TO SETTLE OR NOT TO SETTLE? THAT IS THE MEDICARE QUESTION Presented to DRI TRUCKING LAW SEMINAR February 16-17, 2012 Jay Barry Harris, Esquire FINEMAN KREKSTEIN & HARRIS Chuck Perry, Corporate Director of Claims KNIGHT TRANSPORTATION

RECENT DEVELOPMENTS IMPACTING SETTLEMENTS

HARO VS. SEBELIUS CMS cannot require prepayment of its interest while appeal or waiver is pending Interest accrues Plaintiff’s counsel cannot be held responsible for disbursing settlement proceeds Primary payer can be held responsible

HADDEN VS. UNITED STATES Medicare entitled to complete reimbursement No fault allocation Settlements become more difficult Impact of Joint and Several Liability

BRADLEY V. SEBELIUS Medicare not entitled to complete reimbursement Medicare not entitled to any share of the surviving child’s claim Chilling effect on settlements

CMS REGULATIONS AND ALERTS $300 threshold Med pay, gift cards, etc. Physical based trauma Lump sum No other benefits expected Medicare has not issued a recovery demand letter Insurer has not paid medical bills Effective September 2011

$5000 LIABILITY SETTLEMENT - FIXED PERCENTAGE OPTION Pay Medicare 25% of the settlement Physical based trauma Medicare has not issued a demand letter No other payments anticipated Effective November 2011

SELF-CALCULATED FINAL CONDITIONAL PAYMENT AMOUNT Physical trauma based injury $25,000 maximum settlement Date of loss at least six months before submission of proposed conditional amounts to Medicare Treatment completed No medical treatment in past 90 days Effective February 2012

LIABILITY SET ASIDES ARRANGEMENT Treating physician certifies treatment is completed as of date of settlement ◦ Incur additional cost ◦ Who pays? Submitting a certification for review and approval no longer necessary Confirms notion that LMSAs are required in liability cases? Effective October 2011

PRIMARY PAYER’S DILEMMA Cannot assert Medicare’s right to reimbursement Only U.S. government is authorized to assert Medicare’s right after demand letter issue Cannot delay payment of settlement proceeds pending Medicare’s response The Zaleppa and Wilson quandary

CONFIRMING MEDICARE STATUS Pre-suit ◦ Authorization ◦ Obligation to unrepresented party ◦ Do not use information for any other purpose ◦ Safe harbor language Litigation ◦ Discovery ◦ Motion to compel

MEDICARE’S INTEREST UNKNOWN AT SETTLEMENT Request conditional payment Set aside an amount to cover Medicare’s interest Hold harmless language in the release

PLAINTIFF DISPUTES MEDICARE’S INTEREST AT SETTLEMENT Pay undisputed amount and escrow the remainder Release language ◦ Medicare obligated to be paid in 60 days from settlement ◦ Plaintiff provides Medicare’s final notice within 45 days of receipt of settlement funds ◦ After 45 days, primary payer pays Medicare directly

PLAINTIFF DEMANDS FULL AMOUNT OF SETTLEMENT WITHOUT REGARD TO MEDICARE’S INTEREST Notify CMS Pay undisputed amount Seek judicial involvement Pay full amount with protective language in the release Refuse to pay; continue the litigation

RESOLVING CASES WHERE FUTURE MEDICAL TREATMENT IS UNCERTAIN

PLAINTIFF’S CONDITION GUARDED - RELEASE LANGUAGE Maximum medical improvement IME report – no future treatment needed Plaintiff does not anticipate need for future treatment Plaintiff confirms that settlement monies to be used for future treatment No attempt to shift burden to CMS Court approval, if possible

PLAINTIFF AGREES TO LMSA Evaluate all physician reports (plaintiff and defendant) and life care plans Reduce future care to present value Submit to CMS Seek court approval ◦ Smith v. Marine Terminals of Arkansas ◦ Guidry v. Chevron

PLAINTIFF REJECTS NEED FOR LMSA Educate plaintiff’s counsel Evaluate need for LMSA by independent third-party Notify plaintiff’s counsel of need for LMSA Seek court approval Take case to verdict

SOME SUGGESTED CLAUSES FOR LMSA RELEASE Plaintiff’s injuries may be permanent and progressive and recovery uncertain Plaintiff may need future treatment Plaintiff will set aside monies to solely pay for medical treatment Plaintiff provides proof of set aside Plaintiff will not seek payment from Medicare until set aside exhausted

SUMMARY Monitor ◦ CMS Regulations and Alerts ◦ Case law ◦ Legislation Release Language is Critical ◦ Maximize your client’s protection ◦ Document the good faith efforts