Court Independently Determines MSA Amount in Liability Case

by Jennifer Smith, Esq.
 
In Benoit v. Neustrom, 2013 U.S. Dist. LEXIS 55971 (April 17, 2013), the Plaintiff petitioned the court to review the liability settlement and proposed Medicare Set-aside amount and issue a judgment declaring that Medicare’s interests were adequately protected. The following evidence was presented to the court: (1) a Medicare Set-aside allocation report, which projected the claimant’s future Medicare-covered medical costs to be in the range of $277,758.62 to $333,267.02, (2) a formal demand for reimbursement of conditional payment claims in the amount of $2,777.88, (3) the settlement amount of $100,000.00, (4) that $55,707.98 was the amount subject to be set aside (this represents the remaining settlement funds after payment of attorney’s fees, expenses, and the Medicare conditional payment claim), and (5) testimony from the Plaintiff’s wife, as well as a financial statement from the Social Security office, regarding the Plaintiff’s financial hardship.  The Plaintiff proposed that 10% of the gross settlement proceeds as an equitable amount to set aside since the settlement represented 10% of the possible recovery if he had prevailed on the liability issues at trial.  The court disagreed with the Plaintiff’s methodology, though it still allowed an equitable allocation so that the Plaintiff’s family could fund a special needs trust for the Plaintiff’s future non-Medicare covered items and services.  In calculating the set-aside amount, the court considered the net settlement amount, $55,707.98, and the mid-point range of the MSA allocation report, $305,512.50, and determined that the net settlement was 18.2% of $305,512.50.  The court applied that percentage to the net settlement proceeds and determined that $10,138.00 should be set aside for the claimant’s future medical expenses that would otherwise be covered by Medicare.