Over the last decade or so, much has been written about protecting our government’s exposure to future payments, when a settlement is reached in an injury case. Specifically, as it relates to tire cases, Plaintiffs must be advised that any recovery from a tire company must satisfy any lien possessed by a medical provider or other lien holder. Typically, resolution of past medical expenses satisfies this requirement. But, because of the catastrophic nature of tire cases, a Plaintiff might be in need of future medical treatment. If the future medical care is likely to be paid by Medicare, future exposure is addressed through a Medicare Set-Aside. This financial vehicle literally sets aside funds for future medical treatment and/or disability benefits. Traditionally, Medicare will pay for these treatments and rarely, if ever, seeks reimbursement from the Plaintiff for these expenses or benefits. But, because Medicare is ‘exposed’ for the payment of medical treatment for future care, Medicare could seek satisfaction of these expenses from the Plaintiff. As such, a Medicare Set-Aside is a conservative and wise approach to this possible problem.
As an example, a person is driving his work-related vehicle when he/she experiences a tire detread event that causes an accident. Because of the workers compensation bar in Texas, the person’s employer is largely immune to litigation exposure. After the commencement of a lawsuit against the tire manufacturer, a settlement is reached with this ‘third-party’. Again, the settlement proceeds must satisfy any liens held by a medical provider and/or Medicare. A resolution of this obligation is likely to include a ‘holiday’. But, a problem with exposure exists when/if the Plaintiff is receiving SSDI from Medicare. These SSDI benefits will continue for the Plaintiff. These future payments constitute a future exposure to Medicare. While Medicare has almost never sought reimbursement of these future benefit payments, Medicare is entitled to reimbursement from the Plaintiff.
For these reasons, a Plaintiff on Medicare or one who is receiving SSDI, is wise to establish a Medicare Set-Aside. Or, at the very least, the Plaintiff needs to understand his/her individual exposure to satisfying Medicare’s payment of future benefits. A ‘rainy-day’ fund is wise when/if Medicare chooses to seek reimbursement. At the very least, Plaintiffs need to understand that Medicare could choose to seek reimbursement of these future benefits.
A Medicare set-aside can be established through a fund for future treatment or benefits. Because our example case deals with a tire company, the Plaintiff likely satisfies past workers compensation lien through a resolution with the tire company, but any future medical treatment or disability benefits should be contemplated when distributing the proceeds from the tire case. Our law firm’s practice is to fully apprise the Plaintiff of satisfaction of past liens and his/her possible exposure of future reimbursement sought by Medicare. In some situations, like when a Plaintiff is receiving SSDI, we attempt to persuade the Plaintiff to establish a Medicare Set-aside in the rare event Medicare chooses to seek reimbursement for their exposure going forward. Under all circumstances, however, you should consult with a qualified settlement planner to confirm whether or not a Medicare set aside is needed in any particular scenario.
Written by:
Guy L. Watts, II
Watts Guerra LLP
4 Dominion Drive, Bldg 3, Suite 100
San Antonio, Texas 78257
Phone (210) 447-0500
© Watts Guerra LLP 2015
