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24/Oct/2023

Last year, Medivest wrote about the importance of protecting your client’s government benefits during the settlement process. The full blog can be read here, but to quickly summarize:

If settlement proceeds are handled incorrectly, eligibility for government benefits may be jeopardized. Depending on the eligibility criteria of the specific benefit program, different planning solutions and courses of action should be considered to help the injured party maintain their benefit eligibility. 

However, attorneys need to be aware of another potential risk for their clients’ means-tested benefits. If your client is fundraising to cover the cost of their medical bills and/or services and equipment that insurance does not cover, they could potentially lose their government benefits, particularly Medicaid and Supplemental Security Income (SSI) before the settlement has even begun.

How Benefits Become Endangered

Because the settlement process is often a slow one, crowdfunding services such as GoFundMe have become an increasingly common way for injured parties to cover their medical expenses. When someone engages in fundraising and receives donations or contributions, it can increase their income and assets, potentially pushing their financial situation above the eligibility threshold for these government benefits. Here is how it can happen:

    1. Income Increase: Fundraising often involves receiving money or valuable items as donations from friends, family, or the community. This additional income can be considered when determining eligibility for means-based benefits. The increase in income may exceed the allowable limits set by the government program.
    1. Asset Accumulation: In some cases, fundraising can lead to an accumulation of assets or resources, such as savings accounts, stocks, or valuable items. These assets can also be taken into account when determining eligibility for government benefits, as they may exceed the allowed asset thresholds.
    1. Reduced Benefit Amounts: If a person’s income or assets exceed the program’s limits, they may no longer qualify for certain government benefits, or their benefit amount may be reduced. This can result in a loss of crucial financial support, including healthcare coverage, food assistance, or cash benefits.
    1. Reapplication and Reporting Requirements: Individuals receiving means-based benefits are typically required to report any changes in their financial situation promptly. Failure to report increased income or assets from fundraising can result in legal consequences, including the requirement to repay benefits received improperly.
    1. Loss of Eligibility: In some cases, if an individual’s income or assets exceed the program’s limits, they may become ineligible for benefits altogether. This can lead to financial hardship for the person and their family, as they may have been relying on these benefits to meet their basic needs.

 

This does not mean fundraising should be avoided by an injured party. It simply means it should be done carefully and with consultation. Setting up a special needs trust or ABLE account is a good practice, but most clients (and some attorneys) would need outside professional assistance setting one up. However, for plaintiffs in the early stages of settlement, a new charity called The Plaintiff Fund may provide an effective additional option.

The Plaintiff Fund

Beginning in January of 2024, the Plaintiff Fund will provide plaintiffs support in creating a medical fundraising campaign, with $1,000 toward their medical expenses, and a national resource network of medical service and product providers. So not only are plaintiffs able to get a partner experienced with fundraising and a start-up donation, but they also get peace of mind knowing their government benefits will remain intact.

Even after settlement is completed, some plaintiffs may learn that their medical bills and expenses exceed the future medicals portion of their settlement. The Plaintiff Fund is available for those individuals as well and is a great support tool for attorneys to offer their client after the case is completed.

The Plaintiff Fund will be invaluable to many plaintiffs. We at Medivest are proud to support it! Everyone who supports plaintiffs should get involved! For further information about the Plaintiff Fund or to make a donation to their cause, visit them at website. For additional services to stretch and protect the medical portion of your clients’ settlement, such as Professional Medicare Set-Aside Administration, contact Medivest here.


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19/Oct/2022

During the settlement process, a personal injury attorney needs to consider what government/public benefits their client is enrolled in and what they may be eligible for in the future. Several questions need to be asked. Have you considered Medicare’s interest in the settlement?  How will the settlement proceeds be handled?  Will a lump sum payment disqualify them from their government benefits? These questions need to be addressed because a client’s settlement could have long-lasting financial implications.
When it comes to settling a case with public benefits there are many nuances to consider. Hiring a team of experts such as an Elder and Special Needs Law Attorney, a Structure Settlement Broker, a Medicare Set-Aside (MSA) Allocator, and/or a Trust Advisor can assist you in protecting your client’s benefits and preserving the settlement proceeds.

 

Getting Familiar With Public Benefits

Public benefits can either be federal or state-run programs.  If the benefits program is run by the state, each state has its own set of criteria for eligibility.  Needs-based public benefits are also known as asset means-tested public benefits.  Asset means-tested means that eligibility is based on an individual’s income level and assets.  To learn more about all the different types of government benefits Gov/Benefits.
Government benefits are categorized into two types which are Needs-Based Benefits and Entitlement Benefits.
  1. Needs-Based Benefits – Also referred to as “means-tests,” these are based on an individual’s income and/or assets
  2. Non-Needs Based Benefits Aka Entitlements Based – These are determined by what an individual has contributed or paid into a given benefits system
 

Common Government Benefits

Below is a list and summary of the most frequently used government benefit programs. However, this is not a complete list, and a full investigation of a client’s use of government benefits should be conducted before the settlement process begins.

Medicare

Government national health insurance program in the United States, begun in 1965 under the Social Security Administration and now administered by the Centers for Medicare and Medicaid Services. It is intended for people who are 65 or older,  certain younger people with disabilities, and people with end-stage renal disease.

Social Security Disability (SSDI)

Payroll tax-funded federal insurance program of the United States government. It is managed by the Social Security Administration and designed to provide monthly benefits to people who have a medically determinable disability that restricts their ability to be employed.

Social Security Income (SSI)

Means-tested program that provide cash payments to disabled children, disabled adults, and individuals aged 65 or older who are citizens or nationals of the United States.

Medicaid

Health coverage programs operated by states, within broad federal guidelines. Although the federal government pays a portion of the costs, Medicaid is administered and operated by states, and each state’s program is different and based on the needs and goals of the individual state.

Medicaid Adult / Disability-Based

  • Permanently disabled & unable to work
  • Only Income Test applies in California
  • Income & Asset Test applies
  • Supplemental Security Income (SSI) recipients
  • In-Home Support Services (IHSS) recipients
  • Home & community-based waivers participants
  • Long-Term Care Facility residents

Medicaid Adult / Non-Disability Based

  • Able to work & income is below the Federal Poverty Level (FPL)
  • MAGI Medicaid on household income
  • Assets are not counted toward
  • Pregnant women

Medicaid – Children Health Insurance Program (CHIP)

This program is administered by the United States Department of health and Human Services that provides matching funds to states for health insurance to families with children.

Section 8 – Housing Assistance

The housing choice voucher program aids very low-income families to afford decent, safe, and sanitary housing. Housing can include single-family homes, townhouses and apartments and is not limited to units located in subsidized housing projects. Housing choice vouchers are administered locally by Public Housing Agencies (PHAs).

Veterans Administration (VA)

The United States Department of Veterans Affairs of the federal government providing life-long healthcare services to eligible military veterans at VA medical centers and outpatient clinics.

Our Complimentary Reference Guide for Government Benefit Protection

For further information on how to protect your clients’ government benefits after a settlement, Medivest would like to provide the following data chart. It summarizes a variety of public benefit programs and the best course of action you can take to ensure their benefits are protected.  Click here to download.

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U.S. Supreme Court Rules in Favor of Florida’s Medicaid Program Allowing Reimbursement of Paid Medicals from Settlement Funds (Including Funds Intended as Future Medicals)

We previously wrote about this case Will the U.S. Supreme Court Mandate Protection of Medicaid Futures? when the U.S. Supreme Court agreed to hear the issue.
The issue in Gallardo v. Marstiller was whether Florida’s state-based Medicaid program (Agency for Healthcare Administration or AHCA) could recover its injury related medical payments from the portion of a tort settlement from a third party that compensated for damages other than past medicals. The underlying liability case involved a Florida minor who suffered lifelong catastrophic injuries when she was a passenger in a motor vehicle that was hit by a pickup truck in 2008. The Supreme Court, in a 7-2 vote, upheld Florida Medicaid’s effort to recover its injury related paid medical claims from the portion of the settlement that compensated for past or future medical damages.
As the court opinion detailed, “Gallardo, through her parents, sued the truck’s owner and driver, as well as the Lee County School Board. She sought compensation for past medical expenses, future medical expenses, lost earnings, and other damages. That litigation resulted in a settlement for $800,000, with $35,367.52 expressly designated as compensation for past medical expenses. The settlement did not specifically allocate any amount for future medical expenses.” 
Many states such as Florida have a statutory formula setting forth the framework for when the state Medicaid agency shall reduce its reimbursement.  However, state law in almost all states allows some discretion to the state-based agency directors to allow for waivers or partial waiver of the amounts contemplated by the applicable statute(s), or instead often allow a Medicaid member to petition for exceptions to the statutory formula.
The opinion elaborated that the State of Florida’s “statutory framework entitled the State to $300,000—i.e., 37.5% of $800,000, the percentage that statute sets as presumptively representing the portion of the tort recovery that is for “past and future medical expenses,” absent clear and convincing rebuttal evidence.” (citing Florida Statutes §§409.910(11)(f )(1), (17)(b)). The opinion then explained that Gallardo had “challenged the presumptive allocation in an administrative proceeding.”
In Florida, that type of administrative challenge is pursued under a Chapter 120 Administrative Hearing under the Administrative Procedure Act before the Florida Division of Administrative Hearings (DOAH).  For example, a petitioner may request a declaratory statement which would be an opinion on the application of a particular regulatory statute, agency rule, or agency order to the petitioner’s individual situation. A declaratory statement is a final agency action and is subject to judicial review.  This is how the Gallardo decision began making its way through the court system.  In state court, the applicable state court determined that Florida’s Medicaid lien only applied to that portion of the settlement reserved for past medicals.  On appeal at the 11th Circuit, the Federal Circuit Court upheld Florida Medicaid’s position that its lien extended to any medical damages paid in a settlement including future medicals. The U.S. Supreme Court affirmed the 11th Circuit Court’s decision, holding that Florida’s Medicaid agency could obtain reimbursement of its paid medicals from any portion of a settlement that compensated for medicals including funds slated as future medicals.
The U.S. Supreme Court discussed why Medicaid agencies have an exception to the federal anti-lien law and have been mandated to collect from medical damages of settlements as opposed to the property of the injured party, as announced in the Court’s prior decisions of Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U. S. 268, 284 (2006) and Wos v. E.M.A., 568 U. S. 627, 633 (2013).  The Court explained the distinction in Wos focused on the ability of a state Medicaid agency to obtain its reimbursement from medical damages versus non-medical damages.
The Ahlborn and Wos decisions of the U.S. Supreme Court helped pave the way for what is commonly referred to as equitable distribution or equitable reimbursement based on a Made Whole theory.  In those decisions, if the parties provided evidence of the full value of the case based on damages apart from medical damages and could show that the case settled for an amount lower than the full value because the plaintiff was not Made Whole, that the reimbursement should come from medical compensation only, and implied that a request could be made to reduce the Medicaid recovery accordingly.  If a portion of the settlement was allocated to damages other than past medicals (such as other economic damages including past and/or future wage loss or future medicals, and/or non-economic damages including Pain and Suffering, Loss of Enjoyment of Life, or derivative claims such as Loss of Consortium), it would be argued that the respective Medicaid program would be limited to recovery from those damages allocated to past medicals and if factors like comparative negligence or difficulties of proof of liability existed, further reductions could be requested.
Interestingly, Judge Clarence Thomas, pointed out that the parties had not allocated the amount of the settlement designated as future medical expenses.
Briefs in the case were filed by or on behalf of the National Conference of State Legislatures, the National League of Cities, the U.S. Conference of Mayors, and the Government Finance Office, 14 state Medicaid agencies on the side of Florida Medicaid (UT, OH, AL, AR, GA, KS, LA, MT, NE, ND, OK, SC, SD, TX), as well as the American Justice Association, the Florida Justice Association, the American Academy of Physician Life Care Planners on the side of Gallardo.  At this time, it is unknown how far reaching this decision will be regarding the need for formal allocations of future injury related medicals for Medicaid cases in Florida or other states.

Take Aways and Food for Thought

As it pertains to resolving liens, is it more likely that state Medicaid agencies and their recovery agents will become more aggressive in pursuing their reimbursement/lien recoveries from any and all portions of settlements?
Shouldn’t a showing that a large part of the compensation from a third party liability settlement was intended to compensate for non-medical damages still be taken into consideration to determine whether an exception should be granted by a state Medicaid agency in pursuing its medical reimbursement/lien recovery?
If it is determined that Medicaid is entitled to at least some portion of the expected accident-related Medicaid futures, how might this affect how Medicare Set-Aside (MSA) allocation reports would be prepared and/or funded when beneficiaries are dual enrolled in both Medicare and Medicaid?
For settlements involving injured parties who are duel enrolled, with the complexity of administering funds set aside for protection of Medicare’s future interests heightened, wouldn’t professional administration of those MSA funds seem to be prudent?
Will this decision lead to a higher percentage of liability cases involving Medicaid members going to court for state court allocation determination of the various damages awarded in injury cases?
Will this decision lead to a higher percentage of plaintiff’s counsel petitioning for administrative hearings before the state equivalent of Florida’s Division of Administrative Hearings to resolve difficult and high value liens?
If Florida’s Medicaid agency will be allowed to be reimbursed from funds reserved for future medicals, could it someday request funds to be set aside from settlements to reimburse it for future medicals to be paid by Medicaid after the date of settlement (i.e. a Medicaid Set-Aside)?
Count on Medivest to help you navigate through the complexities of Medicaid liens and questions regarding reimbursement claims and plans for future care out of settlement proceeds.

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23/Feb/2022

On November 16, 2021, the State of California’s Medicaid Agency, the Department of Health Care Services (DHCS or Medi-Cal), issued an All County Welfare Directors Letter (ACWDL or Letter) number 21-26 as a memo to all counties and people who administer various state based benefits, including all Medi-Cal Program Specialists/Liaisons.
The Letter provides clarification on Medicare Set-Aside (MSA) funds, as defined by CMS in the Workers’ Compensation realm. The primary message is that “MSAs, also called Workers’ Compensation Medicare Set-Aside Arrangement Accounts (WCMSA), are not countable as income and property on the basis of their unavailability when determining an individual’s eligibility for Medi-Cal.”
This can be significant for several reasons outlined in the Takeaways section.  Traditionally, an injured party that was otherwise eligible for need based benefits would be advised by their attorney to have a 1st Party Special Needs Trust of some type (individual or Pooled Trust – together referred to here as an SNT) established to help assure the eligibility of those benefits at that time or in the future.  However, there may be times when the cost of establishing such an SNT might be cost prohibitive compared to the value of the benefits to be protected.

Summary

The Letter describes that because the funds in the MSA account are to be used for their intended purpose, covering the costs of future medical needs [that are injury related and Medicare covered], they should be considered unavailable income and not countable when determining an individual’s eligibility for Non-Modified Adjusted Gross Income (MAGI) programs. However, the Letter indicates that it is important to note that interest or dividends generated by the interest-bearing account should be considered available income for MAGI eligibility determination.
The Letter explains that MSAs had previously been determined to not be countable as property pursuant to a previous All County Welfare Directors letter numbered 90-01 from 1990.  “MSA funds are considered unavailable property under ACWDL 90-01 (January 5, 1990), Section 50402 of that letter.”
The Letter also provides guidance to California counties on MSAs regarding:
    • MAGI eligibility
    • Non-MAGI eligibility concerning:
      • Property
      • Income
    • Tasks that are County responsibilities
    • Tasks that are NOT County responsibilities
The full ACWDL 21-26 Letter with additional details and information is available here.

Takeaways

  • This Letter does not discuss settlements that exceed the WCMSA amount. Settlements that exceed the WCMSA amount meaning they exceed the injury related Medicare covered medical items, services, and expenses reasonably expected for the injured party and that are paid outside the WCMSA, might disqualify the injured party from Medi-Cal benefits.
  • The Letter also does not discuss that the injured party’s need based benefits may be jeopardized if the injured party moves to another state without taking steps to address the eligibility of the new state’s Medicaid benefits via the use of an SNT within the required time frame to afford such protection.
  • The information in this Letter may come in handy for certain cases where the cost of a SNT is a prohibitive factor that would affect whether a smaller Workers’ Compensation settlement could proceed.
  • The letter does not make it clear how Medi-Cal would view a liability MSA (LMSA), i.e., an MSA allocation report and arrangement for administration pursuant to the settlement of a liability case.
  • As always, you should consult with an attorney licensed in the state where the settlement occurs (as well as disclose to the injured party to consult with an attorney specializing in the protection of need based benefits for the state where the settlement occurs and in any state they plan to move to ahead of their move) to confirm their rights, their entitlement to any specific benefits, and so that they understand that state need based benefit eligibility varies and other states’ laws likely do not afford this same protection.
Count on Medivest to help guide you through some of the complexities associated with Workers’ Compensation and liability settlements that involve some evaluation of Medicare Secondary Payer Act (MSP) compliance, when you are not sure whether a Medicare Set-Aside arrangement should be utilized, or when need based benefits are in the picture or may be in the injured party’s future.

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01/Dec/2021

On Friday, July 2nd, 2021 the U.S. Supreme Court announced it would take up a legal battle that could have a dramatic effect on settlements in the state of Florida, and potentially the entire country. At question in Gallardo v. Marstiller will be whether Florida’s Medicaid program is only entitled to be reimbursed for the money it spent for a Medicaid beneficiary/Member’s past medicals up to the date of a settlement, judgment, award or other arrangement (“settlement”) or whether it is entitled to recover a portion of the settlement that represents future medical expenses too. Gallardo By & Through Vassallo v. Marstiller, 141 S. Ct. 2884 (2021).

A Brief Summary of Events

In 2008, a Lee County school bus struck and seriously injured 13-year-old Gianinna Gallardo. Florida’s Medicaid agency provided $862,688 in medical payments on Gianinna’s behalf. Her parents sued the responsible parties and ultimately agreed to an $800,000 settlement, of which $35,367 was allocated as past medical expenses.

Florida’s Medicaid agency, using the state’s then-current statutory formula to calculate reimbursement, claimed it was entitled to $323,508 of Gianinna’s settlement. However, the state’s statutory formula did not distinguish between past and future medicals and included money in the settlement that was allocated for future medical expenses.

The Gallardo family sued the state Medicaid agency in federal court, arguing that Florida’s reimbursement formula violates federal law because the state should only be able to recover from that portion of her settlement allocated to past medical expenses. The Medicaid agency countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses.

Between 2017 and 2020 several courts weighed in on similar cases but decisions at odds with each other. In 2017, U.S. District Judge Mark Walker ruled in favor of the Gallardo family. In a 2020 appeal, the 11th Circuit rejected Walker’s decision and ruled that the Florida Agency for Health Care (“AHCA” or “Florida Medicaid”) was entitled to $200,000 of the settlement (Gallardo v. Dudek, 11th Cir., No. 17-13693, June 26, 2020). However, in a separate 2018 case, Giraldo v. Agency for Health Care Admin., 248 So. 3d 53 (Fla. 2018), the Florida Supreme Court said the federal Medicaid Act preempted a state law that authorized Florida Medicaid to seek reimbursement from “portions of (a settlement) that represents future medical funds.” Therefore, that case seemed to indicate that Florida Medicaid was only entitled to recover the portion of money from a settlement that represented past medical expenses

Potential Far-Reaching Effects of a U.S. Supreme Court Medicaid Lien Recovery Decision

All Medicaid agencies have a duty under Federal law to recover past medical payments and most attorneys know to do a lien search when their clients are enrolled in Medicaid.  However, up to now, attorneys never had a legal duty to set aside a portion of settlement proceeds to protect Medicaid’s future interests. The current state of federal law on this topic has been discussed in our prior blog referencing the U.S. Supreme Court’s decisions in Ahlborn and Wos, and their reinstatement via the Budget reconciliation Act of 2018.  Now the U.S. Supreme Court will weigh in this issue – i.e., whether a Medicaid agency like Florida’s is entitled to seek a portion of funds designated for future medical care from a settlement, judgment, award, or other arrangement (each individually now referred to as “settlement”) when it takes up Gallardo v. Marstiller.

How would that be enforced if it is decided that Medicaid’s future interests must be considered at the time of a settlement, judgment, award, or other arrangement? Could this set legal precedent for a nationwide practice of Medicaid beneficiaries setting aside some portion of their settlements to represent Medicaid futures like is done for certain cases involving Medicare beneficiaries or those who have a reasonable expectation of becoming Medicare beneficiaries within 30 months of settlements? Is it possible that a U.S. Supreme Court ruling in favor of Florida Medicaid’s future interests may lead to a federal statute setting forth the protection of Medicaid’s future interests in settlements similar to the way the Medicare Secondary Payer Statute sets the framework for the protection of Medicare’s past and future interests?

The effects could be felt beyond the state of Florida. Perhaps this is the reason that briefs have been filed in this case by or on behalf of the National Conference of State Legislatures, the National League of Cities, the U.S. Conference of Mayors, and the Government Finance Office, the American Justice Association, the Florida Justice Association, the American Academy of Physician Life Care Planners

Additionally, the outcome could increase the awareness of Medicaid lien resolution specifically and lien resolution generally.  Furthermore, if it is determined that Medicaid is entitled to at least some portion of the expected accident-related Medicaid futures, this could affect how Medicare Set-Aside (MSA) allocation reports would be prepared when beneficiaries are dual enrolled, and could increase the need for Professional Administration, due to the complexity of administering funds set aside for protection of both Medicare and Medicaid’s interests.

The Supreme Court’s decision will likely come during the Court’s 2021-2022 term. At that time Medivest will review the decision and provide analysis on what effects it could have on settlement services.


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30/Jan/2020

A state appellate court in Colorado just held that hospitals in Colorado may forego billing Medicare or Medicaid even when an injured party is a Medicare or Medicaid beneficiary, and may proceed against the injured party as long as the hospital follows certain procedures. See Harvey v. Centura Health Corporation and Catholic Health Initiatives, — P.3d —- (2020) Court of Appeals No. 19CA0091 January 30, 2020*.

Those procedures are that the hospital must first submit charges to the “property and casualty insurer and primary medical payer of benefits available” to the injured person when that person is injured as a result of negligence or wrongful acts of another person, before filing a lien. The state appellate court clarified that neither Medicare nor Medicaid are primary payers of medical benefits and because of this, held that Hospitals in Colorado do not need to bill Medicare and/or Medicaid before filing a lien.

Therefore, Colorado hospitals interested in collecting larger amounts of money than Medicare and/or Medicaid will pay will likely forego billing Medicare and/or Medicaid, and will put the at fault party on notice of its charges, will bill the liability carrier for the at fault party, and then proceed to file a lien against the injured party likely to receive a third party liability settlement.

Of course the charges must be related to the underlying third party liability injury and must be reasonable and necessary. So even if a Colorado hospital lien is perfected, the injured party has a right to dispute whether the charges are injury-related and to contest the reasonableness or necessity of the charges.

Call Medivest when your injured client is facing a hospital lien to allow our specialists to first determine if all of the requested charges are related to the underlying injury, and to negotiate with the lien holder or its recovery agent regarding the amount of reasonable and necessary charges. Don’t let your client pay unreasonable or unnecessary hospital bills even when a lien is filed!

*While this case has not been released for publication in permanent law reports and could be subject to a petition for rehearing in the Court of Appeals or for Certiori in the Supreme Court of Colorado, it is important to be aware of hospital practices in this regard.


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