February 16, 2010

U.S. v. Stricker: How Medicare’s aggressive stance on conditional payments affects workers’ compensation settlements

U.S. v. Stricker: How Medicare’s aggressive stance on conditional payments affects workers’ compensation settlements
by Lindy Z. Kerr, Esq.

In December the United States Government used the Medicare Secondary Payer Statute (MSP) as a basis for filing a complaint against both sides of settlement agreement reached in a class action liability claim in 2003. Medicare is seeking to recover conditional payments of medical expenses made on behalf of Medicare-eligible individuals who were part of the settlement. The lawsuit, filed as U.S. v. Stricker, is also seeking a ruling that would require the parties to pay Medicare before any other future payments in the settlement are made.

Several years may pass before there is a final decision in the claim. Nevertheless, the case has immediate implications in the arena of workers’ compensation settlements. The easiest way to determine whether conditional payments have been made is to have a lien verification performed. A lien verification is often one of the services performed by MSA projection companies. If the verification uncovers payments made by Medicare for treatment of the work -related injury then the employer/insurer will need to be prepared to reimburse Medicare for these costs.

The question then becomes, when is it appropriate to do a lien verification since not every claim reaching settlement requires one? Conditional payments only become an issue when the claimant in the workers’ compensation claim is a Medicare beneficiary. Otherwise, Medicare would not have paid for medical expenses that should or could otherwise be covered under workers’ compensation. Therefore, it is important to verify early on whether the claimant is a Medicare beneficiary, prior to filing any settlement agreement with the State Board of Workers’ Compensation. If the claimant is such a beneficiary a lien verification is recommended.

The most prudent course of action is to obtain a lien verification for any settlement involving a Medicare beneficiary, prior to finalizing the terms of settlement or filing any documents. The verification process may require some additional time and resources, but resolving this issue upfront will help avoid uncertainty and allow all parties to move forward without risk of the settlement later being challenged.

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