Lawyers representing plaintiffs in personal injury lawsuits will need to deal with Medicare set-asides. With 2016 just around the corner, plaintiffs’ lawyers will want to find out what’s new in this area of federal law. In this report, Jack Meligan, Chairman of Settlement Professionals Inc., explains what lawyers can expect for the coming year.
Meligan explains that the MSA situation is still uncertain. The federal government was supposed to publish guidance on MSAs in 2013, but they deferred action for a year. In October, 2014, the guidance project was pulled. So, at the moment, “we have no rules, no laws, and no guidance.” The best plaintiffs’ lawyers can do is look at the practice in workers’ compensation cases for guidance. Meligan says he was told by a regional director with Centers for Medicare & Medicaid Services (CMS) that the only standard plaintiffs’ lawyers would be held to on the liability side is reasonableness.
A Medicare set-aside account, known under the law as a Medicare set-aside arrangement, is something that has sprung up in practice even though there is no requirement in the law for such accounts. Meligan explains that the plaintiff in a personal injury case is taking a voluntary step. The account then can be used to pay future expenses that would be allowable under Medicare. This enables the plaintiff to show that he or she has protected the Medicare trust fund. So the account can be used to pay future medical expenses that would be allowable under Medicare. The law provides that, once the account (a non-commingled fund) has been exhausted paying the future medical expenses that would be Medicare allowable, Medicare will pay the plaintiff’s medical expenses for the rest of the plaintiff’s life.
As things stand, then, plaintiffs and their lawyers are stuck with figuring out what to do in the complete absence of guidance from CMS. Meligan points out that a defendant who is settling a case not only wants a complete release from future litigation by the plaintiff, but also to be held harmless from any future liability to Medicare . Meligan says that some defense attorneys were prodding plaintiffs’ attorneys into doing things to satisfy Medicare for which there was no legal requirement. The result has been that MSAs were set up that were not required, and many MSAs that were set up “were grossly over-funded.”
Meligan and his firm, SPI, are urging plaintiffs’ lawyers to take control of these situations. The first thing a trial lawyer needs to do is to work with someone who can help the lawyer decide if the client can avoid dealing with Medicare altogether. If the trial lawyer decides that the MSA is unavoidable and should be voluntarily created, Meligan again notes that there is no requirement to over-fund the MSA. A smart move is to work with a company that can help with the set-up and allocation so that “not one dollar more goes into a set-aside account out of that claimant’s settlement than is absolutely necessary.”
Jack Meligan is the Chairman and founder of Settlement Professionals Inc., Portland, Oregon, a company created to work with personal injury victims in structured settlements. He is a widely recognized settlement industry authority. He helped develop the curriculum for the nation’s only professional Registered Settlement Planner designation, a designation he has held since 2009. For more than 29 years, SPI has forged new paths, developing comprehensive, innovative solutions to protect victims and attorneys all over the U.S. The Legal Broadcast Network is a featured network of Sequence Media Group.