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Mediation Strategies: MSA: Additional Thoughts For Your Mediation Preparation

June 27, 2011

Unlike the Defense bar, the Plaintiff’s bar has been very slow to accept the reality of the oncoming “train” in non-worker’s compensation personal injury matters regarding issues of Medicare Set Aside (MSA) and how it will predictably impact their mediation settlement efforts.

Defendants have always demanded complete closure by their settlement agreements, including proof of adequate protections for them from any existing lien arising as the result of monies paid by others.  However, the MSA issue, that is Medicare’s demand that monies be always available to reimburse Medicare for all future services rendered for an injury for which a recovery was previously made, has now become the prevailing administrative nightmare for achieving settlement. 

Increasingly, the MSA issue, which normally is raised (late in negotiation) by the attorney for any insurance carrier who is contemplating writing a check to fund a mediation resolution, is what administrative requirements will be required in your mediated settlement agreement by these defendants in exchange for the monies to be paid in consideration of a mediated settlement?

Too often, the plaintiff’s attorney’s response, caught off guard, includes only:  “They can’t require that as a condition of our settlement.  There is no such requirement”.  Or, “They have moved the official reporting requirement to 2012”.  Or, “The defendant just doesn’t understand how difficult it is to obtain anything from Medicare.”  Or, “That requirement will kill our settlement.” 

The reality?  There is already existing legal ground, in some circumstances, for the Defendants to be presently concerned that, despite the official “reporting” deadline being administratively delayed for insurance carriers,  liability may already exist on a group of future “targets” if provisions are not included for MSA.  Reasonable administrative requirements can be attached to any mediated settlement agreement, subject, of course, to voluntary acceptance.  And, yes, the Defendants know that they may lose some settlements by these requirements, but are often willing to do so depending upon the circumstances of each case.

I warned the Plaintiff’s Bar (along with anyone else who wished to review my Educational Blog) about how soon I believed this “800 pound gorilla” was going to become their very real problem.  I stand by my earlier warning (and the information I believe is required reading for every serious plaintiff’s attorney who wishes to be prepared for these issues in their personal injury matters).  See this educational blog, Personal Injury Practice?  Start Your MSA (Medicare Set Aside) Notebook Now!  February 14, 2011

It is really very simple.  Even though practically little will likely be done anytime soon to punish those who do not prepare for the jeopardy that has long been legally available to the federal government, it is already a legitimate concern of the defense bar, those attorneys who ultimately advise their carriers as to how to avoid ANY future problem, whenever it may come.

The Defense Bar has been and is having seminars and committees advising their members as to ways to begin to protect their clients for PI settlements that might have any possibility of future medicare payments for the injuries in dispute, even now.  And, frankly, you cannot blame them.  They are just as much a potential “target” in the future as their clients.  (As is, by the way, the Plaintiff’s attorney!)

And, this “future payments lien” issue is raising current practical problems for even the usual “past paid lien” proof.    For example, woe be to the Plaintiff’s attorney who is not prepared to demonstrate official proof of Medicare lien for paid benefits.  And some are demanding proof of the absence of such a lien in those cases in which clearly none have been paid!

 Although resolving a Medicare lien for monies actually paid was long something that Plaintiff’s attorneys had to deal with in properly representing their clients to protect their clients and themselves from personal liability, increasingly, the Defense bar now may not be willing to accept prior, commonly accepted “hold-harmless” agreements, alone, for proof of payment of such a lien or even a potential lien.

The immediate lesson?  First, if you have a client who is receiving medicare for anything, you need to take immediate steps early to notify Medicare of your representation, the incident, the injury related to your claim and by this initial step, at least establish a claim number for future reference.  Be forewarned, you may also need to make this initial contact if your client is medicare eligible or soon will be.   It will not be a waste of your time, however.  You will very likely need this claim number for resolving even the possibility of a medicare lien for past payments at the conclusion of your case. 

The Defense may or may not be aware of the difficulties and time required for obtaining such required proof.   But, you need to be aware that ultimately the Defense simply consider this your problem, not theirs.  Again, it will not be a waste of time.  By at least trying early to establish your claim number, you will have a paper trail begun to show to the opposition and to expedite completion of any requirement.  (Note:  Medicare recently has been using a standard letter to their “participants” that sets forth their responsibilities, including information upon “conditional” payments made presuming reimbursement (and MSA?).)

Second, as with any lien, you will need to have this Medicare correspondence and communication available,  and preferably exchanged with your opposition prior to mediation.  The Defense will require proof of the present lien  status of any “conditional payments” made.  This “conditional payments letter” will be the minimal information that is going to be considered by the Defense when “estimating” your MSA requirement, if any, likely due on any conditional payment injury.

Third, It also would be wise to consider having with you at mediation, the telephone number, if not some pre-mediation conversations, with one of the increasing number of firms who can assist you with a MSA, if one becomes a requirement.  You can bet your defense attorney, or the carrier, or both, will have both prior to signing any final mediation settlement agreement.

Last, but, most of all, as a part of your pre-mediation preparation,  I strongly recommend that you simply call your opposing counsel and inquire as to any proof at mediation or their standard administrative language, if any, that they intend to require in your settlement agreement at mediation in the event of reaching a mediated settlement. 

At the least your advance inquiry will force your opposition to inquire about the particular requirements of that carrier, in advance.   And, you will then know what you must provide to the Defendants should you reach a mediated settlement.  More importantly, you will have sufficient time to obtain the information or offer reasonable alternatives that meet your oppositions’ needs and thereby, hopefully come to an acceptable administrative compromise before your negotiations begin.

Of course, not every PI claim will encounter these MSA issues.  Minor injuries or young claimants with moderate injuries, for example, may not be effected.  But it will pay you dividends to make sure you have ruled out any possibility before ignoring this advice.  Remember, no clear pattern has yet emerged with any predictable uniformity as to what any insurance carrier or law firm, much less individual defense attorney, may require.

But, if your client is of medicare age, likely that will be sufficient alone for MSA to  be a very real issue.  And, of course, if any very young client has catastrophic injuries that will foreseeably become at issue for treatment in their medicare future, the same.  In fact, I predict some of the Defense bar will insist upon some of their administrative requirements if there is even the possibility for medicare to pay, ever, for an injury they are paying your money upon.

Unfair?  Maybe,  Predictable?  Undoubtedly.  After all, if you refuse a good settlement because you simply do not want to jump through the administrative hoops required to obtain the money, the defendant’s attorney merely has more billable hours to collect.

Unreasonable?  Also, maybe.  But, if you are the defendant or the defendant carrier writing out a check to “buy your peace”, do you really want to lose that peace somewhere in the future on a matter you have already paid upon?  Who would want to pay twice? 

And, you can bet that the worse the liability, the tougher your administrative requirements will become.  But even the “bargain” settlement that a professional insurance representative occasionally obtains will likely be the subject of criticism should the administrative requirements ever be tested.  The likely prediction of pattern, as with any corporate decision, will be “why take a chance?”

Do this homework well prior to mediation to allow your opposition to also consider reasonable requirements.  And, be prepared to offer fair, reasoned alternatives to any perceived draconian “requirement”. 

For example, to expedite initially timely receiving any monies, consider offering to place a negotiated portion of your clients monies in an interest bearing trust account pending your proof of any administrative requirement of the defense.  At least the case will be over, the costs and risks of litigation saved and your client will be gaining interest upon their funds as you work to earn your fee!

And, as a part of this pre-mediation preparation, inquire of others, including your mediator, of any suggestions they may have or may have seen successfully used.  Also, share freely your thoughts and experiences with others.  It is in everyone’s best interest to work to achieve some acceptable uniformity that works for all of the parties to be able to achieve settlement at mediation.

As always, in mediation, it is “preparation, preparation, preparation”.  This newest hurdle will not be the last.

One Comment leave one →
  1. Michael Damaso permalink
    September 11, 2011 11:03 am

    Dan, Great article.

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