by Jay H. Bernstein, Attorney at Law.
Again, like a re-appearing apparition, the 2009 Workers’ Compensation Bench Bar Conference confronted the problem of finalized, Section “20” Settlements being corrupted by ever changing Medicare conditional benefit liens. No real answer to this dilemma has been provided by the Director, the Division, or the Judges, the State or Federal legislature, or the Medicare Bureaucracy.
The problem is confounding yet simple; the final, “Section 20 dismissal with settlement” of a Workers’ Compensation matter, (involving key issues of causal relationship, jurisdiction or permanency), is supposed to close, end, and dismiss the case, once and for all. But CMS, Medicare, through the Federal Secondary Payment Act, seeps into the bedrock of the Section 20 Settlement, destroying the foundation of finality. Simply put, Medicare provides the parties with a ‘provisional’ lien before the Section 20 Court hearing and Settlement, that must be finalized by Medicare officials in some Detroit suburb (and Indian Reservation of the Chickapaw nation), only months AFTER the Section 20 settlement is signed, finalized in a Court hearing, and approved by the Judge of Compensation.
For example, a $5000 Section 20 Settlement, with provision to reimburse Medicare for $403 dollars may be “put thru” settled in Court May 1st, based on a CMS Medicare provided, provisional lien of $403. The settlement is sent off to Medicare for final approval. Low and behold, Medicare returns four months later with a finalized “demand for payment” (i.e. new lien) of $22,000! The case is already closed, dismissed forever, gone, ex-nilho. Medicare Federal enforcement under the secondary payer statute is strict, allowing doubled penalties, payable by any party, including the attorneys involved in the settlement.
Some have suggested: (1) Placing the proceeds in the attorney’s trust account, until the final Medicare lien comes in, but this denies the petitioner his/her funds, and possibly changes the settlement parameters. (2) Attempt to reopen the closed, dismissed matter, arguing that no meeting of minds has occurred, declaring the settlement null and void.
(3) Appealing to Medicare in equity, to relinquish the harsh excessive lien against the impoverished petitioner.
Legal malpractice looms at every corner. No satisfactory response has yet to be provided.
I suggest a possible third way that would not involve a legislative fix, but only a procedural and semantic change, based on an administrative directive of the Division of Workers Compensation. We should sign and formalize a Section 20 settlement, with all parties on board, all necessary signatures entered, detailing all monetary amounts, costs, Medicare provisional liens, and fees; ON PAPER ONLY, BEFORE an actual court hearing; and term this the ‘administrative final settlement.’
The papers would be submitted to the good people at CMS/Medicare for review and issuance of the CMS final “demand for payment”. This would meet the demand by Medicare, that only a FINAL (not a proposed) settlement, finished, and entered, can trigger the production of the “final demand for payment.” Upon receipt of the “demand for payment” the parties could proceed to Court, put the petitioner on the stand, and on the Court Record, enter the final binding settlement, now termed the “recorded final settlement.” Thus the case reaches finality, as the Medicare “Demand for Payment” is the Final CMS/Medicare lien.
If the demand for payment by Medicare is within the parameters of the provisional CMS original lien, settlement could proceed, with the petitioner testifying in Court, and closing, the case with a 100% degree of finality.
If the demand for payment by Medicare is wildly divergent from the original Medicare lien, provisions could be made to (a) renegotiate the settlement, (b) negotiate with Medicare to correct or reduce the lien, pursue a waiver and/or appeal, etc…(according to Medicare personal, such action should put a hold on referral to the Treasury Dept. for Collection).
The above quick fix would circumvent the Bureaucratic haggling with Federal Medicare officials, political lobbying, and years of banging our heads against a collective wall. The quick fix would allow elderly, injured petitioners, some who have passed away waiting for CMS Medicare approval, a degree of finality and speedier access to their settlement proceeds.
Medicare is an important and successful program of health care, allowing the elderly proper health care, and must be respected. Medicare cannot continue to lose money to the cost shifting of unscrupulous Worker Compensation Insurance Companies. Yet Medicare should not put a stranglehold on our citizen’s settlement proceeds, denying the very income injured workers rely upon. The above procedural modification could break the logjam in Section 20 settlement; remove the specter of legal malpractice from the Workers Comp. Bar, and restore finality to the Workers’ Compensation “Section 20” Settlement. It’s worth a try!
Jay H. Bernstein is a Certified Workers’ Compensation Attorney in New Jersey, Admitted in NJ, PA, Conn., Wash. D.C. Jay Bernstein directs the Workers’ Compensation Department at Kirsch, Gelband, and Stone, in Newark, N.J., and has met with Medicare officials at the New York City Medicare Regional Office.
Excerpts from the “Medicare Secondary Payer Recovery Claims Process”
CMS Federal Govt. Web site at: