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Workers' Compensation

California WCMSA Case: Did Clinical Need for Medical Treatment Occur Faster Than CMS Process for Approving Medicare Set-Aside?

Jennifer Jordan By Jennifer C. Jordan, Esq.

In California, there is a unique trend compared to the rest of the nation in that the Medicare Set-Aside process is primarily defense driven with less than full disclosure to the Applicants. While not applicable to all employers/insurers, it is problem enough that the Applicant's Bar has been seeking notice requirements through the state legislature to try to become more involved in the process.

Enter Christian v. TJ Maxx, 2012 Cal. Wrk. Comp. P.D. LEXIS -- [free temporary access].

California WCMSAs

The case involved a C&R approved by a WCJ on December 12, 2011, which included a $150,692.00 Medicare Set-Aside (MSA). The MSA included the cost of total knee replacement (TKR) surgery, which, as it turns out, the Applicant already had several weeks before the C&R was approved. The Defendant filed a Petition for Reconsideration on December 31, 2011, to either set aside or seek reconsideration of the Order approving the C&R, alleging either mutual mistake or fraud, which was granted by the WCAB on February 21, 2012.

Here’s where the "California flavor" comes in. We frequently hear complaints by California applicants' attorneys that when presented with a settlement offer, they are basically told that an MSA will be done and submitted to CMS for approval and they will be told when it is done. Many times all they receive is the CMS release to execute, and they are commonly not even permitted to review the MSA before submission.

Generally speaking, if CMS approves it and they fund it, what difference does it really make since the MSP compliance component is taken care of? Well, this case makes one wonder. If applicants don't know what's in the MSA, how can they be held accountable for medical services rendered in the interim? And how can anyone be held accountable for things that may transpire during the extensive delays caused by CMS when attempting to obtain its approval of a WCMSA? 

What we don't know from this order are the details of the settlement negotiation process. Did applicant ever see the MSA? If it was submitted to CMS, did the parties wait several months for approval, during which the Applicant obtained the TKR because it became medically necessary, possibly without even knowing it was included in the MSA? Specifically, did her clinical need for medical treatment occur faster than the CMS process for approving the MSA? Who paid for the TKR, because if it wasn't the employer, then what difference does it make as it would still be a compensable medical expense?  There are so many possibilities other than Applicant intentionally did not disclose the surgery in order to obtain extra settlement funds. 

At the end of the day, the total MSA funded is what will act as a deductible against any future Medicare coverage of her work injury. Worse case scenario for the Christian case? She could have to tender the allocated surgery funds to whomever paid for it and take credit for it in her WCMSA accounting, or it may take her longer than contemplated to exhaust her WCMSA since she no longer needs that surgery paid for. Either way, the employer paid the estimated value of the projected lifetime medical expenses and the only thing that is going to change that estimate is if it is determined that the employer paid for the surgery performed in the weeks before the C&R approval.

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The Complete Guide to Medicare Secondary Payer Compliance now includes discussion of California WCMSAs written by contributing author Robert G. Rassp, Esq.

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