Louisiana Court Approves Zero Set Aside in Product Liability Settlement

CMS, Commentary, Medicare Set-Aside Blog, MSP Litigation on January 14, 2015
Posted by Jennifer Jordan, JD, MSCC

Louisiana courts continue to lead the nation in opining on MSA issues. In a declaratory judgment rendered this week, the court found that plaintiff had presented sufficient evidence from his treating physicians (one of which was a dentist) to demonstrate that he required no further treatment related to a car accident for which he blamed Toyota. In the opinion, the court explained that it notified CMS of the proceedings and received in reply its standard “the government is not taking a position on the need for a MSA in this case and is simply reserving any and all rights it may have in the future regarding any payments which Medicare may be called upon to make in the future” letter. Between that, the fact that there is no LMSA approval program, the fact that conditional payments had been resolved, the physician statements, and the strong public policy supporting settlements, the court found that Medicare’s interests were adequately protected.

The one thing in this opinion that was interesting was the court’s assessment that the government’s failure to take a position was essentially irrelevant. CMS does not have authority to mandate how much money should be set aside for future medical expenses; it can exclude post-settlement benefits and/or only seek reimbursement should Medicare make a related post-settlement conditional payment. CMS can certainly suggest (and does for WC) an amount that it thinks would be adequate and make empty promises that if you set aside that amount, it will not pursue further recovery in the future. But ultimately, that is only an opinion voluntarily sought by the parties and not binding on anyone. It is not until Medicare actually makes an overpayment that CMS has standing to bring claims against plaintiff, a point that this court noted. At that time, section 405(g) of the Medicare Act would kick in and the beneficiary would have the benefit of the administrative appeal process to work out his issues with CMS related to his tort settlement. This court at this time is not the appropriate venue for CMS.

Unfortunately the court unintentionally encourages parties to seek judicial approval of MSAs. It states that “the Court believes there is a strong public interest in resolving lawsuits, and parties to lawsuits in which a MSA is potentially at issue must necessarily look to the courts to hear motions such as this one…. Otherwise, parties will be without any means of establishing that their settlement agreement meets the requirements of the Medicare Secondary Payer statute…. The Court has jurisdiction to rule upon the MSA Motion submitted by the parties.”  While it has jurisdiction, is this really an issue that it wants to waste its resources on? The testimony of the physicians was unquestioned and the conditional payment amount nominal, so this amounts to a rubber stamping of a rather insignificant MSA issue. If we feel the need for approval that CMS refuses to grant and the courts feel compelled to intervene, there should be a specialty court created to handle MSAs administratively by individuals that understand the issues. The MSP in general is far too misunderstood to have random courts throughout the nation making independent and potentially meaningless determinations such as this. MSAs are not a problem unless Medicare makes a related payment, and then there is a forum to address that issue. Why waste the time and money at the time of settlement to hedge against something that can just as easily be defended later, if ever?


NO. 1:11-CV-01611
2015 U.S. Dist. LEXIS 3319
January 10, 2015, Decided
January 12, 2015, File