Plaintiff Bar's Position On Medicare Set-Asides

    Even though it isn't strictly a California issue, we've been following developments in the MMSEA and Medicare Cost Recovery area, with earlier posts, links and white papers here, here, here, here and here.

    Now the American Association for Justice (fka "Association of Trial Lawyers of America") wants to get its two cents in.

More after the jump.

    In an August 11 letter, entitled "Emergency Medicare Set Aside Information," AAJ President Anthony Tarricone writes:

It has come to our attention that some defense firms and insurance providers are now claiming that CMS requires MSAs in liability cases pursuant to Section 111 reporting requirements included in the Medicare, Medicaid & SCHIP Act of 2007 (MMSEA) . . . . This is false.

    He then begins to build a case that section 111, the new reporting provision, changed nothing with respect to the need for MSA's. 

    Uh, Tony, that's true, but it's kind of irrelevant.  It isn't section 111 that may require the MSA's.  It's CMS's (the Center for Medicare and Medicaid Services) position that settlements must take Medicare's interest into account with respect to future medical expenses.  The March 24, 2009 Town Hall Teleconference transcript AAJ relies on doesn't say there is no MSA requirement in liability settlements -- it only says that the section 111 reporting process and the set aside process are two unrelated animals, which they are.

    But since we're looking at transcripts, let's try the one from the Town Hall Teleconference from October 22, 2008, which includes the following: 

(Loren Friedman):
 Hi I’m a lawyer. And my question - and this may not be the right forum for it but the most recent General Counsel Memoranda that I saw talked about the coordination of benefits and Medicare (certified) and so on only applies to worker’s comp. And then, of course, you had the SCHIP Extension Act which extended the information reporting to the third party liability claims and so on.
And it seems informally that in some cases they’re seeking to do coordination of benefits with third party claims that aren’t worth (their) time. And sometimes they’re not. Do you guys have any insight on that as to whether we need to make set aside arrangements and coordination of benefits for ordinary auto accident or medical malpractice or so on...

(Barbara) Wright:
First of all, excuse me, first of all I don’t believe there is a General Counsel Memo that says that there are no liability set asides. We, in brief, we have a very informal, limited process for liability set asides. We don’t have the same extensive ones we have for worker’s comp.
In either case CMS approval of a set aside amount is not required. It is a voluntary process.

(Loren Friedman):
Right.

(Barbara) Wright: And lastly Section 111 does not mandate or specify anything about liability set asides. So no that isn’t really a topic for right now.

(Loren Friedman): So this is not the forum to ask whether CMS is looking for coordination of benefits on liability settlements?

(Barbara) Wright: You can give me a call separately if you’d like to do so.

    So I'm going with Judge Gilbert's common sense, nuts and bolts answer to this question of whether MSA's re required in liability settlements involving Medicare-qualified plaintiffs:  “Probably not, but sometimes you should do it anyhow.”  Because there is a requirement that Medicare's interests be protected, and sometimes there is no other way to do it.