Question: My client was injured in a slip and fall incident. They were treated, at MMI with minimal future expected and with no future surgery of help. The cost for the comp carrier requires a $30,000 set aside, which appears to be excessive. Therefore; I settled a tort claim. The tort defendant's set aside advisor wants to set aside $80,000 additionally in a set aside trust. What should it really be? Thanks so much. Iowa Attorney
Answer: Your question is one asked by a lot of plaintiff attorneys these days when settling a case, either in the WC context or the liability context. Based on the Medicare Secondary Payer Act (42 U.S.C. Sec. 1395y(b)(2)) and its associated regulations, we know Medicare Set-Asides (MSAs) are appropriate under certain fact patterns. Based on guidance provided by Medicare, we also know MSAs are not technically "required" and are not always needed when settling every WC or liability case. Therefore, in order to determine what level of compliance is appropriate on the MSA issue, we suggest parties screen each case and determine if an injured person is an MSA candidate based on the case specific facts. If the injured person is not an MSA candidate, then no MSA would be needed and the parties should document their file accordingly. If the injured person is an MSA candidate, then the parties should then assess the matter to determine if the gross recovery (or potential gross recovery) contains dollars allocated to future medical expenses. If there are no dollars allocated to future medical expenses, no MSA is needed and the parties should document their file accordingly. If there is an allocation for future medical expenses, then the parties should value the injured person's future cost of care needs and determine that amount which is Medicare covered. At this point, the lesser of the future cost of care figure otherwise covered by Medicare and the future medical expense allocation in the recovery becomes the appropriate MSA figure. Finally, you would want to educate the injured person as to how to administer the MSA appropriately. By taking these four steps (Screen, Assess, Value and Educate), the parties can then SAVE the Medicare program (relative to future medicals) as well as the injured person's Medicare benefits.
Based on the facts presented to me, I am curious as to how the entities who created the MSA Allocations determined that an MSA was appropriate under these case specific facts (Screening the case) as well as how they determined that there was, in fact, an allocation in the recovery for future medical expenses (Assessing the damages versus recovery). I would not be able to ascertain the future cost of care needs without further examination (and those figures may well be correct). However, without the proper foundation laid as far as determining why an MSA is appropriate in the first place, it's hard to fathom that the MSA Allocation as created here, represents the proper level of compliance on the MSA issue for all parties involved.
I would be happy to discuss the matter further with you at your convenience.
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