Future Medical Costs in Medical Malpractice Case

Posted by John Cattie

Question:
I am settling a contested medical malpractice case for an elderly client who had a below-knee amputation following negligent podiatry care. Future medical care was not considered or addressed in the settlement, but it is conceivable client could need prosthetic related services in the future (client is 82 y/o). I don't want to put client in the situation that Medicare refuses payment if he should need such services in the future. It seems like a MSA would not be needed, but how do I adequately consider Medicare’s interest?

Pennsylvania Attorney

Answer:
You are right to think that you need to adequately consider Medicare's future interests, we know that from 42 U.S.C. 1395y(b)(1). However, the legal community lacks guidance as to how to properly consider Medicare's future interest in a third party liability case. Unlike a workers' comp situation, where CMS has published twelve (12) Memoranda on the topic of MSAs, CMS has published zero (0) Memorandum on the topic of MSAs in third party liability cases. Therefore, a good faith effort at substantial compliance with the law as it currently stands today is the standard to be met. The question becomes, short of a definitive allocation in the settlement to future medical expenses, how can we adequately consider Medicare's interests?

A good place to begin would be to perform a damages versus recovery evaluation. Try to blackboard the damages in your case (economic and non-economic), then compare those to the amount recovered. If the amount does not contemplate future medical expenses, that will be readily apparent during this evaluation as your client would not even be fully compensated for their non-economic damages. If the settlement does not contemplate future medical expenses, then an MSA would not be appropriate.

Until we receive guidance from CMS about the use of MSAs in liability cases, the most important thing you can do is document your efforts at considering Medicare's interests. Whether that documentation comes in the form of an internal memo within your firm, notes from a telephone consultation on the case, language inserted within the settlement agreement itself, or an MSA evaluation from an independent, neutral 3rd party like GFRG, documenting your efforts to substantially comply with 42 U.S.C. 1395y(b)(1) will serve to show Medicare that you indeed did make a good faith effort at protecting its interests. In turn, you will be protecting your client's Medicare benefits.

My best,
John