Court Takes A Strong Step Toward More Equity in Medicare Set Asides

In a positive step toward curbing government over-reaching in personal injury actions, the New Jersey Superior court in Hinsinger v. Showboat Atlantic City, allowed plaintiff attorney fees to be deducted from an MSA allocation. The Court held that a portion of the attorney’s fees can be taken directly out of a Liability Medicare Set Aside (LMSA) account.

The Hinsinger court held that its decision to apply 42 CFR § 411.37 to funds obtained in a civil action and placed within an MSA was consistent with the general principles of equity. If Medicare were allowed to avoid paying its fair share of expenses incurred in the procurement of compensation, the claimant would be forced to cover all fees which would result in an unfair result to the claimant. The court felt that the consequence of such a situation could leave a claimant paying money out of their pocket to cover fees and discourage Medicare beneficiaries from filing claims when they have a legal right to do so.

Incredibly, CMS has traditionally remained silent when asked for clarification on issues related to liability MSAs, and in some instances, workers’ compensation MSAs. Courts across the country have been interpreting a fair and equitable way to consider Medicare’s interest in their cases. (see Haro v. Sebelius and Bradley v. Sebelius. The liability settlement community is calling for additional directives from CMS.