big r towing

Has a Federal Court Taken the First Step Towards Liability MSAs?


Recently, a federal court in Louisiana, by consent of the settling parties, and in conjunction with a maritime claim under the Jones Act, was asked to rule on a motion to determine future medical expenses to allocate settlement proceeds and to assure the parties their settlement properly considers Medicare’s interests. The court’s January 5, 2011 decision has caused quite a stir among the settlement community, as the court found that a $52,500 set aside for a $150,000 liability settlement was reasonable. A careful review of the court’s decision, however, shows that the court did not create a Liability Medicare Set Aside. Instead, where the parties presented medical testimony identifying future medical expenses totaling $52,500 and had already agreed to let the court determine the allocation based on evidence presented, the court essentially ratified what the parties had already determined, but put a number to it. Accordingly, this case serves as an excellent example of how far parties may go to achieve Medicare compliance, but does not serve as the practical model for doing so (nor is it advisable) in all events.

The Garretson Resolution Group (“GRG”) provides this practice tip to help the settlement community achieve absolute Medicare compliance as this area of law continues to evolve through legislation and court action. Having been engaged on thousands of cases directly involving Medicare Secondary Payer (“MSP”) compliance issues, GRG understands the process. Our formalized approach guides settling parties through the process of verifying, resolving and satisfying Medicare obligations.


Among the tips included in this pamphlet are:

  • What are the key takeaways from Big R. Towing pertaining to Medicare Set-Asides in liability settlements?
  • Is Big R. Towing something that can be achieved in all cases as part of a standard settlement protocol, or is this a case of creating the Medicare Set-Aside conditions in the settlement terms and steps the parties negotiated?
  • Recognizing that the use of the court system as a means of achieving absolute Medicare compliance is unfeasible in the majority of cases, what are some practical methods of satisfying Medicare obligations?
  • What steps are necessary to identify future cost of care and ensure that the burden of paying for and managing that care is not improperly shifted over to Medicare?