Fen-phen Cases / MSAs

Posted by Sylvius Von Saucken

Question:
What is your position on the MSAs for Fen-phen cases? Are you recommending that they be done for settlements under $250,000? All of our clients 62 1/2 or over are receiving less than $250,000. Has anything changed in the viewpoint on requiring MSAs? Also, I have one client who received about $45,000 and is now having a valve surgery. No MSA was done and the conditional payments lien is still being resolved. We were starting to look at completing MSAs for these clients. Please advise.

-Louisiana Attorney

Answer:
Actually, when we verified conditional payments with CMS for groups of Fen-phen cases, we also discussed with the CMS representatives the future costs of care components. CMS advised that for cases in excess of $1 million, we had to analyze each case to determine the necessity of a Medicare Set Aside. It turns out that of the 1,000’s Medicare entitled beneficiaries with Fen-phen settlements (on which we were working), six had settlements substantial enough to warrant a liability MSA analysis. Of those cases, we found a need to create an MSA in 2 cases (so we did).

The Medicare Set Aside analysis we have done with respect to liability cases is vastly different from workers’ compensation cases. Our analysis is unique – and based on the current state of the laws.

First, before any MSA is evaluated, a future cost of care component to the settlement must be identified. That creates a ceiling, not a floor, to identify what, if any, future Medicare covered expenses are a part of the settlement.

Next, even if there is a future cost of care component, an MSA is only required if there is a permanent burden shift such that prior to settlement one party is responsible for the payment and management of injury-related medical care but after the settlement Medicare is responsible.

Finally, if you have affirmative answers to the first two steps, you need to identify what part of the future costs of care Medicare will actually pay for. This is the step where an MSA report is developed. That report is nothing more than a redacted life care plan; redacted to determine what Medicare’s out-of-pocket costs will actually be.

Importantly, when considering liability MSAs, the question of damages brings up pain and suffering, special damages and comparative fault issues that make it less than likely that any part of a $45,000 settlement has an allocation for future Medicare covered expenses.

The other important consideration is that the $250,000 threshold for workers’ compensation cases is just a CMS review threshold to determine whether CMS approval is needed. If you have a case, whether or not $250,000 that meets the future costs of care and permanent burden shift analyses, then an MSA report is appropriate – to properly consider Medicare’s interests in your Medicare beneficiary client’s settlement. We stand ready to continue to assist you and your clients.