Court Permits Deduction of Procurement Costs From Medicare Set-Aside in Liability Claim

Following the guidelines of the CMS Management Memo entitled "Medicare Secondary Payer - Workers Compensation (WC) Information" dated May 7, 2004, and the interpretation of 42 CFR 411.37, a NJ Court granted an attorney the deduction of procurement costs from a Medicare Set-Aside Trust.

"This court's decision to apply 42 C.F.R. § 411.37 to funds obtained in a civil action and placed in a Medicare set aside is also in line with general principles of equity. Where a plaintiff is, or will within a short time become, a Medicare recipient, the plaintiff's attorney also works on behalf of Medicare to secure funds to pay future medical expenses Medicare would otherwise pay. To allow Medicare to avoid paying an equitable share of the procurement fees for a judgment or settlement amount, forcing the plaintiff to cover all the fees, would be unfair to plaintiffs. In some situations, a plaintiff may end up getting nothing after creating the set aside and paying attorneys' fees or may even have to pay money out of pocket to his attorney after a lengthy trial. Such a result would not only be inequitable, it would deter persons on Medicare who are injured by the tortious acts of others from bringing claims."

Hinsinger v. Showboat Atlantic City, L-3460-07, 2011 WL 1885980 (NJ Super Law Division 2011), decided May 19, 2011.

For over 3 decades the Law Offices of Jon L. Gelman  1.973.696.7900  jon@gelmans.com have been representing injured workers and their families who have suffered occupational accidents and illnesses.

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CMS/MSP Statute Tolling Case Set for Hearing by Federal Court

The claim filed by the US government for reimbursement against multiple law firms and insurance companies has been scheduled for a hearing September 13, 2010 on the pending motions. The Federal government, who has claimed that the Statute of Limitation was tolled, is seeking reimbursement involving over 900 specific claims that were paid involving a liability action. The gross settlement was $275 Million for which payment was made in 2003.

The Centers for Medicare and Medicad Services (CMS) under the Medicare Secondary Payer Act has alleged that it was not reimbursed. The Government contends that the Statute of Limitations under 28 U.S.C.2415 is 6 years and not three years. Alternatively the Government has argued that the Statute  f Limitations was tolled under 28 U.S,C, 2416(c), which permits tolling where a claim has accrued, but "facts material to the right of action are not known and reasonably could not be known" by the Government.

The attorneys and insurance companies contend that the Statute of Limitations is a valid defense since the the claim arose when the defendants were originally obligated under the settlement agreement to make payment. Travelers and AIG, as parent companies,  claim that they are not proper parties to the case and should be removed as parties. The insurance companies, in a brief filed in June 2003, also allege that the bar to permitted the statute of limitation tolling should have been dropped under Federal statute. The stated in  "....once the facts making up the 'very essence of the right of action' are reasonably knowable."

United States of America v. James J. Stricker, et al., Case No. 1:09-cv-02423-KOB (USDCT AL).

Related Articles:

Amended Complaint Filed in CMS Recovery Action Against Law Firms

Click here to read more about Medicare Secondary Payer Act and workers' compensation.

For over 3 decades the Law Offices of Jon L. Gelman 1.973.696.7900 jon@gelmans.com have been representing injured workers and their families who have suffered occupational exposures.

Requesting a CMS Overpayment Waiver For Hardship

In conjunction with the enhancement of Section 111 mandatory reporting,  The Medicare Secondary Payment Contractor (MSPRC) has defined a 13 step process to collect overpayment from beneficiaries. Once post demand correspondence is issued, interest accrues on the overpayment if a full refund is not received within 60 days. If the full refund is not received after 120 days a case is referred to the US Treasury for collection.

In certain situations the beneficiary may have a financial hardship which could reduce or entirely eliminate the repayment request. In such circumstances a waiver request may be made by the beneficiary. The Social Security Administration (SSA) form number SSA-632 must be completed and submitted in a timely fashion. The beneficiary must advise SSA of the factors concerning the alleged hardship and then make a complete financial disclosure to SSA.

To read more about the Medicare Secondary Payer Act and workers' compensation  click here.

Good Medicine for an Ailing Compensation System

An historic shift in the delivery of medical care for those injured by occupational exposures has been signaled by the US Senate. Following decades of debate, the proposed emerging health care legislation, amended at the last minute by the Majority Leader's manager amendments, shifts Libby, Montana's asbestos disease claims to Medicare as a primary payor.

The stage was set last June 17th, when the US Environmental Protection Agency (EPA) declared Libby, Montana, a Public Health  Emergency, because of asbestos present at the site. The geographical location was the site of a W.R. Grace vermiculite mine.

The legislative provision was "buried" deep in the legislation at the last moment, reported Robert Pear of the NY Times. The amendment was made Senator Max Baucus of Montana, who lead the Senate legislative committee crafting the legislation. The convoluted political bartering over the last few days reflects a sentinel change in how injured workers may be receiving medical care in the years ahead. It is anticipated that major changes will be offered over the years ahead to modify and expand the coverage.

Occupational diseases have always been problematic to the State workers' compensation systems. They have been subject to serious and costly proof issues. They were "tag along" claims for a compensation system that initially was enacted in 1911 to cover only traumatic claims. The proposed legislation is a first major step to move occupationally induced illnesses into a universal health medical care system and will provide a pilot project for addressing the long awaited need to furnish medical care without serious and costly delays.

By allowing Medicare to become the primary payor and furnish medical care, those without a collateral safety net of insurance will be able to obtain medical care effectively and expeditiously. While cost shifting from workers' compensation to Medicare has been an historically systemic problem in the compensation arena, this legislation maybe a first major step to legitimatize the process. The legislation may allow for great accountability and expansion of the Medicare Secondary Payment Act (MSP) to end cost shifting that has become epidemic in proportion. It is good medicine for an ailing workers' compensation system.


Click here to read more about workers' compensation and universal health care.

Congress, Health Care & Unintended Consequences

This past week some very dramatic things happened in the workers’ compensation world. The US Senate moved forward on initiating a floor debate on health care. At the same time, a group of workers’ compensation scholars met in Washington DC to discuss the future of workers’ compensation and the interplay with social security disability.

 Highlights of the NASI (National Academy of Social Insurance) conference convened in Washington were findings presented by eminent leaders in the field. Professor John Burton, Rutgers University, pointed out that newly created barriers to workers’ compensation were pushing more injured workers to the Social Security disability system for benefits. This reflects a phenomenon that occurred in the late 1970’s when a study commissioned by the US Department of Labor and conducted by Mt. Sinai Hospitals’ Environmental Sciences Laboratory, revealed that the inadequate benefit delivery system of workers’ compensation for asbestos related illness, was forcing injured workers and their families into the civil justice arena for adequate compensation.

The problems have not changed in decades; they have only gotten worse, maturing into a system that is in critical condition and on life support. In 1980 Irving J. Selikoff, M.D. reported, “There has been widespread acknowledgement of significant problems with disability compensation for workers in the United States. One major area of concern has been the shortcomings with regard to occupational disease. Whatever the suitability of current workers’ compensation systems in the 50 states for injuries and work accidents, there has been little disagreement about the inadequacies of such systems for workers who become disabled by illness or, if they die, for their surviving dependents.”

Complex questions continue to exist between the scientific and legal communities as to the path to be taken. Barriers placed into the path of recovery, including pre-existing and co-existing conditions, which result in limited or delayed recovery and major shifting of the economic responsibility upon the public/private benefit systems need to be removed. The unspoken social consequences continue as a silent epidemic as families and survivors struggle in silence.

Looking backward over the noble experiment in California which turned sour, Tom Rankin, former President of the California Labor Federation, AFL-CIO, expressed his regret of the reform. The former Labor leader theorized that the results were “unintended consequences.” Indeed he is looking forward to solutions springing forth in a “public option” embedded into the national health care legislation.

Some participants at the NASI conference alleged a major shortcoming of the California workers’ compensation legislative reform effort. Doug Kim, a lobbyist for the claimant’s attorneys, disclosed that the injured workers’ advocates were not invited to partake in the discussion that lead up to crafting the initial drafts of the 2004 California reform legislation SB 899.

History reveals, that when the theoretical reforms were practically applied, the injured workers suffered serious setbacks. If these were in fact “unintended consequences,” then one must consider the active involvement of all stakeholders when looking forward to solutions. The courts in California have consistently upheld challenges to the inequitable results, pointing to the legislative intent to reduce costs. Absent from the discussions of the presenters were practical systemic applications to improve the present system. The “blood and guts” of the traumatic, delay and denial, struggles of navigating in a crippled workers’ compensation system, in California and elsewhere, is verification that change is mandated.

As North Carolina attorney, Valerie A. Johnson, so eloquently remarked, “workers’ compensation is supposed to be a simple system.” The process has now been obstructed by encroaching elements of fault, contributory negligence, apportionment of pre-existing conditions and difficulties of the element of time, manifested by latent diseases unknown to the fathers of the system a century ago. The advance of medical science has brought forth new and innovated modalities that have contributed to soaring medical costs. The convergence of these issues has generated higher administrative costs.

Pecuniary Industry motives have worked adversely to improving safety in the workplace. The need for workers’ compensation would be minimized by adopting a safer occupational environment. Under reporting of workplace accidents continue as the Government Accountability Office announced. Nebraska Appleseed reveals that workers feel intimidated and are apprehensive to report injuries and unsafe work conditions. This is scenario is compounded by the fact that undocumented workers, who have even less job security, work in jobs with higher risk. The Bush Administration did not make efforts to allow OSHA to heighten enforcement efforts. All of these ingredients combine to create a recipe that just doesn’t work.

The US Senate advanced the health care legislation to a floor debate in an unusual late Saturday night session. This action may indeed provide an opportunity for the stakeholders in workers’ compensation to all join in the debate and look for solutions to the delivery of appropriate medical care in an efficient and timely fashion. To avoid “unintended consequences” yet again, injured workers and their advocates will need to be active participants and engage in the debate now.

.......

To read more about workers’ compensation and universal health care solutions click here.

Expanding the Long Arm of CMS

Legislation has been introduced in Congress to phase out the waiting period for Medicare over the next 10 years from 24 months to zero. Under the proposal, "......[i]n 2010, it would be reduced to 18 months and then reduced by 2 months each year until January 2019, when it would be totally eliminated."

Such an expansion would expand the involvement of CMS's roll in the workers' compensation program under the Medicare Secondary Payor Act to seek reimbursement.

CMS Workers' Compensation Mandatory Reporting Teleconference Thursday April 9, 2009

Teleconference Event for Mandatory Reporting for
Liability Insurance (including Self-Insurance), No-Fault Insurance and Workers’ Compensation
Date: April 9, 2009
Time: 1:00 PM – 3:00 PM Eastern Time
Participation is by telephone only. (The Centers for Medicare & Medicaid Services (CMS) will not have space for individuals/entities to participate onsite at CMS).

Call-in Line: 800 779 4354
Pass Code: SECTION 111

Please begin dialing in approximately 20-30 minutes before the call due to the large number of participants.

Click here for Notice and Agenda

NJ Issues a Procedural Alert for Medicare Elligible Petitioners

The New Jersey Division of Workers' Compensation has issued a procedural alert to attorneys handling claims of Medicare Elligible Petitioners. Peter J. Calderone, Director and Chief Judge of the NJ agency issued a Memorandum in an effort to establish a formalized and smooth transition with the integration of the mandatory reporting requirements to be initiated this year by The Centers for Medicare and Medicaid Services (CMS).

1. "...parties should not send unsigned settlements to CMS";

2. "...settlements signed by a judge which are not based on a transcribed court record would violate our law since judges must find a settled case resolution fair and just on the court record presented";

3. "Up to date Medicare information must be obtained prior to the entry of a signed workers' compensation order that needs final CMS approval";

4. "When a case is settled, the parties can agree on language in the settlement that a party, usually the petitioner, will be responsible for any additional CMS reimbursements. The petitioner is generally identified since only the petitioner can petition CMS for a waiver from additional payments on hardship or equity grounds. We are advised that such waivers when supported are most often granted;" and

5. "As an alternative, the parties can agree in Orders Approving Settlements (but not Section 20 Orders [lump sum payments in lieu of compensation]) and the judge can insert language in judgments that the parties have the right to reopen the case ifthere are additional Medicare reimbursements and a dispute as to which party is responsible for the payment."

The memorandum goes on to caution the parties that if the parties and the Court are uable to agree upon settlement terms, then a trial and judicial resolution will be required.

CMS/MSP Not Going To Require Pre 12/5/1980 Exposure Reporting, BUT....

CMS will not require reporting of claim data where the exposure occurred prior to 12/5/1980 (Effective date of the MSP Act), but if exposure continues after that date, that is another story.

"We were asked about the 12/5/80 date for liability and no fault and the date of incident. Yes we say that in general CMS is determined that it won’t pursue recovery if the date of CMS defined date of incident is prior to 12/5/1980. But then we give an example of a situation with a continuing DOI specifically with respect to exposure.

"If it’s easier for you to think of it that way, if you have a situation with exposure and that exposure continues on or after 12/5/80 it’s really like you’ve got a series of continuous multiple DOIs and we only require you to report the first DOI but yes we do have a recovery claim in that situation.
Transcript of Teleconference 3/24/1980, page 12

CMS/MSP Requires Deceased Beneficiary Information

CMS has announced that workers' compensation information concerning deceased beneficiaries must be reported by insurance carriers.

"We received another question about deceased beneficiaries, were they covered under the reporting; yes they are. If someone is a Medicare beneficiary or was a Medicare beneficiary at any of the time period issue the claim has to be reported if it meets the other criteria."
Transcript of Teleconference 3/24/09, page 5

Death benefits to dependents, are those reportable? Again you go back to what we’ve referenced in the manual where something that doesn’t claim or release or have the effect of releasing medicals with respect to the beneficiary does not need to be reported. But if it does any other those things then yes it needs to be reported.
Transcript of Teleconference 3/24/09, page 12

CMA Issues an Alert on MSP Reporting Data Extending Testing Period and Setting Thresholds

The Centers for Medicare and Medicaid Services (CMS) has issued an Alert on mandatory workers' compensation reporting extending the permissible testing period through December 31, 2009. They have also issued threshold criteria for “Ongoing Responsibility for Medicals” (ORM) and “Total Payment Obligation to the Claimant (TPOC).”

Private Claim for Medicare Reimbursement Dismissed

A private suit, brought by a consortium of plaintiff entities and individuals seeking reimbursement of Medicare for the failure of the tobacco companies’ to repay The Centers for Medicare and Medicaid [CMS] for benefits, was dismissed by a Federal. The parties had sought to recovery benefits and damages against Philip Morris USA Inc.

The Court reasoned that the law suit did not demonstrate the tobacco companies’s responsibility for the payment of a Medicare beneficiary’s medical costs. The plaintiff’s had attempted to rely upon the opinion in a bench trial instituted by the Federal government under the RICO Act.

The Federal Court judge held that the defendants, the tobacco companies, “are not subject to suit under the MSP unless and until they are found responsible for Medicare costs and they fail to reimburse Medicare within 120 days after that responsibility first arises.” The suit by the private parties was dismissed.

National Committee to Preserve Social Sec. and Medicare v. Philip Morris USA Inc., ___ F.Supp.2d ___, 2009 WL 590573 E.D.N.Y., March 05, 2009.

Medicare Reporting - $1,000 fine/claim/day

The failure to report claims to Medicare could cost insurance carriers $1,000. per day per claim. The penalties are discussed in a very informative article authored by Stephanie Stacy and Jill Schroeder that appears in The Nebraska Lawyer, March, 2009. A copy has been posted to the Yahoo Workers' Compensation Blog.

The article:
http://tinyurl.com/bthcfm

Is The Recovery Of The Workers’ Compensation System An Illusion?

The present economic downturn has been compared to the Great Depression of the 1930’s or the recession of the 1980’s. The factors that existed during those financial cycles need to be compared to the present political and economic dynamic to determine whether or not history is repeating itself. Analysis of those two periods provides an insight as to whether or not there will be a rebound or surge of claims in the future.

The depression of the 1930’s occurred at a time when the workers’ compensation program in the United States was in its infancy. The benefits delivered were very limited. Occupational diseases were not included in most acts, the population had a lower life expectancy, early retirement plans did not exist, social security was not yet enacted, and Medicare was only an idea. The federal government poured dollars into the economy to construct public works [WPA] projects while limiting private debt. A consumer based economy didn’t exist at the time of the Great Depression.

Likewise, the recession of the 1980’s had its own characteristics. During the 1980’s, the populations mostly affected by layoffs were those who were the labor force of post-World War II. The workers of that generation suffered from occupational exposures to many deleterious and carcinogenic substances. The occupational diseases were latent in manifestation and epidemic in proportion. Laid-off workers who became victims of the recession of the 1980’s participated in a surge of litigation, both workers’ compensation claims and third-party actions against the manufacturers of toxic substances. Litigation snowballed against , including asbestos manufacturers, suppliers and distributors because of the minimal money recovered in the ordinary workers’ compensation claim. Asbestos litigation became “the longest mass tort in history.” In the years following the 1980’s the many workers separated from their jobs did not return to employment. Instead they collected both workers’ compensation benefits and Social Security disability.

The medical costs incurred, due to their occupational illnesses, were intentionally shifted from the workers’ compensation program to the Social Security Medicare program. The Medicare Secondary Payer Act was enacted by Congress in 1980 to end the cost shifting tactics by employers and their workers’ compensation insurance companies programs, Medicare and health group coverage, and pension offsets.

The current workforce, now being laid-off, is composed of an entirely different demographic than what existed in the 1930s and the 1980s. The social and political factors at the present time are far different from what was facing the workforce of the prior recession/depression years. The US Bureau of Labor Statistics reported, “In January 2009, the unemployment rate of persons with a disability was 13.2 percent, compared with 8.3 percent for persons with no disability, not seasonally adjusted. The employment-population ratio for persons with a disability was 20.0 percent, compared with 65.0 percent for persons with no disability.” The elderly have now been designated as a “new class of workers” as they return to the labor market out of economic desperation. The numbers of unemployed workers who are 65 years old and older now in the workforce, compared to a decade ago, have increased to 7.3% from 4.7%.

The census of workers currently without employment opportunities include significant numbers of aging baby boomers who were about to seek retirement while looking forward to the "golden years." The erosion of planned retirement savings requires that many older workers now return to work. There is a reluctance to file claims. Therefore, fewer injured workers now seek total disability payments under workers’ compensation. The stagnation of the administration of the workers’ compensation system makes it even more difficult for the elderly who are injured to navigate the system. This only adds to the claimant’s frustration and encourages a greater reluctance to file a formal claim for benefits.

Some workers’ compensation insurance companies now involved in the compensation system have been nationalized by the federal government to the various stimulus and bailout programs. They lack funds to remain economically viable with out further insurgence of capital from the federal government. The federal government is now a stakeholder in the process. Self-insured employers are becoming financially weaker. Corporate assets have been minimized by lack of credit and the massive economic stock value decline. Municipal entities and others involved in joint insurance funds (JIFs) are now having difficulty in maintaining economic viability. Because of the lack of tax revenues and federal support, State and local communities are on the verge of bankruptcy.

The present ills of the American workers’ compensation system mirror the economic woes of the national economy. The last decade has demonstrated an accelerated decline in the functioning of the system. It is reflective of what Paul Krugman, Professor of Economics and International Affairs at Princeton University, commented in the NY Times, that Americans are having financial “illusions.” “The bottom line is that there has been basically no wealth creation at all since the turn of the millennium: the net worth of the average American household, adjusted for inflation, is lower now than it was in 2001.” The workers’ compensation system is so bogged down in increasing medical debt that it is unable to deliver benefits efficiently. The present compensation system can’t be relied upon to rebound.

Compounding this downturn in the financial sector is the fact that workplaces have become safer. Over the years there has been a decline in fatalities as reported Bureau of Labor Statistics National Census of Fatal Occupational Injuries. As the United States becomes more of a service-based economy with a dwindling manufacturing sector, less injury risk exists in the occupational sector. The workplace has become safer and there are fewer serious injuries and less occupational illness.

The corporate downturn has been reflected by the implosion of many defense law firms who have reduced their staffs. Over a thousand lawyers were laid-off in a single day by major defense firms. The legal market restructuring is the result of a domino effect of the downsizing of corporate America. Representing injured workers and defending compensation claims on behalf of corporate America has taken a dramatic downturn. The trend is toward less attorney participation in the present system. Even attorney layoffs have become epidemic as the economic downturn intensifies.

Additionally, workers’ compensation programs have been subject to insurance industry targeted reform. The yet number of claims, eligible for benefits that would require legal representation has declined substantially as the California wave of reform swept towards the east coast. As the economies of the States shrink, so do the dollars available to operate the administrative programs for injured workers. Workers’ Compensation hearing offices in California will be closed two days per month and in New Jersey, a state that has already imposed a hiring freeze, is about to similarly close State offices.

The workers’ compensation system, based upon new national social and economic characteristics is already being re-crafted into a new program requiring less need for litigation support. Unlike the Great Depression of the 1930’s and the recession of the 1980’s, the present downturn in workers’ compensation claims activity is not anti-cyclical. It is an illusion of grandeur to believe that the present workers’ compensation system will recover or rebound in its present format. A national universal medical program will ultimately embrace the compensation delivery system and determine the future destiny of workers compensation.

Building A Workers’ Compensation System That Works

State workers’ compensation systems are beginning to suffer from the impact of the national economic downturn. Economically induced factors are compounding the underlying issues that previously generated a growing level of critical stagnation. The combination of this dynamic now threatens the very core of the workers' compensation system and endangers its extinction.

Prior to the accelerated national economic downturn, the patchwork of State and Federal compensation programs were besieged by an assault of complex legal issues emerging during the last decade. These included: the reimbursement of collateral medical source issues, ie. CMS and MSP (Medicare Secondary Payer Act) ; greater difficulty in litigating complex scientific issues; a costly and inefficient medical benefits delivery system and a transition of “fault” into the administrative system.

As the national economy began to fail there was a surge of new administrative issues challenging the programs. These include: higher unemployment; self-imposed limitations on administrative cost by the States; and the increase of potential insolvency by the insurance industry. The filing of claims in NJ over the first 3 weeks of 2009 have already reflected a 27.5% decrease which is projected over the last reported year, 2007. Judicial salaries have been frozen and new State employees have been taken out of the State pension system. State budgetary freezes have caused a reduction of the hiring of critically needed new personnel such as the appointment of Deputy Attorney Generals to represent State funds, ie. Second Injury Funds. Hearing calendars have been reduced because of lack of personnel to appear.

Banking and investment house scandals continue. Insurance carriers have been threatened by insolvency including the giant AIG which has continued to require the infusion of “bail out” capital to float. Liberty Mutual has announced the plan to sell certain of its markets including the Wausau line of business.

As President Barack Obama reported, “The economic news has not been good.” The hope of a new beginning that prevailed at the recent inauguration signals creative opportunities for the reinvented and modernization of the entire workers’ compensation system. The implementation of technology and video conferencing initiated in Social Security hearings may be required to be utilized to lower expenses and increase efficiency. It is cheaper for the government to move electronic images rather than personnel. Technology advanced hearing systems and claims processing will be required to reduce costs and increase efficiency. Instead of hiring more personnel and establishing more offices, technologically advanced centralized hearing centers will be utilized. These will result in a lower carbon footprint and lower administrative costs.

Workers’ Compensation is not only an economic issue, it is also a human issue. Medical delivery and its associated costs remain problematic in the present workers’ compensation system. A single payer national medical insurance system program is a viable solution. Immediate delivery of medical benefits to injured workers will result in an administrative cost saving and allow for the introduction of medical monitoring, prevention programs and research grants to treat and cure industrial disease. The new system will require greater transparency and accountability.

The failing national economy is a catalyst for change. The ailing workers’ compensation program must obtain the course of treatment that it requires to rebound into a healthy and robust system once again.

Seeking a Waiver of CMS/MSP Overpayment Request

A formal process exits to obtain a waiver of an Overpayment Recovery request from The Center for Medicare and Medicaid Services [CMS]. If SSA advises you or your client that it has made an overpayment, ie. Medicare Secondary Payer Act [MSP] recovery request, then a waiver request maybe made. This is not to be confused with a Request for Reconsideration which should be used where the amount is disputed.

If you or your client agrees that the number is correct and the beneficiary is unable to make repayment, then a Request for Waiver of Overpayment Recovery should be filed. The form is 8 pages in length and requires the submission of a reason for the request including no fault of the beneficiary or unfairness of the request.

A financial statement is required to be submitted to CMS which requests information concerning: current rent; mortgage payments; pay stubs; tax returns; utility, medical, charge cards and insurance bills; cancelled checks; spouse and dependent(s) financial information.

CMS Publishes WCMSA Operating Rules

The Centers for Medicare and Medicaid Services (CMS) has now published a copy of its Operating Rules regarding the evaluation of set-aside proposals. CMS cited that distribution of this material may reduce review time by the agency.

The Operating Rules, an 11 page document, highlights the procedures to be utilized by CMS. They instruct CMS on how to respond to telephone quires including specific instructions such as, "Do not give recommended amounts or expected completion dates." The Rules also instruct CMS contractor to consider the Total Settlement Amount (TSA) if the claimant has multiple workers' compensation cases and suggest one Recommended MSA (RMSA). Therefore "apportioning" multiple claims into a series of cases below the threshold level will not avoid CMS scrutiny. Also legal malpractice awards based on the mishandling of the workers' compensation claims are deemed not to be payments of compensation.

The Operating Rules were previously made available under a Freedom of Information Request in October 2008. The Operating Rules have been posted in redacted form and will be updated periodically by CMS.

A Bailout for Workers’ Compensation

The issues facing the present economic downturn are not necessarily the same that existed  during the great depression and therefore the outcome may not be the same. The US workers' compensation system, a patchwork of State programs, is seriously being challenged during the present tough economic times. The past does identify a pattern that may require similar solutions. 

 It has been reported that the US government is contributing vast sums to bring the economy out of the ditch. "In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan."

Workers’ compensation is not necessarily an anti-cyclical market. It is a political entrenched program. The present economic crisis will change the social and economic fabric of the country. "....the most troublesome unknowns are how the maze of protections for investors and consumers will change economic and political behavior in the future." The NY Times reported that levels of unemployment may reach 10%, a number used to define a depression.

During The Great Depression the US workers’ compensation system had an additional unique challenge confronting it. Silicosis claims were challenging Industry with uncertain economic outcomes. The insurance industry rushed to the rescue by advocating that silicosis and other occupational diseases be brought within the umbrella of the workers’ compensation system.

Activity soared within the workers’ compensation arena. The pace continued through the pre and post World War 2 years as the legacy of disease and death continued. Asbestos claims and other toxic tort claims continued the spiral. When workers’ compensation was unable to fully compensate the victims, the activity switched to the liability arena and claims proliferated and activity soared. Insurance exhaustion, corporate bankruptcy, an aging workforce, lack of manufacturing in the US and Federal Multi-District litigation. soon lead to a decline litigation activity.

Confronting the present workers’ compensation programs are the residual issues generated by  the expansion of occupational disease litigation program of the 1930’s. Cost shifting from workers’ compensation to other programs has resulted in workers’ compensation system becoming a collection agency and has resulted in bureaucratic stagnation. Occupational disease claims created major cost shifting of medical costs to other systems including: temporary disability benefits, major medical and Medicare and Medicaid, disability pension and Social Security.

 In the 1930’s the Federal government though the Department of Labor stepped in to save the system. David Rosner and Gerald Markowitz in their volume, Deadly Dust, point out that without national standards and a uniform approach, the 1930s' system system would not survived that moment in time.

The economic factors of The Great Depression now hover  over the present workers’ compensation system. The Federal Government now needs to intervene and bail out the State systems and rethink the medical delivery system that has generated tension in medical and reimbursement programs.

NJ WC Reports a Drop of 46% of CMS Backlog in 60 days

NJ, a State that elected not to data match with CMS, is now reporting a drop of 46% of its backlog from the cases designated "waiting for CMS approval," MCARE matters. In a memo to all judges and attorneys, the Director and Chief Judge reported the drop in the cases so designated.

The memo encourages and the use of "specialists" and suggestions that the cost for that service be shared among the parties. It also suggested that some cases be tried fully or partially and that special language be incorporated in Judgments/Settlements where cases have been compromised, providing the opportunity for the cases to be re-heard at a later date to address Medicare issues when reviews are actually completed by CMS. It is difficult to determine whether the CMS issues are actually being completely resolved or whether they are deferred to a later date. The State of NJ continues to offer the judicial assistance of the Division of Workers' Compensation to reduce the backlog of cases designated as MCARE matters.

The memo also recognizes that little action has occurred on the Industry supported, and previously ill fated, Medicare Secondary Payer Statute which attempts to modify the CMS recoupment procedure for conditional medical payments. The proposed admendments discourage the periodic payments of compensation benefits, a basic premise of the entire workers' compensation system.

Attention was brought to the NJ situation when local attorneys enlightened Senator Lautenberg who then introduce Federal legislation requesting the that CMS provide status on the CMS recovery effort.

“These delays mean that thousands of workers in New Jersey and across the country are waiting months and even years to be compensated for their workplace injuries. Workers who are hurt on the job rely on these payments for medical expenses and to get their lives back on track. Medicare needs to provide information to Congress immediately on the number and length of these delays so we can determine the best way to end them and get workers the settlements they need and deserve,” said Sen. Lautenberg, who is a member of the Senate Appropriations Committee.

CMS has since supported newely enacted legislation and Rules to place an increased burden on primary medical providers, major medical carriers and employers to comply with reporting issues.

Medicare Finalizes New Rules To Collect Conditional Payments

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule to tighten its procedure in collecting conditional payments made in workers' compensation actions.. On February 22, 2008 the Department of Health and Human Services published a final rule (PDF) in its program to strengthen CMS's ability to collect payments under the Medicare Secondary Payer (MSP) Amendments.


CMS has designated third party administrators (TPAs) and self-insured plans as "primary payers."

The rule continues to provide that, "...As is the case with group health plan and large group health plan insurance, Medicare may not make payment if payment with respect to the same item or service has been made or can reasonably be expected to be made under workers' compensation..."

The final rule removes the requirement that the reimbursement will be made "promptly" and now substitutes that the primary payer is "...obligated to reimburse CMS if and when it is demonstrated that the primary payer has or had primary payment responsibility. This responsibility may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items and services included in a claim against the primary payer, or by other means, including but not limited to a settlement, award, or contractual obligation. This means that a primary payer may not extinguish its obligations under the MSP provisions by paying the wrong party--for example, by paying the Medicare beneficiary or the provider when it should have reimbursed the Medicare program. Primary payers are expected to reimburse CMS when it is demonstrated that they have or had payment responsibility."

This rule supplements the recent legislation requiring the timely disclosure of information which was contained in the Medicare Medicaid and SCHIP Extension Act of 2007 and again reflects the Administration concern that cost shifting should not be transferred from workers' compensation onto CMS. The insurance industry continues to press for legislation that will would shift the burden from workers' compensation onto Medicare and require the US taxpayers to continue to supplement contested workers' compensation claims. CMS recently announced improper payments in 3 states amounted to $371.5 Million dollars alone. Previously this legislation was introduced and efforts to enact it failed.