BACKGROUND: On July 11, 2005, the Centers for Medicare and Medicaid Services (CMS) released its sixth policy memorandum with answers to frequently asked questions (FAQ’s) on Workers’ Compensation Medicare Set-Aside Arrangements. The fifteen new FAQ’s clarified two existing policies; amended or replaced three previously published FAQ’s; and introduced ten new CMS policy statements. Among the new statements was CMS’ policy that CMS would not compromise the amount projected for future medical expenses. CMS’ position was that the "compromise" language in 42 C.F.R. §411.47 only applied to overpayment of past medical expenses.
In 2007, a company and a law firm that provided consulting services for the settlement of workers’ compensation claims brought a declaratory judgment action against the Secretary of the U. S. Department of Health and Human Services and the Administrator of CMS (Protocols v. Leavitt). The law suit claimed that the above referenced memorandum opinion misinterpreted the Medicare statute and regulations and exposed the plaintiffs to unexpected liabilities arising out of settlements they had previously structured. The U.S. District Court for the District of Colorado granted the defendants motion for summary judgment because the plaintiffs lacked constitutional standing (they had not suffered the requisite injury).
HOT OFF THE PRESS: On December 11, 2008, the 10th Circuit Court of Appeals issued an Order reversing the district court. In support of its opinion, the circuit court noted that the only issue relevant to standing was whether CMS is now taking a position that is contrary to the plaintiffs’ past settlement practice thus exposing them to possible (contingent) liability.
I will continue to monitor this case and post any new developments.