Are attorneys in workers’ compensation cases allowed to take fees for Medicare Set Asides (MSAs)?

Question: Are attorneys in workers’ compensation cases allowed to take fees for Medicare Set Asides (MSAs)?

Answer: The question of whether an attorney may take fees on an MSA in a workers’ compensation case really boils down to state law, and whether it permits counsel to take a fee on the future medicals portion of a workers’ compensation settlement. Certain states allow this while others don’t. Remember, an MSA is really just a subset of the injured worker’s future medicals awarded pursuant to state law. An MSA is not supposed to be an additional tack on to a workers’ compensation award, although that seems to be a common practice in some jurisdictions.

The Medicare Secondary Payer Act (MSP) (42 U.S.C. Sec. 1395y(b)(2)) doesn’t specifically address your question. However, the related federal regulations (42 C.F.R. Sec. 411.37) address Medicare’s recovery, and allow for a procurement cost offset to be applied to any amounts owed and reimbursable to Medicare for an injured worker’s medicals. Read broadly, this would cover past medicals (i.e., conditional payments) as well as future medicals (i.e., MSAs). The NJ state court in Hinsinger agreed as it applied a procurement cost offset to a liability MSA. Hinsinger v. Showboat Atlantic City, 2011 N.J. LEXIS 96 (January 21, 2011). Based on this, nothing in the MSP or its related regulations would prohibit an attorney from taking fees on an MSA.

But please keep in mind that Medicare officials believe an MSA should be fully funded for the injured worker’s future injury-related care otherwise covered by Medicare. Once that MSA has been funded, injury-related care is the only appropriate use of those funds. Medicare is unlikely, at the present time, to agree with a procurement cost offset to the MSA if asked to review and approve the MSA amount. But, since the CMS WCMSA Reference Guide dated March 29, 2013 clearly states that such submission is voluntary, not mandatory, that should not be an issue so long as you are not asking CMS to review and approve your MSA.

Bottom Line:

State law will dictate whether you can take a fee on the future medicals portion of a worker’s compensation settlement. If the answer is ‘yes’, then you should feel free to take that fee, fully knowing that the MSA is a subset of the future medicals portion of the award. If your state does not allow you to take fees, then you would not.