Louisiana Federal District Court Determines MSP Compliance by Ordering MSA Allocation

A settlement conference was held at which Big R agreed to fund a settlement in the total amount of $150,000 in exchange for a complete release of all claims by Benoit against Big R. Since Benoit was receiving Social Security disability benefits, part of the consideration for the settlement was that Benoit would be responsible for protecting Medicare's interests under the Medicare Secondary Payer statute, 42 U.S.C. 1395y. As such, an oral motion was made for the court to determine the future medical expenses in order for Benoit to set aside funding, taking Medicare's interests into account, in order for Medicare to remain as a secondary payer.

A hearing was held in open court at which evidence derived from the health care providers of the future medical costs for the recommended low back surgery and left hip replacement was placed into the record by Benoit's counsel. Based upon the records and proceedings in this matter and the stipulations and submissions of counsel, the court made the following findings of fact:

1. Medicare does not currently have a policy or procedure in effect for reviewing or providing an opinion regarding the adequacy of the future medical aspect of a liability settlement or recovery of future medical expenses incurred in liability cases.
2. Benoit's date of birth is Aug. 2, 1952, and he will not obtain the age of 65 within 30 months of the date of settlement. However, he is currently receiving Social Security disability benefits.
3. Benoit qualifies as a seaman within the provisions of the Jones Act inasmuch as he was, at all relevant times, employed by Big R as the captain of a vessel in navigation. Benoit has not worked since December 2009 and was earning approximately $50,000 per year at the time of the alleged accident. In the event Big R was found negligent or the M/V General Ellis unseaworthy, and such negligence or unseaworthiness caused Benoit's alleged damages, all of which are issues which are highly contested, he would be entitled to pecuniary and non-pecuniary damages. He has incurred economic losses in the past and could incur economic loss and medical expenses in the future, the precise amount of which is speculative. Considering all of the facts and circumstances of the case, including significant liability issues and significant past and future losses, the parties' agreement to settle this case for a payment of $150,000 represents a reasonable compromise should this case go to trial.
4. Benoit is aware of his obligation to reimburse Medicare for all conditional payments made by Medicare for medical expenses incurred by Benoit. Benoit testified that Medicare has made no conditional payments in this case.
5. The parties have considered Benoit's projected future loss of earnings and projected future medical expenses. According to his health care providers, the future costs for low back surgery are $32,000, inclusive of hospital and surgical fees, and the costs for a left hip replacement are $20,500. The figure will not materially change if Benoit opts not to have surgery on his hip, but instead goes through palliative treatment. The combination of these two figures ($52,500) represents more than half of the net settlement proceeds and will be set aside by Benoit to fund these medical expenses.
6. There is no evidence that Benoit is attempting to maximize other aspects of the settlement to Medicare's detriment.

Based upon the foregoing conclusions of law, the court ordered the following:

1. To the extent Benoit receives confirmation from Medicare of any conditional payments made by Medicare for services provided prior to the date of this order, Benoit shall promptly reimburse Medicare for such conditional payments;
2. Benoit will set aside $52,500.00 of the settlement proceeds for payment of future medical benefits arising out of the injuries alleged in this lawsuit.