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Montana Senators Request a Waiver of Medicare Liens for Libby Montana Asbestos Victims

On October 2, 2012, Montana Senators Max Baucus and Jon Tester sent a letter to Marilyn Tavenner, acting administrator for the Centers for Medicare and Medicaid Services (CMS), requesting a complete waiver of the Medicare liens in the infamous Libby, Montana asbestos settlement case.

The Libby Story

Libby Montana, population 3,000, is a picturesque mining town 40 miles south of the Canadian border.  Vermiculite ore has been mined there since 1919 and since 1963, a W. R. Grace and Company plant mined and stockpiled vermiculite on site before shipping it by across the U.S. to make attic insulation.  Grace distributed its excess vermiculite in Libby for use in playgrounds, baseball fields, backyards, gardens and roads.  The Grace plant closed in 1990 for economic reasons.

In 1999, a series of articles were published in a Seattle newspaper entitled, “Uncivil Action: A Town Left to Die”, noting the high rates of asbestos related diseases and deaths in Libby.   In response, that same year, the U.S. Environmental Protection Agency (EPA) investigated and found toxic forms of asbestos at the former Grace mine site.  In 2000, the EPA started a massive cleanup effort in and around Libby.  In 2005, the U.S. government brought criminal conspiracy charges against W.R. Grace and several former employees, claiming that they knew of the risks involved but hid it from employees and the town of Libby.  The company and the former employees were later acquitted of all charges.  In 2008, Grace agreed to pay $250 million to reimburse the federal government for the cost of the cleanup.   Also in 2008, Grace paid a $60 million settlement to numerous homeowners and businesses.  In 2009, the EPA declared the Libby asbestos contamination as its first public health emergency.

Senator Baucus, chairman of the Senate Finance Committee, inserted a clause in the Affordable Care Act, which was passed by Congress in 2010, that gave Medicare coverage to residents of Libby who are diagnosed with an asbestos related disease.

Recent news reports state that approximately 400 deaths have occurred, and about 1,700 residents have been sickened by asbestos exposure.   Reports have referred to he Libby site as the deadliest superfund site in U.S. history.   It has been estimated that about $400 million has been spent so far on the cleanup efforts.

Two documentary films; “Libby, Montana” and  Dust to Dust” have been produced and four books have been written on the Libby asbestos issue.

$43 Million settlement with the state of Montana held up due to Medicare liens

In September of 2011, a Montana district court approved a $43 million settlement with the State of Montana and former miners and their families who accused the State of Montana of failing to properly oversee the mine and failing to warn the miners of the dangers.  These plaintiffs originally sued W.R. Grace, but after the company filed for bankruptcy in 2001, they filed suit against the state of Montana.  About 1,400 people are expected to receive payments from this settlement.

However, final payments from this settlement have been held up for over a year, while the parties wait for Medicare to determine how much they are owed.  Under the Medicare Secondary Payer (MSP) statutes, Medicare has the right to recover, from the settlement, the medical payments it made (“conditional payments” as they are properly called) to treat the asbestos victims.

On October 4th, 2012, both Senators from Montana, Senator Baucus and Senator Testor sent a letter to CMS requesting a complete waiver of all Medicare liens from this settlement.  In a press release dated the same day, Tester said, “Folks in Libby had their good health taken away from them through no fault of their own, and the courts agreed that they deserve to be compensated”.   Baucus similarly stated, “The people of Libby have already been hurt by greed and we can’t allow them to be hurt even further by red tape”.

Conclusion

It will be interesting to see what happens with this request for waiver of Medicare liens by two U.S. Senators.  The MSP issues in this case are complex and are similar to those of recent court decisions (see previous Medivest Blog posts on Hadden v. U.S., Bradley v. Sebelius, and U.S. v. Stricker) around the country, and of legislative bills currently in Congress.”  Medicare’s policy regarding compromising conditional payment situations is perplexing and frustrating to the settlement community.  In most cases, Medicare insists on collecting 100% of its conditional payments stating that a compromise is in conflict with the MSP provisions.  Nonetheless, CMS compromises about two thirds of the cases where the conditional payment collection would consume the entire settlement.  However, this option is only available upon request and CMS does not advertise its availability.

Regarding the delay, on one hand, it is unconscionable that these 1,400 people, after waiting over a decade, finally get a settlement and now have to wait over a year to receive their settlement payment while Medicare can determine how much the Medicare payment will be.  On the other hand, can you imagine digging through Medicare lien information for this many individuals?   H.R. 1063, the Strengthening Medicare and Repaying Taxpayers Act of 2011 (SMART ACT), is working its way through Congress right now.  One of the SMART bill’s main components is a provision to expedite Medicare’s determination of conditional payments, which would prevent situations like this from occurring again.

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