There's Only 1 Way to Skin a Cat
I never really wanted to understand the context of the origins of that phrase, but I find myself compelled to use it today. For years, I've told people that it doesn't matter who orders an MSA from us, we will always do it the same way. While there is a spread to account for the subjective individual case facts, the medical cost projection still has to fall within Medicare coverage guidelines and known pricing guidelines; therefore, the swing shouldn't be that dramatic. I sincerely believe that there is really only one way to perform the medical assessment in an MSA, but it is the legal and financial parts that muddy the waters.
Well, there is a disturbing force developing in the MSP marketplace, and sadly, it is taking MSAs down a path similar to life care plans in that plaintiff attorneys are trying to use them to establish claim value rather than as an assessment of Medicare's interests in an insurance claim. While not unexpected and certainly without influence on my already low opinion of the practice of dueling life care plans in general, I believe I saw the most disturbing evidence of where this practice is headed today.
Last week, I received notice of a second circuit appellate decision involving MSAs and AIG so of course my interest was piqued. The case turned on the amount in controversy and the underlying district court dismissal was upheld, so ordinarily I would have let it go. But it involved AIG so I really wanted to know what they were being blamed for this time. While the only interesting part of the case was the whiny, greedy nature of the claimant, it was that greed itself that finally captured my attention.
In order to gain an audience in federal district court, claimant needed an amount in controversy in excess of $75,000. His argument was that AIG (and indirectly NuQuest) harmed him through the delay in obtaining CMS approval, during which he was allegedly spending his entire $7,000 monthly advance on medical treatment that otherwise should have come out of his MSA. Unfortunately for him, the approval even with some unexplained delays in the initial mailing only took seven months, so at most he could have suffered $49,000 in damages. On appeal, claimant produced an independent MSA estimate from Hummel Consultation Services valuing his future anticipated medical needs at $2,383,564.72 and compared it to NuQuest's $223,693 to demonstrate he was damaged something in excess of $75,000 (he did not allege that he was entitled to recover the difference, only that it was a loss to him none the less for jurisdiction purposes). While the court turned to an article by Ken Paradis as the voice of reason to demonstrate how the plaintiff was not harmed, the disturbing part of this story was that there was a $2M+ MSA out there somewhere in a case that CMS, although they did counter higher, still approved for only $282,179. I've seen my fair share of MSAs that have missed the mark, but this was egregious and intentional and the entire MSP industry is the worse for it.
In New Orleans last week during the NAMSAP conference, two new crops of certified MSP professionals were launched into the personal injury world and if nothing else, I hope they left with an understanding of the primary objective of an MSA and a sense of integrity that they do the entire MSP industry a disservice by freely disseminating MSAs like this into the world. While there is room for some discretion, making demands far in excess of Medicare's exposure only harms the injured party by increasing the encumbered portion of their settlement funds and increasing the deductible prior to Medicare resuming benefits. Attorneys would be wise to understand the system prior to trying to game it and MSA providers who play along should just be ashamed.
Full text of the case can be found at:
JEREMIAH BINDRUM, Plaintiff, v. AMERICAN HOME ASSURANCE
COMPANY, INC., AMERICAN INTERNATIONAL GROUP, INC., AIG SPECIALITY CLAIMS SERVICES, INC., CHARTIS INSURANCE COMPANY, Defendants.
Case No. 5:10-cv-116 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF VERMONT 2011 U.S. Dist. LEXIS 11373
February 4, 2011, Decided February 4, 2011, Filed
And
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 2011 U.S. App. LEXIS 19932
September 29, 2011, Decided
Categories: MSP litigation, Litigation
Tags: MSP Litigation
I would just like to take a moment to defend my company. HCS does not purposefully overvalue our MSAs and we do quality work for both plaintiff and defense. In this case the two MSAs (ours and AIGs) were calculated in late 2007 and early 2008; well before the June 1, 2009 prescription drug review policy by CMS became effective. Prior to 6/1/09 it is fairly common knowledge that CMS would approve just about any RX allocation even if not supported by the medical records. In this case HCS was asked by the client to calculate the MSA using the exact medications in the medical records; not taking into account any dispute/litigation on the file (there were disputes on the file regarding medications and other treatment; HCS was instructed to disregard all such disputes and simply fund the MSA based on the treatment recommendations). Nor did the client want HCS to reduce the RX funding by assuming the claimant would be tappered off medications or that a "generic" version of a brand name drug would suddenly be available in 5 years for an unknown price. The HCS MSA was valid and not overfunded. The reason our MSA was as high as it was is because we actually fully funded all of the claimant's medications as prescribed by the treating physician for his full 43.2 year life expectancy. The medical records provided to HCS at the time indicated all medications would continue indefinitely; therefore, there was no reasonable medical basis available to discontinue funding prior to death.
Next time you choose to discuss work my company did in your blog, I would appreciate you contacting me first to get your facts straight.
Sincerely, Christine Hummel, Esq.
Hummel Consultation Services
President
Fair enough, but I was merely commenting on only the facts as presented in the published court opinion. The point still remains that the only way to do an MSA is the way that CMS wants it. If it is approved as adequate by CMS, then there is no point in allocating amounts beyond that for purposes of MSP compliance. It is ridiculous enough to fully fund 43.2 years of prescription drugs in today's dollars with no consideration of generics becoming available, tolerances building or new cheaper alternatives becoming available, but we do it because that's what CMS wants in exchange for its approval. Doing so at a time when they didn't require it makes your MSA a plaintiff's Life Care Plan and that was the original point.
Thanks Jen. Your point is valid in that there is no point in allocating for treatment in excess of what Medicare requires in its approval process. I often tell clients on both the plaintiff and the defense side that an MSA bears little resemblance to the actual medical treatment needed for a particular case. An MSA is simply the amount CMS would regard as reasonable for a given injury. Sometimes that closely matches the claimant's actual needs, but more often than not, at least lately, it is a pure fiction that is overfunded and unneeded.
I have worked on some of the most catastrophic cases you could imagine and have NEVER come anywhere close to $2.3 MM as a valid MSA number. A claimant could be nothing more than a brain and single eyeball in a jar and the Medicare covered expenses would be less than 2MM. Of course, these same cases have life care plans in excess of $2MM, but that does not translate directly to the MSA. I have no issue with a plaintiff’s attorney trying to get the highest settlement possible for their client. I believe that is their duty as their advocate. But the MSA is not the place to establish the value of a case. Remember, when it comes to MSP compliance it isn't plaintiff against defense. It is plaintiff AND defense against CMS. Same interests, same number, same methodology.
While I understand Ms. Hummel's indignation at having her work portrayed in this unfavorable light, it was her client that sued based on her work and said work is part of a published legal opinion dealing with the MSP. So as far as I am concerned, this is a newsworthy event. However, I will publish her rebuttal because her point has some merit regarding a wholesale discounting of claimant's future pharmacological needs. I think where she went wrong was allowing her plaintiff client to manipulate the MSA in a way favorable to his cause without meeting (presumably) any resistance from Ms. Hummel. Was it intentional? I don't know. But I can't imagine Ms. Hummel finishing up a $2.3MM dollar MSA, leaning back in her chair, looking at her law books on the shelf and thinking "This looks good. I'm sure the claimant won't mind putting $2.3MM away in an MSA from his settlement." Call it a life care plan and I have no issue. Call it an MSA and Jen's original point stands.
We will work with our clients to get to an MSA number that fits the facts of the case and that all parties can live with. But don't come here if you are looking to use the MSA as a bludgeon against the other side. That’s what life care plans and expert testimony are for. We just want to carve out the portion of the agreed upon settlement that reasonably protects Medicare and puts the MSP issue to rest at settlement, not years later in an appellate decision.
Ryan
PS, do we have our facts straight? If not, I am happy to continue this dialogue. You have an open microphone.