Workers’ Compensation Board Says “No” to Medicare Hold Harmless Language in Settlement Agreements
On Monday, the New York State Workers’ Compensation Board issued a bulletin that announced that the Board would no longer approve Section 32 Waiver Agreements that required the claimant to indemnify and hold the Carrier harmless for any payment made by Medicare for treatment of claimant’s work-related injuries before the execution of the Agreement. The Bulletin further indicates that the board based this decision on the “disparity on the bargaining power and financial resources between individual claimants and insurance carriers, [and that] the Board believes such provisions, regardless of the particular liability for which the carrier seeks indemnification, are unfair and unconscionable.” This announcement is directly related to Medicare Conditional Payments or payments made by Medicare on behalf of a Medicare beneficiary for medical treatment provided which should have been paid for by a primary payer.
What does this mean?
Practically speaking a hold harmless clause in a settlement agreement should never be utilized as a defense to circumvent the statutory obligation to repay Medicare Conditional Payments. However, in general, strong settlement language should be incorporated into every settlement agreement, which reflects the process by which Medicare conditional payments have been addressed pre-settlement and will be addressed post-settlement. Most parties to a settlement need to better understand the conditional payment recovery process and be aware that the Medicare Secondary Payer regulations do not release a party from the obligation to reimburse Medicare, therefore such provisions as a hold harmless clause could still mean an insurer/entity will be on the hook post-settlement. This is one of the reasons we advocate so strongly in getting the conditional payment compliance piece started as soon as a settlement is likely, to obtain an accurate estimate of the existing conditional payments before settlement. Moreover, it is certainly helpful to know what reimbursements may be due to Medicare while you are negotiating the settlement amount.
Implement Best Proactive Practices
The NY State Workers’ Compensation Board announcement should not impact settlement practices involving Medicare beneficiaries but is nonetheless a reminder that it is important to identify and implement proper internal protocols and best practices to timely address conditional payments. This can be done by proactively addressing the conditional payment issue before settlement and implementing the following best proactive practices:
- Confirm entitlement status.
- If the claim involves a Medicare beneficiary, conduct a conditional payment inquiry to determine if conditional payments have been made;
- If charges exist, diligently advocate for the removal of any charges that are unrelated to the claim.
- If there are no conditional payment charges or recent medical treatment, ask the beneficiary about whether they treating and enrolled in a Medicare Part C/D plan. Do not forget about Medicare Advantage Plans, and that many jurisdictions have found that these entities have a right to reimbursement as traditional Medicare does.
- Ensure that the settlement terms address the manner how all conditional payments and liens pre-and post-settlement have been and will be resolved. A settlement agreement should memorialize all of the efforts to address all conditional payments.
We offer assistance with conditional payments, lien resolutions, as well as establishing proper Medicare compliance protocols. For more information on these services, please visit our website here, or contact our team at [email protected].
Jean is MEDVAL’s Senior Legal Counsel and has been instrumental in settling claims nationwide. With a keen understanding of Medicare compliance, Jean is often consulted to offer insight, direction, and training to insurance carriers, self-insured entities, third-party administrators, law firms, and industry professional organizations. Her focus is on Medicare issues involving liability, no-fault and workers’ compensation claims and finding settlement solutions in the best interest of all parties. To reach Jean, please visit our site here.