My Big Fat Annual Conference: MSP Litigation Strategies to Manage Some Very Risky Business

My Big Fat Annual Conference: MSP Litigation Strategies to Manage Some Very Risky Business

Karen C. Yotis, Esq., the Feature Resident Columnist for the LexisNexis Workers’ Compensation eNewsletter, provides insights into workplace issues and the nuts and bolts of the workers’ comp world.


Although not many could see their far-reaching impact when the Medicare Secondary Payer Act’s reporting requirements first arrived on the regulatory scene in 2010, there were a few prescient individuals in the workers’ compensation industry who understood the nature of the new beast. The folks in charge of planning the annual National Workers’ Compensation and Disability Conference & Expo recognized that something important had occurred, and have featured sessions about MSP every year since. This is hardly surprising though, because the NWCDC—which has been running for 22 years—always focuses on hot button topics. From workers’ compensation opt outs to medical marijuana for workers, and everything in between, this is the conference venue that consistently takes attendees past the bare issues of the day to cutting edge analysis and prediction of trends. The November 2013 NWCDC conference was no exception, serving up a smorgasbord of educational sessions and panel discussions on a wide variety of workers’ compensation-related topics.


Building on offerings from prior years, the NWCDC once again presented a stand-out session on Medicare Secondary Payer Case Law Trends during its 2013 gathering in Las Vegas. In true NWCDC style, a top notch panel featuring MSP doyenne Jennifer C. Jordan, esteemed workers’ compensation attorney Vernon Sumwalt, and legal eagle James J. Kennedy, III, gave something different than what most conference audiences have come to expect. Instead of doing the usual ho-hum (and tedious) review of MSP legislation, these experts did a deep dive into the complexities surrounding the Medicare Secondary Payer Act, and described the inner workings of the tools that practitioners and industry leadership in charge of managing risk will need to navigate the increasingly complex MSP landscape.


Jennifer Jordan started things off by examining recent trends in MSP case law, explaining about new exposures related to MSP obligations, and identifying practical strategies to avoid increasingly difficult litigation.

Jordan encouraged the crowd to develop a strategy to manage MSP exposure by engaging in an inquiry that asks what would or could happen when it all goes wrong. She made it abundantly clear that a thorough analysis of the likelihood of future exposures, along with a practical discussion about whether defenses would be available, is the only way to approach the MSP Gordian Knot.

Looking through this lens of future exposure, Jordan then shared some practical strategies that demonstrated how to take control of potential MSP exposure and avoid being trapped by lack of understanding or fear. Operating from an intimate knowledge of the Medicare Secondary Payer Act, the true nature of Medicare Set Asides, and the inner workings of the Centers for Medicare and Medicaid Services (CMS), Jordan made some simple—yet provocative—suggestions that bear repeating.

Jordan’s strategy for approaching MSP exposure begins with this premise: there IS no exposure unless and until Medicare makes a payment that someone else should have paid. She also made certain that another important truth was crystal clear: there are no laws or regulations governing Medicare Set Asides, and CMS memos are neither laws nor regulations.

Instead of looking at an MSA in terms of compliance, Jordan approaches the MSA as a risk management tool that is a negotiable agreement to allocate money for future medical. Demystifying the MSA as a hedge against future exposure, Jordan advised the crowd “don’t protect Medicare’s interest, protect your own interest.”

She then proceeded to tell the conference attendees how to go about protecting their own interest instead of Medicare’s. Dispelling the industry-wide panic about double damages for failure to comply with the MSP’s reporting requirements, Ms. Jordan clarified that double damages are only imposed against a non-compliant entity if that entity is sued by the government for what Medicare should not have paid. Double damages are not imposed for not having an MSA. Likewise, there are no double damages imposed on the entire exposure of a claim. Rather, double damages may only be imposed in a private cause of action in federal court and that typically does not occur until after the five steps to the Medicare appeal—redetermination, reconsideration by QIC, ALJ hearing, MAC review, and US District Court—are exhausted. This means that a LOT of time exists within which to fix a nonpayment mistake and avoid the dreaded double damage award, clearly an important risk factor to consider when determining whether to negotiate an MSA.

Jordan also touched upon the possible dangers lurking in the shadow of an MSP statute that is silent on when an entity’s obligations to Medicare may end, and under which the rules on the applicable limitations period are murky at best. Risk management accordingly involves realizing the potential exposure that could arise from Medicare making a payment on your closed claim at any point in time.

Jordan also warned parties facing potential exposure to avoid backing themselves into a corner for failure to fully understand MSAs and the CMS review process, and supplemented her admonishment with a few more uncomplicated—and bold—comments about MSP. Simply put, no party in the process of negotiating an MSA is obligated to follow any CMS approval that party doesn’t like. And just as a party is not obliged to follow what CMS says, CMS is not obliged to change its mind so don’t expect a reconsideration even if you can produce proof that contradicts its position.


Jordan’s section of the presentation also described litigation trends relating to MSP liability. Recent case law teaches that:

Editor’s Note: Citations link to Bracketed citations link to Lexis Advance.

> Cases heard before district court judges are held to an extremely different standard than parties may be used to with CMS review [Schnexnayder v. Scottsdale Insurance Company, 2011 U.S. Dist LEXIS 83687 [2011 U.S. Dist LEXIS 83687]; Big R Towing, Inc. v. Benoit, 2011 U.S. Dist LEXIS 1392 [2011 U.S. Dist LEXIS 1392] (W.D. La., Jan. 5, 2011); Guidry v. Chevron USA, Inc., 2011 U.S. Dist LEXIS 148942 [2011 U.S. Dist LEXIS 148942] (W.D. La., Dec. 28, 2011); Frank v. Gateway Insurance Company, 2012 U.S. Dist LEXIS 33581 [2012 U.S. Dist LEXIS 33581] (W.D. La., Mar. 13, 2012); and Bessard v. Superior Energy Services LLC, 2012 U.S. Dist LEXIS 124690 [2012 U.S. Dist LEXIS 124690] (W.D. La., Aug. 30, 2012)]

> Disputes involving one party which wants to enforce or avoid a settlement are increasing

> Defenses in cases that involve underfunded or improperly spent MSAs will tend to focus on the manner in which the parties demonstrated compliance at the time of settlement [Ivester v. Parkway Regional & Specialty Risk, 996 So.2d 909 [996 So.2d 909] (Fla. 1st DCA 2008)]

> A very real danger exists to parties in negotiating an MSA to require CMS approval in the event CMS withholds approval

> A counter by CMS does NOT constitute approval [Welsh v. American Home Assurance Company, 2013 U.S. Dist. LEXIS 25948 [2013 U.S. Dist. LEXIS 25948] (S.D. Miss., Feb. 26, 2013); Draine v. S & ME, Inc., 2013 Tenn. LEXIS 108 [2013 Tenn. LEXIS 108] (Tenn., Jan. 22, 2013)]

> A meeting of the minds is critical to an MSA, as courts may only enforce the law or a mutual agreement among the parties [Early v. Carnival Corporation, 2013 U.S. Dist. LEXIS 16711 [2013 U.S. Dist. LEXIS 16711] (S.D. Fl., Feb. 2, 2013)]

See Part 2 of this article: “My Big Fat Annual Conference: Medicare Advantage Marches On”.

See Part 3 of this article: “My Big Fat Annual Conference: The Feds Bring Out Their Big Guns”.

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