Posted by John Cattie
Question:
I have an MSA question regarding WC. Is it appropriate for our client to spend her MSA funds for related medical care while out of the country, specifically, Greece? Your thoughts would be greatly appreciated.
Answer:
Great question! To my knowledge, CMS has not shared with the general public whether it is appropriate to spend MSA proceeds outside the US versus inside the US. Medicare’s concern is that its future interest is being protected. We know that the only approved use of MSA proceeds is to pay for future injury-related care otherwise payable by Medicare. There are two notable exceptions – any bank charges or postage can be paid out of the MSA. Since we know what MSA proceeds should be spent on, my thought is this: if the expenses being paid out of the country are 1) injury-related and 2) otherwise payable by Medicare, then so long as annual accountings are being kept and it can be shown that the proceeds spent abroad were indeed for injury-related care otherwise payable by Medicare, then the expenditures are proper. The location these proceeds are spent should have no bearing on whether the expenditures were appropriate. I hope this sheds some light on the situation.
My best,
John Cattie
Tuesday, August 25, 2009
Self-Funded Benefits
Posted by Michael Russell
Question:
Handling a NJ PI case for a Connecticut resident. Lien alleged for plan that is not fully self-funded. Does CT recognize the made whole doctrine?
Thanks in advance,
NJ Attorney
Answer:
Before delving into the state specific issues it is important to clarify the status of this plan which is described as “not fully self-funded.” I hope the points below are helpful to you….
Partially Funded Plans. First and foremost, a benefits Plan may have certain components which are self-funded and others which are insured. Thus, it is possible that certain components, including the component which paid for a client’s medical benefits, are fully self-funded while other components remain partially or fully insured. The different components, while part of the same Plan, remain independent of one another. The self-funded components will be exempt from state law but the insured components will be subject to state law. Thus it is important to first verify whether your client’s benefits were provided by a part of the Plan that is fully self-funded or only partially self-funded. If the specific benefits provided were only partially self-funded then our analysis goes on.
Making the Determination. To determine whether a plan is insured it is necessary to go beyond the plan language. To verify a plan’s classification it is helpful to inspect the Form 5500. This Form is filed annually with the Department of Labor. Lines 7 and 9 on Schedule A of this form will provide you with the answer.
“Stop-Loss” Coverage. If the Plan benefits provided were both partially funded and partially insured we are dealing with a “stop-loss” coverage situation. These situations arise when an employer or Plan purchases insurance coverage intended to reimburse it for higher or catastrophic losses. In the case of a higher loss, a self-funded Plan would pay the entire loss but would be reimbursed for any amount above where the insurance policy began to assume responsibility (known as the “attachment point”). The use of “stop-loss” insurance does not change a self-funded plan into an insured plan. However, there is one exception.
In some cases, the attachment point is set very low and the Plan is attempting to function as and enjoy the benefits of a self-funded plan under ERISA when in fact it is really an insured plan. Such examples would include a specific attachment point of $500 (individual claim) or $25,000 for an aggregate attachment point (total benefits paid for all participants). In such cases, courts will look to the substance of the Plan rather than its alleged form. In determining whether a stop-loss Plan is truly self-funded or merely illusory, a court will look to the loss experience and how often the stop-loss coverage has applied.
Connecticut. Connecticut is an anti-subrogation state, although plans with specific subrogation language may fall outside the state statute. The “made whole doctrine” has not been directly addressed by Connecticut. The one exception is a bankruptcy case (In re De Lucia, 261 BR 561). While the doctrine has not been specifically addressed it appears that the doctrine may be able to be overridden by the contract terms of the Plan or policy. (The Auto. Ins. Co. of Hartford v. Conlon, 216 A.2d 828, 829 (Conn. 1966)).
My best,
Michael Russell
Question:
Handling a NJ PI case for a Connecticut resident. Lien alleged for plan that is not fully self-funded. Does CT recognize the made whole doctrine?
Thanks in advance,
NJ Attorney
Answer:
Before delving into the state specific issues it is important to clarify the status of this plan which is described as “not fully self-funded.” I hope the points below are helpful to you….
Partially Funded Plans. First and foremost, a benefits Plan may have certain components which are self-funded and others which are insured. Thus, it is possible that certain components, including the component which paid for a client’s medical benefits, are fully self-funded while other components remain partially or fully insured. The different components, while part of the same Plan, remain independent of one another. The self-funded components will be exempt from state law but the insured components will be subject to state law. Thus it is important to first verify whether your client’s benefits were provided by a part of the Plan that is fully self-funded or only partially self-funded. If the specific benefits provided were only partially self-funded then our analysis goes on.
Making the Determination. To determine whether a plan is insured it is necessary to go beyond the plan language. To verify a plan’s classification it is helpful to inspect the Form 5500. This Form is filed annually with the Department of Labor. Lines 7 and 9 on Schedule A of this form will provide you with the answer.
“Stop-Loss” Coverage. If the Plan benefits provided were both partially funded and partially insured we are dealing with a “stop-loss” coverage situation. These situations arise when an employer or Plan purchases insurance coverage intended to reimburse it for higher or catastrophic losses. In the case of a higher loss, a self-funded Plan would pay the entire loss but would be reimbursed for any amount above where the insurance policy began to assume responsibility (known as the “attachment point”). The use of “stop-loss” insurance does not change a self-funded plan into an insured plan. However, there is one exception.
In some cases, the attachment point is set very low and the Plan is attempting to function as and enjoy the benefits of a self-funded plan under ERISA when in fact it is really an insured plan. Such examples would include a specific attachment point of $500 (individual claim) or $25,000 for an aggregate attachment point (total benefits paid for all participants). In such cases, courts will look to the substance of the Plan rather than its alleged form. In determining whether a stop-loss Plan is truly self-funded or merely illusory, a court will look to the loss experience and how often the stop-loss coverage has applied.
Connecticut. Connecticut is an anti-subrogation state, although plans with specific subrogation language may fall outside the state statute. The “made whole doctrine” has not been directly addressed by Connecticut. The one exception is a bankruptcy case (In re De Lucia, 261 BR 561). While the doctrine has not been specifically addressed it appears that the doctrine may be able to be overridden by the contract terms of the Plan or policy. (The Auto. Ins. Co. of Hartford v. Conlon, 216 A.2d 828, 829 (Conn. 1966)).
My best,
Michael Russell
Putting Medicare's Name on the Settlement Draft
Posted by Matthew Garretson
Question:
Settled a case with Westfield today and was told by the adjuster that, under the new guidelines, they must now put Medicare on the settlement draft. I understood that they had to verify whether the claimant had received Medicare benefits - which we are happy to cooperate with them. However, putting Medicare on the settlement draft isn't doing anyone any good.
How is everyone dealing with this?
Thanks.
Answer:
While that isn't a requirement at all under the new MMSEA, some defendants are doing this as an extra-protective measure. If they put Medicare's name on the check, it takes a minimum of 10 to 12 weeks for Medicare to process it and send you the funds back (and, of course, it means that your Medicare reimbursement claim must be finalized during that timeframe). A much preferred route is to show up at the settlement conference with an up-to-date conditional payment summary from Medicare and be able to demonstrate to the defendants you are only 30 to 45 days away from getting a Final Demand from Medicare (once you ink the settlement agreement). That leaves you with two options: 1) if the conditional payment summary you have at the time of settlement is current, you might be able to agree to have them hold back 1.5x's that amount (or you hold it back in your IOLTA) while the claim is finalized or perhaps they just hold the entire proceeds while you complete the Medicare reimbursement claim. Either way, 30 to 45 days (assuming no waiver or appeal is required) is much better than waiting 10 to 12 weeks.
Hope that helps.
My best,
Matt Garretson
Question:
Settled a case with Westfield today and was told by the adjuster that, under the new guidelines, they must now put Medicare on the settlement draft. I understood that they had to verify whether the claimant had received Medicare benefits - which we are happy to cooperate with them. However, putting Medicare on the settlement draft isn't doing anyone any good.
How is everyone dealing with this?
Thanks.
Answer:
While that isn't a requirement at all under the new MMSEA, some defendants are doing this as an extra-protective measure. If they put Medicare's name on the check, it takes a minimum of 10 to 12 weeks for Medicare to process it and send you the funds back (and, of course, it means that your Medicare reimbursement claim must be finalized during that timeframe). A much preferred route is to show up at the settlement conference with an up-to-date conditional payment summary from Medicare and be able to demonstrate to the defendants you are only 30 to 45 days away from getting a Final Demand from Medicare (once you ink the settlement agreement). That leaves you with two options: 1) if the conditional payment summary you have at the time of settlement is current, you might be able to agree to have them hold back 1.5x's that amount (or you hold it back in your IOLTA) while the claim is finalized or perhaps they just hold the entire proceeds while you complete the Medicare reimbursement claim. Either way, 30 to 45 days (assuming no waiver or appeal is required) is much better than waiting 10 to 12 weeks.
Hope that helps.
My best,
Matt Garretson
Friday, August 21, 2009
Medicare's Interest After Death
Posted by Mary Skinner
Question:
If your client dies before Medicare provides their lien amount, does Medicare still have a right to their lien? We have a client who hurt his finger and hip in a fall, we settled the case, but he has died today from unrelated issues. Does Medicare still have a lien?
Thanks,
Arizona Attorney
Answer:
We are happy to assist you. Yes, Medicare's interest survives the death of your client. Under the MSP Manual 50.5.4.1 - Recovery from Estate of Deceased Beneficiary, "A beneficiary's death does not materially change Medicare's interest in recovering its payments on behalf of the beneficiary while alive. Upon death, the estate of the beneficiary comes into existence by operation of law. An executor or administrator whose sole purpose is to conclude all business and financial matters that still remain at death manages it. Medicare's interest is the outcome of a third party claim and is one of these matters. Therefore, Medicare's claim is properly asserted against the estate."
If we can be of any further assistance please contact me.
Mary Skinner
Question:
If your client dies before Medicare provides their lien amount, does Medicare still have a right to their lien? We have a client who hurt his finger and hip in a fall, we settled the case, but he has died today from unrelated issues. Does Medicare still have a lien?
Thanks,
Arizona Attorney
Answer:
We are happy to assist you. Yes, Medicare's interest survives the death of your client. Under the MSP Manual 50.5.4.1 - Recovery from Estate of Deceased Beneficiary, "A beneficiary's death does not materially change Medicare's interest in recovering its payments on behalf of the beneficiary while alive. Upon death, the estate of the beneficiary comes into existence by operation of law. An executor or administrator whose sole purpose is to conclude all business and financial matters that still remain at death manages it. Medicare's interest is the outcome of a third party claim and is one of these matters. Therefore, Medicare's claim is properly asserted against the estate."
If we can be of any further assistance please contact me.
Mary Skinner
Injury-Related Claims
Posted by Mary Skinner
Question:
I reached a settlement with State Farm insurance for my client. The client is eligible for Medicare and has had some unrelated medical bills paid by Medicare during the time he was seeking treatment for his injuries. State Farm has sent me paperwork to submit to MSPRC to provide State Farm proof that none of the accident related bills were paid by Medicare. I have done this in the past and it takes six weeks just to get the request into the system. Is there any faster way to do this since my clients did not receive any related payments from Medicare? I did not think this would be an issue since all accident related bills were paid by State Farm and they are aware of this. Any suggestions would be appreciated. Matt Garretson spoke at our Trial Lawyers Association meeting several weeks ago.
Thanks,
Montana Attorney
Answer:
Regardless of whether or not Medicare has paid injury related claims, you still need to go through the process. The claim must still be reported to the COB (1-800-999-1118) and request for conditional payments sent to the MSRPC. Upon receipt, the MSPRC will canvass the claims from the injury date and if no claims have been paid they will send you a letter of no interest. At that point you would need to submit the settlement statement to the MSPRC and they will issue you a letter advising that they have closed the case.
Hope this helps,
Mary Skinner
Question:
I reached a settlement with State Farm insurance for my client. The client is eligible for Medicare and has had some unrelated medical bills paid by Medicare during the time he was seeking treatment for his injuries. State Farm has sent me paperwork to submit to MSPRC to provide State Farm proof that none of the accident related bills were paid by Medicare. I have done this in the past and it takes six weeks just to get the request into the system. Is there any faster way to do this since my clients did not receive any related payments from Medicare? I did not think this would be an issue since all accident related bills were paid by State Farm and they are aware of this. Any suggestions would be appreciated. Matt Garretson spoke at our Trial Lawyers Association meeting several weeks ago.
Thanks,
Montana Attorney
Answer:
Regardless of whether or not Medicare has paid injury related claims, you still need to go through the process. The claim must still be reported to the COB (1-800-999-1118) and request for conditional payments sent to the MSRPC. Upon receipt, the MSPRC will canvass the claims from the injury date and if no claims have been paid they will send you a letter of no interest. At that point you would need to submit the settlement statement to the MSPRC and they will issue you a letter advising that they have closed the case.
Hope this helps,
Mary Skinner
Thursday, August 20, 2009
Medicare Hospital Bill
Posted by Matthew Garretson
Question:
I have settled a case with a tortfeasor's carrier for low limits. The hospital bill for my two clients has not been paid by Medicare yet. Currently, I want Medicare to pay the bill. Can I cash the check and still ethically require Medicare to pay the medical bills? Should I wait and let my clients elect to use Medicare to pay the bills and then once this occurs, cash the check and then go through the whole Medicare maze of confusion? Thanks for any and all responses.
Answer:
You can certainly cash the check and put it in either an escrow or your IOTLA account but - to be safe - you should not disburse any of the funds to the client until you have resolved Medicare's interest. Having said that, why has Medicare not yet paid the claims? Has the hospital billed Medicare yet?
Keep in mind that many providers may take up to 2 years (or more) to bill Medicare.
Hope this helps...
My best,
Matt Garretson
Question:
I have settled a case with a tortfeasor's carrier for low limits. The hospital bill for my two clients has not been paid by Medicare yet. Currently, I want Medicare to pay the bill. Can I cash the check and still ethically require Medicare to pay the medical bills? Should I wait and let my clients elect to use Medicare to pay the bills and then once this occurs, cash the check and then go through the whole Medicare maze of confusion? Thanks for any and all responses.
Answer:
You can certainly cash the check and put it in either an escrow or your IOTLA account but - to be safe - you should not disburse any of the funds to the client until you have resolved Medicare's interest. Having said that, why has Medicare not yet paid the claims? Has the hospital billed Medicare yet?
Keep in mind that many providers may take up to 2 years (or more) to bill Medicare.
Hope this helps...
My best,
Matt Garretson
Bankruptcy Subrogation Interest
Posted by Sylvius von Saucken
Question:
I am representing a client in a PI case. We have reached a settlement with the tortfeasor's carrier and gotten the check. Then, as we were starting to finalize the settlement, my client was laid off from his job and is now facing bankruptcy -- even despite getting the settlement money. I have not distributed any money yet from the settlement.
Here is the issue. My client had 2 different medical insurers during the treatment he had for the accident. Each has claimed a subrogation interest that I had not yet negotiated before I got notice from my clients about their financial problems. My clients now absolutely do not want me to pay these subrogation claims at all. They are no longer covered by those carriers. My concern is whether I have any potential personal liability if I do not pay the subrogation claims. I have not promised the subrogation carriers anything and the clients are not worried about the subrogation carriers trying to come after them. However, I do not want to be stuck somehow myself if I distribute all of the money to the clients instead of paying any of the subrogation claims or still-outstanding medical bills. The client proposes to simply list the subrogation carriers as creditors in the bankruptcy since the clients will owe the carriers this money back. Does anyone have any experience with these issues? I need to move this forward. They are likely going to wait until the preference period has passed after they get and use the settlement money before they file the bankruptcy.
Anyone have any experience or can offer any advice?
Thanks in advance,
Ohio Attorney
Answer:
The clients are not wrong - they can treat the subrogation carriers as creditors in a Ch 7 or a Ch 11; provided however, they put the settlement money into the estate. They cannot, however, treat subrogation carriers as creditors and then keep or spend the settlement money. If they hold off accepting and then file, the trustee (if a 7) would likely accept for them. On the other hand, if they put the settlement money into the estate, depending on how much money, they would be paying all creditors, including subrogation carriers something in exchange for federal bankruptcy protection (via an automatic stay order).
Our best,
Sylvius von Saucken
Question:
I am representing a client in a PI case. We have reached a settlement with the tortfeasor's carrier and gotten the check. Then, as we were starting to finalize the settlement, my client was laid off from his job and is now facing bankruptcy -- even despite getting the settlement money. I have not distributed any money yet from the settlement.
Here is the issue. My client had 2 different medical insurers during the treatment he had for the accident. Each has claimed a subrogation interest that I had not yet negotiated before I got notice from my clients about their financial problems. My clients now absolutely do not want me to pay these subrogation claims at all. They are no longer covered by those carriers. My concern is whether I have any potential personal liability if I do not pay the subrogation claims. I have not promised the subrogation carriers anything and the clients are not worried about the subrogation carriers trying to come after them. However, I do not want to be stuck somehow myself if I distribute all of the money to the clients instead of paying any of the subrogation claims or still-outstanding medical bills. The client proposes to simply list the subrogation carriers as creditors in the bankruptcy since the clients will owe the carriers this money back. Does anyone have any experience with these issues? I need to move this forward. They are likely going to wait until the preference period has passed after they get and use the settlement money before they file the bankruptcy.
Anyone have any experience or can offer any advice?
Thanks in advance,
Ohio Attorney
Answer:
The clients are not wrong - they can treat the subrogation carriers as creditors in a Ch 7 or a Ch 11; provided however, they put the settlement money into the estate. They cannot, however, treat subrogation carriers as creditors and then keep or spend the settlement money. If they hold off accepting and then file, the trustee (if a 7) would likely accept for them. On the other hand, if they put the settlement money into the estate, depending on how much money, they would be paying all creditors, including subrogation carriers something in exchange for federal bankruptcy protection (via an automatic stay order).
Our best,
Sylvius von Saucken
Tuesday, August 18, 2009
CMS Threshold to Review MSA Proposal
Posted by Matthew Garretson
Question:
I am close to settling a claim where the lump sum plus seed money for a proposed MSA plus the amount of the annuity payout under the MSA falls about $7,000 short of $250,000 and my client hasn't yet qualified for SSD though he has applied. Defendants have agreed to assume an additional risk on the MSA of up to $10,000. Defendants say that they don't have to submit this to CMS since it's below the $250,000 threshold and my client's not Medicare eligible. They're probably correct on that. However, I want it submitted. I don't want my client to assume the risk and have it suggested that we have a contingent settlement voidable at the option of either party. The problem is we won't be able to get CMS to consider it unless we get over the $250,000 threshold, or at least that's my experience. My question is this: can I add the $10,000 the defendants proposed on assuming the risk to the total to get it over $250,000 and would that cause CMS to consider it?
Thanks,
North Carolina Attorney
Answer:
CMS Memos tell us that, in cases involving a claimant with a "reasonable expectation" of Medicare entitlement within 30 months of settlement, the gross settlement must be greater than or equal to $250,000 in order for CMS to review the MSA proposal. Computation of the gross settlement amount may include (but is not limited to) wages, attorneys' fees, all future medical expenses, and repayment of any Medicare conditional payments as well as any previously settled portion of the Workers' Compensation claim. This threshold is a workload review threshold, meaning CMS will not review the MSA proposal in this situation unless the gross settlement is greater than or equal to $250,000.
From the sounds of it, the MSA proposal itself is $7,000 short of the $250,000 threshold as opposed to the gross settlement. If that is the case, the gross settlement must exceed $250,000, meaning that the MSA proposal at $243,000 can be submitted to CMS for review and approval in its present state without having to have defendants assume an additional risk on the MSA, nor do you need a contingent settlement agreement voidable at the option of either party.
Hope this helps...
My best,
Matt Garretson
Question:
I am close to settling a claim where the lump sum plus seed money for a proposed MSA plus the amount of the annuity payout under the MSA falls about $7,000 short of $250,000 and my client hasn't yet qualified for SSD though he has applied. Defendants have agreed to assume an additional risk on the MSA of up to $10,000. Defendants say that they don't have to submit this to CMS since it's below the $250,000 threshold and my client's not Medicare eligible. They're probably correct on that. However, I want it submitted. I don't want my client to assume the risk and have it suggested that we have a contingent settlement voidable at the option of either party. The problem is we won't be able to get CMS to consider it unless we get over the $250,000 threshold, or at least that's my experience. My question is this: can I add the $10,000 the defendants proposed on assuming the risk to the total to get it over $250,000 and would that cause CMS to consider it?
Thanks,
North Carolina Attorney
Answer:
CMS Memos tell us that, in cases involving a claimant with a "reasonable expectation" of Medicare entitlement within 30 months of settlement, the gross settlement must be greater than or equal to $250,000 in order for CMS to review the MSA proposal. Computation of the gross settlement amount may include (but is not limited to) wages, attorneys' fees, all future medical expenses, and repayment of any Medicare conditional payments as well as any previously settled portion of the Workers' Compensation claim. This threshold is a workload review threshold, meaning CMS will not review the MSA proposal in this situation unless the gross settlement is greater than or equal to $250,000.
From the sounds of it, the MSA proposal itself is $7,000 short of the $250,000 threshold as opposed to the gross settlement. If that is the case, the gross settlement must exceed $250,000, meaning that the MSA proposal at $243,000 can be submitted to CMS for review and approval in its present state without having to have defendants assume an additional risk on the MSA, nor do you need a contingent settlement agreement voidable at the option of either party.
Hope this helps...
My best,
Matt Garretson
Monday, August 10, 2009
Lien Resolution Service Fees
Posted by Tate Johnson
Question:
Can you give me a brief summary of your firm's retainer when a plaintiff's firm hires you to negotiate a lien/subrogation claim?
Thanks,
Florida Attorney
Answer:
Thank you for inquiring about our services. Regarding fees for our lien resolution services, we typically have two different types of fee arrangements:
1) On single event cases where your firm is handing off one case at a time to us, we generally charge $1,800 per case.
2) In situations where we integrate with your firm and handle most or all of the liens associated with the firm's cases, we basically tier a fee structure tailored to the size of the single event cases that are settling. On very large cases our fee will not exceed $1,800, but most feels will be somewhat less to accommodate (for example, a case with a settlement value of $45,000 may only have a fee of $750). Essentially, we charge a fee proportionate to the level of service.
We have integrated with many PI firms now to have a complete outsource of all healthcare related liens (Medicare, Medicaid and Private Heatlh/ERISA). When the "outsource" process is fully implemented, our firm in effect mirrors/tracks the PI lawyers' case files (via integration with their system) to make sure all lien resolution procedures are initiated early in the process and that we are handling all aspects related to any third-party interests in the firm's cases.
Thanks very much, and please let us know if we can assist further.
Question:
Can you give me a brief summary of your firm's retainer when a plaintiff's firm hires you to negotiate a lien/subrogation claim?
Thanks,
Florida Attorney
Answer:
Thank you for inquiring about our services. Regarding fees for our lien resolution services, we typically have two different types of fee arrangements:
1) On single event cases where your firm is handing off one case at a time to us, we generally charge $1,800 per case.
2) In situations where we integrate with your firm and handle most or all of the liens associated with the firm's cases, we basically tier a fee structure tailored to the size of the single event cases that are settling. On very large cases our fee will not exceed $1,800, but most feels will be somewhat less to accommodate (for example, a case with a settlement value of $45,000 may only have a fee of $750). Essentially, we charge a fee proportionate to the level of service.
We have integrated with many PI firms now to have a complete outsource of all healthcare related liens (Medicare, Medicaid and Private Heatlh/ERISA). When the "outsource" process is fully implemented, our firm in effect mirrors/tracks the PI lawyers' case files (via integration with their system) to make sure all lien resolution procedures are initiated early in the process and that we are handling all aspects related to any third-party interests in the firm's cases.
Thanks very much, and please let us know if we can assist further.
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