Workers' Compensation Medicare Set Aside Dispute

Question: How will the ruling in Protocols, LLC v. Leavitt impact workers’ compensation cases?

Answer: In Protocols, LLC v. Leavitt, 2008 WL 5188854 (10th Cir. (Colo.) Dec. 11, 2008), the 10th Circuit Court of Appeals recently found that Protocols, LLC has standing to claim it has been injured as a result of July 11, 2005 Memo issued by CMS. This ruling allows Protocols to pursue damages for claimed injuries suffered as a result of the July 2005 CMS Memo. Protocols alleges that it has a potential contingent liability hanging over it due to the publication of the July 2005 CMS Memo since it has admitted to arranging settlements that are contrary to what CMS has declared to be required. Given the timing of the decision of this case, and its results, this case may contribute additional confusion to the complex world of Medicare compliance rather than provide additional common law (case law) guidance. Prior to the Protocols case, decisions by CMS concerning WCMSAs were not considered to be appealable. By granting Protocols standing based on a contingent liability, the 10th Circuit may be setting the wheels in motion towards establishing due process as a part of the WCMSA procedures. However, since CMS Memos are meant to provide guidance related to an agency policy rather than being statutory or regulatory based, due process may not be in the offering. No one really knows whether due process is forthcoming as a result of this litigation, but the case may serve as a harbinger of things to come.

Win or lose, this ruling may not have an immediate impact on parties who settle workers’ compensation cases. The additional confusion it creates, however, makes it even more imperative that the new Congress give health care reform its full, undivided attention. President-elect Obama’s directions to Tom Daschle (Obama’s nominee for Director of the Dept. of Health and Human Services) are likely to set the table for the 2009 Congress to focus on Medicare reform. The combination of this ruling and the President-elect’s plans for Medicare reform may provide the necessary momentum to get HR 2549, a bill that directly addresses WCMSAs, out of the House’s SubCommittee on Health, where it has remained since June 5, 2007. A statutory solution, like HR 2549, to these non-statutory problems, would provide welcome clarity to the Medicare compliance arena.