Dueling MSA Recommendations

Commentary, Liability, Medicare Set-Aside Blog on June 30, 2014 | Posted by Jennifer Jordan, JD, MSCC

We knew it was inevitable but the day has come. The Court of Appeals of Ohio published an opinion within which the parties debate the need for an LMSA and use the polar extreme of MSA providers to argue their cases. Unlike dueling life care plans, this was not a case of high and low MSAs, but instead the plaintiffs claim no obligation to allocate for future medicals and the defense disagrees. Now mind you that this opinion is actually focused on a claim for post-settlement interest, but there is extensive MSA discussion given that that is the primary reason for the delay in settlement funding. Here’s the story…

Case stems from a 2010 med-mal claim against multiple defendants, half of which previously settled and were not party to the case at hand. The claim settled on July 21st at mediation (on a Saturday, no less) for $587,500 without any discussion of an MSA. On August 24th, plaintiff sent an email stating that no structure would be funded and then on November 6, changed his mind. At no time was any settlement agreement actually executed by any party. But because no MSA agreement could be reached, no funds have changed hands and plaintiff is seeking nearly $18,000 in interest dating back to the date of mediation.

With regard to whether an MSA was needed or not, plaintiffs turned to the Garretson Resolution Group whose answer was that they did not identify the plaintiff “an MSA candidate since a permanent burden shift of the responsibility to pay for future injury-related medical expenses from the tortfeasor to Medicare is not expected.” But this is not because he’s not a Medicare beneficiary for whom Medicare did render conditional payments for which GRG performed the search, but rather because the wife’s group health plan has been paying the bills. One might wonder how Medicare has no exposure if it has already been exposed, but I guess that is not relevant.

Now the defendants turned to an attorney in Pennsylvania whose claim to fame is allegedly participating in the writing of the Patel Memo. He stated that “[i]n the thousands of workers’ compensation cases where I have supplied Medicare estimates to the Agency, the Agency has always indicated that an MSA should be done in situations such as this because the private insurance could be cancelled or lost and then Medicare would be the primary payer. Therefore, I believe a set aside is necessary in this case.” Essentially he compared apples to oranges to justify his position. The voluntary CMS workers’ compensation policies may be indicative of the agency’s hopes and desires, but certainly not of the legal obligation to fund an LMSA. It is painfully obvious that CMS would “want” an MSA in any personal injury case, but do we have a legal obligation to do so, particularly in the egregious manner in which the agency recommends for workers’ comp?

Unfortunately, the Court further muddles this decision by looking at the effort rendered by each side in making these determinations. Plaintiffs proactively sought GRG’s advice prior to settlement whereas the defendants’ outside consultant “clearly lacked information about the case, and his correspondence is dated three months after the settlement date. Significantly, the authority attached to the defendants’ motion does not support the motion but rather supports a conclusion that an MSA is not required in personal injury cases.” Then the final blow was the fact that CMS was put on notice and declined to participate (with no mention of the fact that the MSP only gives Medicare the right to exclude or seek reimbursements, not to make damages demands for future treatment that has not yet occurred or been paid for by Medicare.) Medicare may have a future interest but CMS certainly has no right to actively participate in any given personal injury settlement, invited or not. Can you imagine what the CMS/DOJ budget would look like if forced to actively participate in every insurance settlement involving one of the 50 million Medicare beneficiaries? That’s just stupid to even ask them to come, but more importantly should not be a deciding factor in whether an MSA is needed or not.

Regardless of all the semantics, the plaintiffs were ultimately awarded interest all the way back to the original date of settlement (at least on the cash portion) basically because the court felt the defendants caused the delay. Call it what you want, but plaintiffs received compensation for future medial expenses as consideration for the release from responsibility and that will trigger the MSP and permit Medicare to exclude benefits no matter what the parties want to call it. By labeling it an MSA or LMSA, parties tend to go on high alert and settlements screech to a halt. But at the end of the day, it is simply part of the medical damages alleged and received and it is technically an MSA no matter how many opinions are obtained to the contrary.


SCOTT TYE, et al. Plaintiffs-Appellants/ Cross-Appellees v. UPPER VALLEY
MEDICAL CENTER, et al. Defendants-Appellees/ Cross-Appellants
C.A. CASE NO. 25997
2014 Ohio App. LEXIS 2755
June 27, 2014, Rendered