As many adjusters, employers and attorneys know the issue of an employer’s/carrier’s obligation to provide future medical care and treatment for a claimant has become a much more difficult issue of late. The increased difficulty does not arise from a change in the Indiana Act or new case law interpreting the Indiana Act. Rather, the new difficulty arises from an aggressive collection program instituted by the federal government to protect Medicare.
Medicare through CMS (Centers for Medicare & Medicaid Services) is asserting that Medicare must remain a secondary payor for medical expenses incurred by injured workers, where there is an obligation under a workers compensation act to provide ongoing medical coverage for an injured worker. That position presents difficult questions in Indiana where there is no absolute obligation under the Indiana Act to provide ongoing medical coverage for an injured worker in every case. The process for obtaining CMS approval of settlement and the factors to be considered are discussed by Christine Hummel in this article. I will attempt to discuss the process or options that can be considered for resolving claims before the Board that involve a potential Medicare Set Aside (MSA) issue.
There are essentially three options for the resolution of a workers compensation claim. Those options are: 1. hearing; 2. settlement by open stipulation or agreement to compensation; or 3. settlement by stipulation of compromise pursuant to section 15 of the Act. Each option will be discussed separately as well as the conditions or circumstances that might justify the use of a particular alternative.
1. HEARING:
As there is no absolute obligation under the Indiana Act to provide ongoing medical care and treatment to a claimant after they reach maximum medical improvement you may always litigate that issue. CMS has accepted decisions by the appropriate state authority, in this case the Board, that state law does not require ongoing medical care and treatment for a claimant. In those instances Medicare does not have an interest to be protected because absent a finding by the Board in favor of the claimant that ongoing medical treatment is required and related to the accident the employer bears no primary liability and Medicare would be the primary payor for future medical. The Board has been accepting stipulations for hearing and medical evidence in lieu of testimony as a method of determining this question. Obviously, there needs to be medical evidence negating the need for future medical treatment or a lack of evidence that future treatment is necessary for there to be a basis for the Hearing Member’s decision.
2. SETTLEMENT BY STIPULATION OR AGREEMENT:
Claims can always be resolved by an agreement to compensation or open stipulation of settlement. This settlement option leaves open the question of ongoing medical care or treatment. Under the Act claimants have a statutory period of time, now two years from the date for which compensation was last paid, to file and application for adjustment of claim for change of condition and seek additional benefits and compensation, including ongoing medical treatment. The advantage of a settlement by agreement to compensation or stipulation that allows the claimant to retain the right to file an application for change of condition is the limitation on the period of time for which there is an exposure. Once the statutory time period expires for the claimant to file an application for change of condition the employer/carrier is no longer primarily liable for medical expenses the claimant may incur related to accident and there is no Medicare interest to protect.
Thus, under the appropriate factual circumstances where the open period for filing an application for change of condition will expire in a short period of time you may wish to accept the risk of an application for change of condition to forego the expense of a Medicare set aside allocation. You must remember, whether using an agreement to compensation or a stipulation of open settlement, to include the dates for which compensation is being paid (that includes compensation for Temporary Total Disability and Permanent Partial Impairment). You will likely want to run the compensation for Permanent Partial Impairment as being paid from the date of injury forward to reduce the time period for an application for change of condition by as much as possible.
3. SETTLEMENT BY STIPULATION OF COMPROMISE:
The settlement of claims by stipulation of compromise settlement remains an option. The difficulty with this option posed by CMS is the necessity and cost of considering and protecting any interest that Medicare may have in the settlement of these claims. A stipulation of Compromise Settlement pursuant to Section 15 of the Act is full and final and cuts off any claims the claimant may have for change of condition or ongoing medical care and treatment. As a consequence in many, perhaps most, if not all cases some consideration of Medicare’s interest must occur. Specific factual situations will be discussed below.
A. CLAIMS DISPUTED FROM THE OUTSET:
This is a type of claim often settled by stipulation of compromise. Until recently CMS did not consider the probability of success of disputed claims when discussing MSA issues. That has apparently changed and it is now possible to obtain a zero sum MSA or reduced sum MSA on a disputed claim that has been denied from the outset and is being settled by the parties on a stipulation of compromise. We still must follow appropriate procedures with respect to CMS approval where applicable, for a discussion of that process please consider Christine Hummel’s discussion of these points. The Stipulation of Compromise Settlement filed with the Board should still include a provision that Medicare’s interest, to the extent it has any, related to potential or actual medical expenses, has been considered and resolved by a zero sum MSA or, funded at some level by a self administered or third party administered MSA or that there is no interest to protect based upon statutory or medical opinion. It is still possible to rely on medical opinion of a treating physician, that no future medical care or treatment is related to a work accident or anticipated in the future; however you cannot rely on peer review reports, second opinion or independent medical evaluations for this purpose.
B. CLAIMS ACCEPTED:
A number of issues arise with respect to claims that are initially accepted and then disputes arise as to benefits or compensation due, including but not limited to ongoing medical care. One of the steps that can be taken now in all accepted cases involves the information we request from the authorized treating physician at the conclusion of a claim. In addition to asking the authorized treating physician to offer an opinion whether the claimant has reached maximum medical improvement and assessing an impairment rating you should ask the physician to state whether any additional medical care or treatment is anticipated or reasonable in the foreseeable future. A negative answer to this question by the authorized attending physician supports a provision in any settlement agreement that Medicare has no interest to protect and no MSA is required. You cannot rely upon the opinion of peer review evaluations, second opinions or independent medical evaluations for this purpose. Obviously, reports obtained by claimants, or their counsel from a physician stating that ongoing medical care or treatment is necessary raises a dispute on this issue and renders it difficult and inadvisable to ignore the Medicare/MSA issue.
You can and should, under appropriate circumstances, include provisions for the protection of Medicare’s interest in a Stipulation of Compromise. Where an MSA is necessary, or arguably necessary, you can obtain projections of ongoing medical expenses and the current cost of funding those future obligations. It is highly recommended, and may be deemed necessary by CMS, that you include as an exhibit to any Stipulation the MSA projection as part of the terms of settlement. The Stipulation once approved by the Board must be submitted to CMS, under certain guidelines, including the Award approving the Stipulation for final review and approval by CMS. The CMS guidelines for review and approval are discussed by Christine Hummel in this article as well. Under the Indiana Act the occasions where an MSA is truly needed should be limited to those occasions where the ongoing medical needs of a claimant are extraordinary or necessary to maintain their condition or prevent their condition or impairment from deteriorating. Unfortunately, when resolving disputed claims by a Stipulation of Compromise, given the current standards applied by CMS and the evolving standards of the Indiana Act as interpreted by our Courts you must consider the MSA provision in most if not all disputed claims where there is no finding by the authorized treating physician that future medical care or treatment is not anticipated or that finding is disputed by the plaintiff, with support of a medical opinion.
You can resolve portions of disputed claims by a Stipulation of Compromise Settlement and “carve out” the ongoing medical treatment dispute for separate determination. The issue of ongoing medical treatment can be submitted to the Board for hearing or by written submission in lieu of hearing. An Award by the Hearing Member that there is no obligation to provide ongoing medical care relieves the employer/carrier of the obligation to protect Medicare’s interest and no MSA is required. Conversely, an award by the Hearing Member that ongoing medical care is the obligation of the employer will require the preparation and approval of an MSA or maintaining an open file and providing an authorized physician and monitoring as long as required by the Award and the time limits of the Act. Medicare’s interests are adjudicated and/or protected by either outcome.
One final thought concerns the timing of discussion of any MSA issues. It is much easier to handle any potential or actual MSA issue if it is discussed as part of the settlement of the claim. It can be very difficult to agree upon a resolution if the parties agree to some value of settlement and later discover that an MSA must be considered. The costs of an MSA can be high and if the parties have not agreed which of them will be responsible for funding or obtaining approval of the MSA a claim that was once thought to be settled may suddenly be in dispute. Hearing Members have uniformly stated that an agreement to settle workers compensation claim is not enforceable until approved by the Board. Thus, it is in our interest to discuss all issues and potential issues of settlement and cost of settlement at the outset and have a clear agreement on all terms and costs including MSA issues as part of the settlement to reduce the risk of settlement agreements that are not enforceable.
The choice of method for resolution of a workers’ compensation claim which includes a Medicare set aside issue can be difficult and depends not only upon the facts of the case and the medical records, but also the level of risk or the amount of liability and potential liability a party is willing to accept. Therefore, you should always consult with your attorney and MSA consultant regarding your options and obligations prior to settlement of a claim. It is always easier to find a method of resolving an issue before it becomes a problem than after that occurs.
For additional information regarding resolution of claims with MSA issues, please contact Michael Schoening at 317-485-0043 or mschoening@nsmlaw.com.