Louisiana Attorneys Seek MSA Seed Money as Fee

Commentary, Medicare Set-Aside Blog on March 24, 2014 | Posted by Jennifer Jordan, JD, MSCC

On March 19, 2014, the Court of Appeal of Louisiana affirmed an OWC ruling denying two attorneys a request for their fee. While attorneys are frequently criticized for the amounts they take from settlements, no one expects them to work for free. But when it is their own negligence that leaves them unpaid, well there’s a certain amount of karma to that.

You see, rather than wait around for CMS approval, these attorneys bifurcated their case. Their client settled indemnity for $30,000 in February 2012, and then later settled his medical with a $50,846 structured MSA in October 2012. It is assumed that they took their share of the first $30,000 so it is not like they were not paid at all. But when it came time to take a piece of the medical settlement, they obviously forgot to build some unencumbered cash into the deal because there was none from which to take their fee. Therefore they petitioned to take the only cash available – the $2,480 MSA annuity seed money. The OWC concluded that the attorneys were not entitled to the seed money because it was expressly spoken for in the settlement agreement. Claimant must use those funds for medical expenses or run the risk of being denied Medicare if spent improperly.

Now while I’m enjoying the fact that these attorneys lost the ability to easily skim their fee right off of the top, the fact remains that they do have a fee agreement with their client that entitles them to get paid. Depending upon the wording of that contract, that claimant may still owe them compensation for the services they performed, probably a percentage of the second settlement. While the OWC protected the MSA funds, that may not help the claimant in the long run. MSA funds are not protected by any state or federal law, so the OWC was actually affording them more protection than they actually deserve. Once the MSA funds hit the bank, they are susceptible to creditors just like any other money. So should the attorneys pursue their client for payment of their fee, he could be forced to pay it from his previous settlement (if there is anything left), from personal finances (if he has any) or truly from his future periodic MSA payments as they come in, if it comes to that. With the absence of protective laws, other courts would not be so likely to take the same stand as the OWC and appellate court did here. Of course I don’t see them suing their client for fee payment from funds that would leave him without access to medical care because they failed to negotiate themselves some cash from which to get paid. But then again, they did create the situation and attempted to take the seed money. Hmmm, guess we’ll see…

 

2014 La. App. LEXIS 716
BRIAN J. BENOIT VERSUS MMR GROUP, INC. D/B/A MMR CONSTRUCTORS, INC. ZURICH-SCHAUMBURG
2013 CA 0537
COURT OF APPEAL OF LOUISIANA, FIRST CIRCUIT
2013 0537 (La.App. 1 Cir. 03/19/14); 2014 La. App. LEXIS 716
March 19, 2014, Judgment Rendered