There is a garden industry that has emerged since 1997 in California of companies who have become “WCMSA specialists”, promoting themselves as experts in developing WCMSA proposals that will pass muster with CMS. Most workers’ compensation legal practitioners who represent injured workers do not practice Social Security disability law, and the issues of the “80% rule” for Social Security disability offsets and the criteria for requiring a WCMSA are completely foreign to them [see The Complete Guide to Medicare Secondary Payer Compliance, Pt. I, Ch. 6, § 6.01[d][viii]].
Sometimes an injured worker agrees in a compromise and release agreement to “hold the defendant harmless” from any claim by the Social Security Administration or CMS concerning the injured worker’s entitlement to Social Security disability or Medicare. Such agreements are not binding on anyone and are essentially meaningless [see The Complete Guide to Medicare Secondary Payer Compliance, Pt. I, Ch. 6, § 6.01[d][iv]].
In California workers’ compensation cases, liability for a work related injury is either accepted or denied by the employer or workers’ compensation claims administrator. In cases where liability for an industrial injury is accepted by the employer or claims administrator, sometimes parts of body injured are in dispute. For example, a right wrist injury might be admitted but the left wrist claim is denied. So under the “Patel Memo” [see The Complete Guide to Medicare Secondary Payer Compliance, Pt. I, Ch. 5, § 5.02], California can be both a “commutation” state or a “compromise” state, depending on whether liability for an injury or part of body injured is accepted or denied [see The Complete Guide to Medicare Secondary Payer Compliance, Pt. I, Ch. 5, § 5.02].
In California, commutations are most frequently used as liability is generally accepted and a settlement is for future benefits for which the employer or claims administrator is legally liable. Sometimes a settlement in a workers’ compensation case also involves compromises over past and future benefits including medical treatment. The reason why is that even in denied cases, a claimant can obtain medical treatment on a lien basis where the medical provider agrees to compromise his or her billing for medical treatment even though liability for an industrial injury is never accepted by the employer or claims administrator. The employer must pay, negotiate or litigate the liens of record for medical treatment in disputed cases where either liability for the injury is entirely denied or where parts of body injured are in dispute. These cases settle for a compromise and release without the employer or claims administrator accepting liability. In all cases, Medicare may have a lien as a matter of law for past medical treatment expenses that were conditionally paid on behalf of a Medicare beneficiary pending a determination of liability for the claimed work injury.
In California, WCMSA proposals tend to be higher than expected due to the costs of medical treatment and medication. When CMS evaluates a proposed WCMSA, there is no evidence that CMS considers any limitations that California law has for determining the actual costs of future medical treatment and medication. California law has some stringent utilization reviews of medical procedures and medication use [see Cal. Lab. Code § 4610], statutory limits on physical medicine procedures [see Cal. Lab. Code § 4604.5], an official medical treatment utilization schedule [see Cal. Lab. Code § 5307.3; 8 Cal. Code Reg. § 9792.20 et seq.]. It appears that CMS disregards all of these built-in limitations for treatment.
In addition, the date an injured worker is declared MMI by a physician is a moving target. There may be multiple opinions about exactly when an injured worker becomes MMI. The treating physician may have more than one opinion, influenced not by medical considerations alone, but by outside factors such as pressure coming from a claims examiner to close a file or motivation to stop paying temporary total disability benefits or from the injured worker who wants to move on from the claim into retirement or to return to work. The second opinions about a person’s MMI status is coming from a medical-legal evaluator such as an “agreed medical examiner” or an examiner selected from a list of panel qualified medical evaluators provided by the Division of Workers’ Compensation Medical Unit [see Cal. Lab. Code § 4062.1 (unrepresented injured worker); Cal. Lab. Code § 4062.2 (represented injured worker)]. All WCMSA proposals must be determined at the time the injured worker’s medical condition has stabilized, and there are no clear-cut guidelines from CMS as to when the most accurate point during a claim a WCMSA should be developed.
As a result of medical uncertainty, disputes over parts of body injured in many claims, exactly when a person reaches MMI status, and what future medical needs a person has from a realistic standpoint, all result in quite a variation of WCMSA amounts, even in similar cases for similarly situated injured workers. Consider the following hypotheticals:
EXAMPLE #1: A WCMSA is originally proposed for $35,000 for the prescription medication portion and is later required by CMS to be raised to $101,000 due to the AWP for the medications. Most of the cost of medication is for narcotic pain medication. The injured worker says it would be cheaper for him to simply stop taking the medication or to go to a wholesale store such as Costco or Walmart instead. In a similar case involving exactly the same parts of body injured and the same aged person, the CMS-approved WCMSA is $35,000. Perhaps the difference in results in these two cases were due to the fact that different companies were hired to prepare and present the WCMSA proposals to CMS and separate analysts from the CMS contractor evaluated each case.
EXAMPLE #2: A WCMSA includes about $85,000 for two knee replacements and a possible one level lumbar fusion. The Part D medication portion of the WCMSA is an additional $83,000, which includes a 27-year supply of Lyrica®, a neuroleptic pain medication. That 27-year supply costs $52,000 in the WCMSA. The problem is that the injured worker has discontinued use of Lyrica® six months prior to the CMS approval of the WCMSA because of the side effects – she has decided to use over the counter anti-inflammatories instead, which are more effective and will not cost her $52,000 over a 27-year life expectancy. This scenario occurs in a large percentage of our cases in which the actual future medical treatment and drug use are based on pure speculation on the part of CMS and the submitters of proposed WCMSAs, including some physicians who might be inflating future medical expenses in an attempt to boost the potential value of cases.
EXAMPLE #3: In another case, a vendor sent a proposed WCMSA to the claims administrator, who forwarded it to its attorney and the applicant's attorney. The case involved an accepted low back injury that resulted in surgery and a chronic pain syndrome for a 57-year-old truck driver. The proposed WCMSA was for a little over $12,000.00, with no money allocated for prescription medication! The fact of the matter was that the applicant was actively treating with a pain management physician who regularly prescribed Cymbalta and Norco. It is clear that CMS would never approve this proposed set-aside since the applicant's treating physician's records were never considered part of the proposed WCMSA because the claims administrator may not have sent them to the vendor in the first place. Sometimes, WCMSA proposals are undervalued like this one because the claims administrator is afraid of how much a legitimate WCMSA would cost, while it is under pressure to close files by way of compromise and release agreements.
© Copyright 2011 LexisNexis. All rights reserved. This article was excerpted in part from The Complete Guide to Medicare Secondary Payer Compliance, 2011 Edition, which now contains discussion of California WCMSAs.