In a recent order by the U.S. District Court for the Western District of Louisiana, Lafayette Division, the court approved a Medicare Set-Aside in a Longshore and Harbor Workers’ Compensation Act (LHWCA) case.
Gregory Bessard was injured in a workplace accident when he jammed his neck and right shoulder on a crane aboard a lift boat working in the Gulf of Mexico. He underwent an anterior cervical decompression and fusion of the C5-6 and C6-7 levels of the spine. After lengthy negotiations, the defendant agreed to settle the case for $785,000 conditional upon obtaining a Medicare Set-Aside. The MSA report came back showing that Mr. Bessard’s estimated injury related, Medicare allowable future medical expenses were $6,701.00.
The parties were concerned that CMS would not review the MSA so they jointly filed a motion of declaratory judgment asking the court to: approve the settlement, state that the interests of Medicare were being protected and order Mr. Bessard to establish an MSA. CMS responded to a court inquiry stating that, “CMS would neither participate nor review the parties’ determination of whether a set aside was needed or the amount of the set-aside with respect to the liability settlement. Nevertheless, CMS expects the settlement funds to be exhausted on otherwise Medicare covered and otherwise reimbursable services related to what was claimed and/or released before Medicare is billed for future medical services”.
The court found that “since CMS provides no procedure by which to determine the adequacy of protecting Medicare’s interests” in this case, the $6,701.00 MSA was reasonable and fairly took Medicare’s interests into consideration. In addition, the court ordered Mr. Bressard to establish and self-administer the MSA.
Interestingly, the court also found that Mr. Bessard was “able” to self-administer the MSA. This complies with an October 15, 2004 CMS memo that requires that all MSA administrators (including self-administrators) be “competent”; a requirement that CMS rarely ever enforces.
This case is very similar to Smith v. Marine Terminals of Arkansas (8/9/2011) where CMS refused to review a LHWCA case even though it exceeded their review threshold. The court determined that the MSA was reasonable and that Medicare’s interests were reasonably considered and protected in the settlement.
The Bessard v. Superior Energy Services case points out that navigating the waters of MSP compliance can be difficult. It’s a shame that CMS provides very little guidance to parties who are just trying to protect Medicare’s interests, preserve the Medicare Trust Funds and comply with the Medicare Secondary Payer statute. Having to go to federal court is not an appropriate approach. The solution to this problem seems very simple. Medicare should establish and publish detailed guidelines for settling parties to follow so they can have certainty that they are complying with the statute.