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U.S. Attorney Announces Plan to Supplement CMS Liability MSA Review Process in New York


By: Kendra Phillips

On May 6, 2011, the U.S. Attorney’s Office for the Western District of New York announced a protocol to provide a secondary review process for liability settlements in its jurisdiction. The document, which the office titled “Western District of New York Medicare Secondary Payer (‘MSP‘) Protocol,” outlines a process allowing litigants to submit applications for “MSP Compromise” to the U.S. Attorney’s Office. As with the case law and other efforts cited in our March newsletter, the protocol does not require liability MSAs but does represent the federal government’s increasing interest in liability MSAs. From our point-of-view, the protocol has features that merit review of current liability MSA policies by our clients and partners:

  • This is the first agency other than CMS to claim the jurisdiction to adopt MSAs. The scope of its application and the authority to review CMS subject matter has yet to be determined.
  • The protocol provides an opportunity to secure a release from the US Attorney’s Office in a liability settlement on MSP issues by following a procedure and filing a liability MSA.
  • Though qualified as a work review capacity issue, this is the first pronouncement of a review threshold by any federal agency on liability MSAs: $350,000.
  • This process provides a “fast track” settlement process on liability MSAs while still requiring completion of the existing process for conditional payment resolution.

The mechanics of the process are as follows: First, the U.S. Attorney’s Office will review applications for and request additional information (if necessary) including “additional LMSA(s).” Once all of the requested documentation has been requested, the Office will provide the litigants with a release. “The release issued by the U.S. Attorney’s Office for the WDNY will compromise the LMSA obligations related to the settlement, judgment, award or other payment.” In order to limit volume, the following requirements were placed on this process:

  • The conditional payment issue must have been resolved prior to application, or adequate assurance as to future conditional payment resolution must be provided. As anyone who has ever tried to do this on her own is aware, conditional payments can be very time consuming to obtain and resolve. This requirement will likely frustrate many potential applicants to the process.
  • The process does not apply to mass tort cases.
  • All litigants must jointly state that:
    • The value of the settlement is at least $350,000.00.
    • The Plaintiff is a Medicare beneficiary.
    • The litigants had previously requested CMS approval of the LMSA, but had received no substantive response for at least 60 days.
    • The MSA preparer (i.e. vendor) provides an affidavit explaining that the LMSA “true and correct based on the Medicare beneficiary’s medical records and the injuries being released as well as in conformance with the WCMSA submission checklist as published by CMS.”

It is worth noting that this protocol cannot be utilized until after conditional payments have been resolved and the CMS Regional Office has failed to provide a “substantive response” within 60 days. With these two requirements, parties who pursue the WDNY “MSP Compromise” option may be waiting a very long time for claim closure. Questions remain about which cases qualify for review by the office, as well as what form the release provided by the U.S. Attorney’s office will ultimately take. As a result of this information, among the checklist of questions we recommend to any claims organization resolving New York Liability cases are:

  • Does the value of a release of ongoing MSP liability from the US Attorney’s office on New York liability settlements outstrip the cost of producing an MSA? If so, should this be a request in other settlements in other jurisdictions?
  • Should our organization have a liability MSA threshold at $350,000? Should I look at the $350,000 threshold as just a way to prompt this protocol and at least cover CMS $25,000 / $250,000 approach on workers’ compensation? Should it be lower?
  • If the organization is anticipating using this process, are we pursuing the conditional payment discovery and negotiation process early enough to make this protocol viable at the time of settlement?
  • If the organization is utilizing a more general form of life care planning rather than an MSA analysis for setting aside future medical expenses, does the affidavit requirement prompt a more tailored liability MSA analysis?

As noted previously, this U.S. Attorney’s protocol reflects the most recent in a series of moves by state and federal adjudicators, administrators, and counsel seeking a definitive process to match the general requirement of “protecting Medicare’s interests” in the context of liability settlements. In the absence of a policy from Medicare, it is safe to assume that other jurisdictions and organizations will continue to offer a means to address the outstanding challenge.

With a long history of New York workers’ compensation, liability, and MSP analysis prowess; Crowe Paradis would welcome the opportunity to work with you to analyze this checklist as well as your approach to liability MSAs generally.

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Kendra C. Phillips is an MSP Compliance Advisor for Crowe Paradis. She has been working in Medicare Secondary Payer Compliance for six years and focuses on Medicare Set Aside compliance, with a special concentration on issues involving states in the Eastern U.S. Kendra graduated from Boston University School of Law and is a member of the Massachusetts and New Hampshire bars.



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