Call or email us anytime
(805) 484-0333
Search Guide
Today is Thursday, June 20, 2024 -

Industry Insights

Young: The WCAB and MSA Approval

  • National
  • -  0 shares

A recent California Workers' Compensation Appeals Board panel decision highlights some of the challenges in settling cases with a Medicare set-aside.

Julius Young

Julius Young

Kaiser and Sedgwick appealed when the judge approved the workers’ comp settlement but refused to approve the proffered Medicare addendum language.

In the case, Irma Dufelmeier v. Kaiser Foundation Hospitals, the WCAB panel denied reconsideration sought by Kaiser Permanente and its administrator, Sedgwick. In denying reconsideration, the WCAB panel adopted and incorporated the report of the assigned workers’ compensation judge. According to the WCJ, along with nine pages of compromise and release forms settling the case, the parties had attached another eight pages of Medicare language but did not actually attach the proposed MSA when it was filed in the WCAB computer system. 

Although the panel decision does not include details on the proposed settlement addendum, the parties apparently did propose an MSA that would not be submitted to Medicare. According to the WCJ, the terms purported to resolve “all right of CMS against parties and placing all liability on the applicant, should there be any adverse action by Medicare at a future date."

The WCJ stated:

“I do not believe I have either jurisdiction or obligation to provide a blanket approval and ratification to contracts between parties extraneous to the actual jurisdiction of the WCAB, especially to jurisdiction enjoyed by the federal government over Medicare. In fact, petitioner in the 17-page settlement states they don’t believe Medicare has an interest in the settlement. Apparently, their belief is insubstantial, as they proceed to hedge their position.”

Over the years, I’ve seen settlements with Medicare set-asides handled in many different ways. If an MSA was required because the settlement met threshold levels and the worker was on Medicare or soon eligible for Medicare, some employers, carriers and MSA vendors would settle only after the MSA was submitted and approved by CMS. Sometimes, this process has resulted in substantial delays while parties wait for CMS approval.

But some defendants have not required CMS approval before settling. They obtain an MSA analysis by a vendor and designate an allocation of the settlement funds for the worker to self-administer but propose that the MSA not be submitted to CMS. They may attach the “non-submit” MSA to the compromise and release settlement document along with an addendum they draft. The quality of these MSAs may vary.

Sophisticated, ethical and careful applicants' attorneys have often been concerned about what would happen if Medicare later determines that an allocation in a non-submit MSA was insufficient. Likewise, they have been concerned (whether the MSA was submitted to CMS or not) if the client misuses MSA funds he agreed to sequester and self-administer.

There is a risk to clients if all of this is done thoughtlessly. The risk? The client could lose Medicare coverage.

Some workers’ comp judges may be reluctant to approve Medicare addendum language, particularly if it is a non-submit and the language seeks to have the injured worker indemnify the employer/carrier from any reimbursement claims made by Medicare. That was the situation in Dufelmeier.

Some judges may be uncomfortable with the task of reviewing Medicare addendums and MSAs and may question (as in Dufelmeier) whether it is beyond the scope of their charge and expertise to analyze the MSA to determine whether a set-aside adequately considers Medicare’s interest. 

But I’ve communicated with other workers’ comp judges who are willing to approve settlement language from MSA addendums. An example might be language in a WCAB settlement approval order that indicates a finding that the settlement adequately considers Medicare’s interest.

While there is a real question of whether CMS is bound by a WCAB settlement approval including language that a workers’ comp settlement adequately considers Medicare’s interests, such a finding may add to the comfort level of the parties and encourage settlements.

There is no overarching statutory or regulatory guidance from the Division of Workers' Compensation and WCAB on how judges should process MSA settlement addendums.

Various employers, carriers, MSA vendors and attorneys have different comfort zones as to how much risk they will undertake in order to move workers' comp claims to settlements. Clients typically want the settlement money, and the niceties of MSA language and Medicare rules are not top of mind.

It is not clear whether the Dufelmeier settlement addendum had language that clearly explained to the injured worker the future risk she could have if Medicare questioned the settlement terms.

The Dufelmeier case is a panel decision, and I don’t read it as a blanket WCAB condemnation of WCJ approvals of settlement language. But on these facts, the WCAB was not willing to reverse the action of the judge. 

Yet, it is a cautionary tale and a reminder that at least some judges may believe that it is not the WCAB’s role to get involved in Medicare issues. I suspect we will see many of the workers' comp judges talking about this case, as the topic is ripe for discussion.

Julius Young is an applicants' attorney and a partner for the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his Workers Comp Zone blog on the firm's website.

No Comments

Log in to post a comment

Close


Do not post libelous remarks. You are solely responsible for the postings you input. By posting here you agree to hold harmless and indemnify WorkCompCentral for any damages and actions your post may cause.

Advertisements

Upcoming Events

  • Jun 20-23, 2024

    California Applicants' Attorne

    Attendee Registration Opens Tuesday, April 9th @ 9:30 AM Sponsorships & Exhibitor Applications …

  • Jul 29 – Aug 2, 2024

    76th Annual SAWCA Convention

    SAVE THE DATE! 76th Annual SAWCA Convention July 29 – August 2, 2024 Hotel Effie Sandestin 1 Grand …

  • Aug 14-17, 2024

    CSIMS 2024 Annual Dual Track C

    California Society of Industrial Medicine and Surgery (CSIMS) is combining its two conferences, PI …

Workers' Compensation Events

Social Media Links


WorkCompCentral
c/o Business Insurance Holdings, Inc.
PO Box 1010
Greenwich, CT 06836
(805) 484-0333