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Florida Court finds Settlement Agreement Not


									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.

    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 or 813.612.5504 or visit our Blog at

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