Friday FAQ: The Effect of No Fault Coverage on MSP Compliance



Question: I was an attendee at a recent conference where an attorney from GRG spoke. He talked about factors you should consider when deciding whether a client needs an MSA or not, and documenting the file if you decide an MSA is not required. In making that decision, does the amount of No Fault coverage a plaintiff has in a motor vehicle accident case effect whether an MSA is necessary?

I am currently handling a matter where the plaintiff has significant No Fault coverage left, as well as an additional $25K of OBEL coverage and APIP coverage. The plaintiff will require a surgery in the future, but at this point has delayed having it due to circumstances regarding the care of a spouse. The No Fault carrier has indicated that they will pay for the surgery and all subsequent follow up appointments and therapy when the plaintiff decides to have the surgery.

The underlying bodily injury limits in this case I mentioned are only $50K. The client is concerned that any net proceeds he/she may receive will be eaten up by an MSA. However, in thinking about this case I was not sure if an MSA would be necessary in light of the available No Fault coverage. Any insight that you can provide on this would be appreciated.


Answer: At the end of the day, the Medicare Secondary Payer (MSP) statute (42 U.S.C. §1395y(b)(2)) is all about burden shifting. By that, I mean to say that the statute is in place to ensure that the party responsible for a beneficiary’s injuries is paying those bills such that the federal government (and the American taxpayer) are not footing that bill. This means that the beneficiary takes a certain amount of settlement proceeds (affirmatively identified as opposed to proceeds intended for past medicals, wage loss, non-economic damages, etc) and uses those first before Medicare gets billed. Under that rubric, a beneficiary does not rule afoul of the MSP statute if an entity other than Medicare is paying for future injury-related care. In your fact pattern, it sounds as though there is ample No-Fault coverage available which would pay first before Medicare is asked to pay. So long as that coverage continues to exist and is available to make those payments going forward, Medicare would not be asked to pay. Thus, no one would run afoul of the MSP statute with respect to future medicals.

We would be happy to formalized this guidance for the file in the form of an MSA Evaluation Letter which you could rely on to document the file and evidence compliance on this issue going forward. Let us know if we can assist!


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