How does one determine exactly the amount that should be allocated for future medicals so that the risk of triggering Medicare recovery is minimized? And what kind of proof do you need? Because CMS has stated that nothing will limit its recovery other than a court order on the merits of the case (CMS Pub. 100-05, Chapter 7, §50.4.4), claimants are using the courts to determine the adequacy of MSA allocations, large or small. And even after untold court and attorney fees, motions and judicial determinations, there are still no guarantees. It is, to say the least, an inefficient and inconsistent system.
This recently came to light in Frank v. Gateway Insurance Company, et al., a case out of the United States District Court for the Western District of Louisiana decided March 13, 2012. Plaintiff filed suit seeking to recover damages after he was injured in a workplace accident in June 2010. As a result of his injuries, plaintiff underwent spinal surgery in July 2011. On December 7, 2011, the parties agreed to a settlement of all claims with the exception of a possible future MSA. The court ordered a hearing on the MSA. Although CMS was notified of the hearing, an Assistant United States Attorney sent a letter advising that “CMS would neither participate or review the parties’ determination of whether a set aside was needed or the amount of the set aside.” See Frank v. Gateway Insurance Company, 2012 U.S. Dist. LEXIS 33581 (March 13, 2012)
A Motion for Determination of Need for, and Amount of Medicare Set Aside was heard on January 24, 2012. The court received into evidence medical records, a letter and affidavit from plaintiff’s treating physician summarizing plaintiff’s treatment, a letter from CMS with Payment Summary Form submitted by the defendant insurance company, and an affidavit of plaintiff’s pharmacist summarizing the amount of future medical costs. The court ordered plaintiff to provide a second affidavit explaining plaintiff’s future projected need for prescriptions and the duration of that need. Plaintiff provided this second affidavit on February 24, 2012.
Although plaintiff’s surgeon opined that no further surgery was needed, plaintiff would require future treatment including pain medication (estimated to be between $700 to $1,000 for approximately 5-6 more months of medication) follow-up office visits (approximately 5 or 6 more office visits at $92.00 to $186.00 per visit) and approximately five or six more x-rays (totaling around $2,200) to ensure that his spine was healing properly. Out of the evidence presented, the court determined that the plaintiff would require $3,200 in items or services that would otherwise be covered or reimbursable by Medicare that are related to what was claimed in the lawsuit.
After all of this effort, the amount allocated in the MSA is likely enough to cover attorney fees and expenses for the process of determining the proper amount. Yet through its silence the CMS has created an imperfect system where the courts are the best forum to ensure that Medicare’s future interest is addressed. Although CMS will not get involved in determining the adequacy of an MSA, we can be sure that it will not go unnoticed should Medicare be charged at some point in the future for any medical items or services deemed related to the claim. Furthermore, since the determination is left in the hands of judges who may or may not be familiar with MSAs or even the Medicare Secondary Payer statute the system promotes inconsistency. The CMS needs to provide greater guidance for those who endeavor to protect Medicare’s interest. Until then, we can use the court system and only hope we’re doing enough.
You can find the case here.