GRG Issues Client Advisory Update on MSAs in Third Party Liability Cases

By John Cattie

In a CMS teleconference call on September 30, 2009 addressing policy questions related to the implementation of the MMSEA Section 111 reporting rules, the topic of MSAs in third party liability cases was raised by a participant on the call.  His question was whether the MMSEA required the use of MSAs in third party liability cases.  Though this question has been asked and answered on prior calls, the response from CMS officials bears repeating.

According to CMS officials, Section 111 reporting is not related to the use of MSAs in third party liability cases.  The MMSEA imposes a reporting obligation on RREs in certain settlements involving claimants currently entitled to Medicare at the time of settlement, judgment, award or other payment.  The MMSEA does not change MSA obligations in any way.  The use of MSAs in third party liability cases is the same as it has been prior to the July 1, 2009 effective date and the December 29, 2007 enactment date of the MMSEA.

CMS officials went further in discussing the appropriate use of MSAs.  Like they did on the March 24, 2009 call, CMS officials stressed that the submission of MSAs in the workers’ comp context was voluntary, not mandatory.  They also advised that the submission process for MSAs in third party liability cases does not have the same formal process as applies to the submission of MSAs in workers’ comp cases.  Instead of submission to a central office, MSA proposals in third party liability cases are to be submitted to the appropriate Regional Office, and that Regional Office may choose to review or not review the MSA proposal based on its current workload.

In our White Paper, The Use and Propriety of Medicare Set Asides in Liability Settlements (August 19, 2009), our group takes the position that MSAs are rarely appropriate in third party liability cases.  Until the legal community receives guidance in this area, the most important thing you can do is document your good faith efforts at substantial compliance with Medicare.  There are a variety of ways to accomplish this, including obtaining a MSA evaluation of your case.  If you have questions about MSAs and whether your client should consider a MSA, call John Cattie at (704) 559-4300.