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May 24, 2012 Florida Court finds Settlement Agreement Not Specific to Require an LMSA The United States District Court for the Southern Florida of Florida recently found in a personal injury matter that an agreement to execute a general release with “Medicare provisions” did not require that the defendant fund a Liability Medicare Set-Aside (LMSA) 1. By way of background, the Plaintiff, Berneva Bruton (“Bruton”) sued the Defendant, Carnival Corporation (“Carnival”), for injuries allegedly suffered when she slipped and fell onboard one of Carnival’s cruise ships. Bruton and Carnival settled the case and executed a mediation agreement on December 19, 2011, which required that Bruton execute a “general release with approved confidentiality provisions and Medicare provisions.” When Bruton received the Release and Hold Harmless Agreement drafted by Carnival, she struck language within the Agreement, specifically stating that she “. . . further agrees to retain a portion of the amount in a trust account administered by their undersigned attorneys for three (3) years from the date settlement funds are received or until Medicare provides [Bruton/Plaintiff] with notice that any claim for reimbursement, as authorized by the Medicare Secondary Payer statute (42 U.S.C. § 1395y(b)(3)(A)) has been waived or resolved, whichever occurs first.” The Court construed this stricken language as referencing a LMSA; however, one could argue that the language does not describe a Medicare Set- Aside (MSA) at all because it references the funds in trust would be for a “claim for reimbursement.” As is well known, MSA funds are not paid to Medicare but rather held by the injured party to pay their medical bills which would otherwise be reimbursable by Medicare. Bruton did agree however, to language which stated that because she had reached Maximum Medical Improvement (MMI) with regard to her injury that no part of the settlement was intended to provide for future medical treatment. She also agreed that she would agree to satisfy any Medicare conditional payments out of her settlement monies. Due to Bruton’s deletion of a portion of the Medicare language which Carnival interpreted to require an LMSA, Carnival returned the release to Bruton’s counsel and refused to tender payment to Bruton. Bruton subsequently filed a motion to compel settlement, arguing that she fulfilled her obligation to execute a general release with sufficient Medicare language which still obligated her to satisfy Medicare conditional payments, that MSAs are not required in personal injury cases, and that Carnival breached the Agreement by failing to make payment within thirty (30) days, as provided for in the Agreement. 1 Bruton v. Carnival Corp., 2012 U.S. Dist. LEXIS 64416 (May 2, 2012). Carnival, while acknowledging the “unsettled state” of the law as to whether MSAs are mandated in personal injury settlements, argued that it needed to consider the interests of Medicare, and also noted that it could have potential exposure for any failure of compliance as a third party payer. Carnival further pointed out that the “most appropriate course of action” would be the creation of an LMSA as proposed. The sole issue before the Court was whether the Agreement required the creation of an LMSA. The parties were in agreement that they settled the case and that the Mediation Settlement Agreement governed. Ultimately, the Court decided that the Agreement did not require the creation of an LMSA. The Agreement only specified that Bruton was to execute a general release with “Medicare provisions” without specifying what those provisions would be. Additionally, the Agreement made no mention specifically of an LMSA. Within the opinion, the Court noted that there was no legal requirement that a personal injury settlement include an LMSA. However, there is no legal requirement that a workers’ compensation settlement have an MSA either. MSAs are a best practice which considers the interests of both Medicare as well as the Medicare beneficiary’s future benefits. This applies in both the liability/personal injury setting as well as the workers’ compensation setting. The lesson learned from this case is that parties need to be very clear and specific within their settlement documents if they intend to include an MSA as part of the settlement. Documenting all efforts to be compliant with the Medicare Secondary Payer Act (MSP) is a prudent step should the settlement ever be scrutinized by the Centers for Medicare and Medicaid Services (CMS) or by a Court in the future. For more information, please contact Heather Schwartz, Corporate Counsel, PMSI at Heather.Schwartz@pmsisettlement.com or 813.612.5504 or visit our Blog at www.MedicareInsights.com. Proven Solutions for Cost Containment Founded in 1976, PMSI is a leader in developing solutions to control the growth of medical costs in workers’ compensation. As one of the nation’s largest and most experienced companies focused solely on workers’ compensation, we deliver proven solutions for cost containment across the claims lifecycle. PMSI’s Pharmacy, Medical Services and Equipment, and Settlement Solutions products deliver quantifiable results and improve the quality of care for injured workers. We provide our customers with the innovation, focus, expertise, analytics and technology needed to successfully deliver workers’ compensation benefits.
"Florida Court finds Settlement Agreement Not"