policy concerning the ruling on the merits, but it will terminate your exposure to Medicare recoveries with a degree of finality that you cannot otherwise obtain, unless of course you are relying upon CMS approvals which is seriously in question these days with all of its post-settlement revisions. But given the time and expense of obtaining either a judicial ruling or CMS approval, why isn’t more consideration given to defending the MSA if and when it becomes a problem rather than proactively? The MSA industry is over ten years old and the vendors that work within it are in fact experts because we know what CMS is looking for and we can easily mirror its independent review since we monitor it closely through constant interaction with the agency. We can tell you what a reasonable allocation is following the same criteria CMS gives its contractors and predict when CMS is going to counter higher because of certain triggers found in your records. So if final MSA determinations rarely differ from those initially obtained from the vendors, why does the risk management industry continue to be so risk adverse when it comes to dealing with CMS?

The case that sparked this rant was Bertrand v. Talen’s Marine & Fuel. There’s nothing exciting about the details of the case. CMS approval of the MSA wasn’t available; therefore, they went to court. What is interesting is the timeline because it took nearly five months to obtain the judgment, so this alternative is faster than CMS approval but likely to have cost considerably more. Also of note here was that the parties used a legitimate MSA evaluation from MedAllocators as opposed to presenting physician testimony that historically results in substantially less than CMS would have preferred, thus squandering a potential opportunity to limit future CMS exposure by its own rules. The full cite fort he case is:

CIVIL ACTION NO. 6:10-cv-1257
2012 U.S. Dist. LEXIS 78053
June 4, 2012, Decided