Insurer Takes Money from Beaten Giants Fan

ERISA liens can be a big problem for liability plaintiffs and their lawyers. What can be done, and how, are the subjects of this report by Speaking of Settlements host Mark Wahlstrom the president of Wahlstrom & Associates.

Mark Wahlstrom

Mark Wahlstrom

Wahlstrom explains that an ERISA lien is a lien put on an injury award by an ERISA-approved health plan. “The majority of corporate-owned or corporate-managed plans are ERISA plans.” Because of some court rulings in the last several years, ERISA lien claimants have almost the same ability to avoid negotiation as one would find with a Medicare or Medicaid lien. This is important because it changes how trial lawyers need to proceed with the settlement of cases. In the past, liens by health care providers were ripe for settlement. That, says Wahlstrom, is no longer the case.

The educational case on ERISA liens is a matter written about by David Armstrong in Bloomberg Business, “How an Insurer Is Taking Money From the Fan Beaten at Dodger Stadium.” The case began in 2011 when Giants fan Bryan Stow was beaten nearly to death because he wore Giants gear to a Dodgers home opening game. Stow was represented by eminent trial lawyer Thomas Girardi, who got a great verdict in the case. However, the complication is that ACE Property & Casualty Insurance bought the ERISA lien (ACE was the insurer for the Dodgers organization). This happened with any knowledge by Mr. Girardi or anyone else on the plaintiff’s side involved in negotiations. ACE bought the $3.4 million lien at a discounted price of $1.8 million.

It was only when the case closed and a check was written for the amount of the award that $3.4 was deducted from the award, and ACE revealed that it owned the lien. The maneuver allowed the insurer for the Dodgers to earn $1.6 million on the deal. There are other lienholders in the case, and all of them want to be paid out of the award to Stow.

The issue that concerns Wahlstrom is the acquisition of the ERISA liens by the defense in a lawsuit, thus cutting out plaintiffs’ counsel from any ability to negotiate down the amount of the lien and thus preserve more of the money awarded to plaintiffs. Wahlstrom’s firm, Wahlstrom & Associates, encounters this problem frequently in liability cases they work on. Wahlstrom’s approach is for plaintiffs’ lawyers to take control of the situation. First, it is necessary to identify the ERISA liens that will fall under the newer lien protecting standards. The second step is to determine how much of each such medical bill is legitimate. This requires a close look at the bills. Wahlstrom points out that there are firms who do an excellent job at appraising such bills. The audit of the bills permits plaintiffs’ lawyers to argue that the bills should be reduced, sometimes substantially.

A third step Wahlstrom suggests has to do with the insurance companies’ tactic of buying these ERISA liens. “What if the trial lawyer could do the same thing?” The idea is to get a third party to provide the money to buy the lien, thus giving the plaintiff’s lawyer control over the situation. Wahlstrom says this is very much possible. There are companies ready to make those purchases. Wahlstrom’s company can help plaintiff’s lawyers with these problems.

Mark Wahlstrom, President of Wahlstrom & Associates, founded of one of the nation's first plaintiff-only structured settlement firms in 1983 and is a renowned specialist in settlement planning, structured settlement annuities, structured legal fees, and the administration of large, complex multi-claimant settlements using qualified settlement funds and trusts. Located in Scottsdale, AZ he manages a national practice with clients in every part of the country. He is also the founder and CEO of the Sequence Media Group. The Settlement Channel is a featured network of Sequence Media Group.

Posted on December 10, 2015 .

MSA Accounts For Plaintiffs And What Attorneys Need To Know In 2016

Speaking of Settlements has focused for the month on how plaintiffs’ attorneys deal with government benefit packages, and in particular, dealing with Medicare set-asides. Settlement Professionals Inc. of Portland, Oregon has been a pioneer in the MSA field. In this report, Mark Wahlstrom of Wahlstrom & Associates interviews Jack Meligan, Chairman of Settlement Professionals Inc., discussing what lawyers need to know about MSAs and what SPI can do to help.

Jack Meligan

Jack Meligan

Melligan explains that SPI has partnered with MSA Administrators to develop a full service approach for plaintiffs’ lawyers. SPI has an initial consultation with a plaintiff’s attorney to assess a settlement. If it is decided that an MSA cannot be avoided, the matter is taken up by MSA Administrators for the creation and construction of an allocation study by RNs with MSCC credentials. Once the study is completed, SPI personnel will work with the plaintiff’s attorney on a funding analysis to develop the best and most economical funding of the MSA.

Meligan explains that he has put together a presentation on MSAs by starting with the amendments in 1965 the “grafted Medicare onto the Social Security system.” He then worked his way forward, studying every change in the law and every memorandum ever written about the subject. Once he had mastered all the materials, Meligan took the Medicare Set-aside Certified Consultant (MSCC) course and the Certified Medicare Secondary Payer Professional (CSMP) training. In the process of getting the training, Meligan had a chance to meet and talk with many excellent lawyers working with MSAs. As a result of the training and the discussions with attorneys, Meligan started the MSA services just for plaintiffs’ attorneys.

Meligan has created a presentation for trial lawyers distilling his extensive research down to basic and understandable education. The presentation covers the timeline of 1965 to the present and uses multimedia tools, including videos, to show lawyers what they need to know about MSAs and how to protect their clients. Lawyers learn that, if they voluntarily create an MSA, they need to do strategic planning so as to include only necessary funding. The programming qualifies for continuing legal education credits. Lawyer associations or law firms are welcome to contact SPI to book a date. Meligan points out that part of the value of his presentation is that it shows plaintiffs’ lawyers how to take control of the process and prevent defense attorneys from abusing their clients who are going through a settlement with Medicare issues.

Jack Meligan is the Chairman and founder of Settlement Professionals Inc., Portland, Oregon, a company created to work with personal injury victims in structured settlements. He is a widely recognized settlement industry authority. He helped develop the curriculum for the nation’s only professional Registered Settlement Planner designation, a designation he has held since 2009.  For more than 29 years, SPI has forged new paths, developing comprehensive, innovative solutions to protect victims and attorneys all over the U.S. The Settlement Channel is a featured network of Sequence Media Group.

Posted on December 9, 2015 .

Arizona U.S. Court Ruling Impacts MSA Rules For Personal Injury Settlements

Medicare set-asides (MSA) are a problem that plaintiffs’ lawyers need to be aware of and perhaps work with. MSAs were the subject of an earlier report on the Settlement Channel. A recent case from the U.S. district court in Arizona provides some insight into the problems involved. Mark Wahlstrom of Wahlstrom & Associates interviews Jack Meligan, Chairman of Settlement Professionals Inc., in this report.

Jack Meligan

Jack Meligan

The case in question, Aranki v. Burwell, arose out of a medical malpractice case in state court in Arizona in 2009. A settlement was reached in the case, but the defendants were concerned about finality of the settlement because of uncertainty about the MSA. The Centers for Medicare & Medicaid Services (CMS) provided no guidance as to what, if anything, should be done. In order to move the case, the state court ordered the filing of a declaratory judgment case in the U.S. district court to obtain guidance. The district court dismissed the case, finding that the case was not ripe for decision “because no federal law mandates CMS to decide whether Plaintiff is required to create a MSA. That CMS has not responded to Plaintiff’s petitions on the issue, is not reason enough for this Court to step in and determine the propriety of its actions.

Meligan points out that, as terrible as this situation was, it was not isolated. “It’s happened in other venues.” Back in 2009, knowledge about MSA was in “the dark ages.” Meligan says that this case predates Section 111 reporting. Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) that came into effect in 2012 requires defendants to report liability settlements when they have determined that the claimant is a Medicare beneficiary. Meligan explains that defense counsel in the Aranki case knew so little about MSAs that they thought they would somehow be liable without having a court decision. As a result, it took six years to get the problem resolved.

Moving ahead in settlement situations will be the plaintiff’s problem. Meligan points that defendants will always want a complete and irrevocable release from litigation before they part with money. They will want to be held harmless, even defended, from any Medicare complications. “But they can’t force a plaintiff to create an MSA. . . .There is no law that requires an MSA account.” Meligan says that, while plaintiffs’ lawyers are probably more knowledgeable than they were six years ago, many of them do not realize that the creation of an MSA account is a voluntary act. There are no statutes or regulations making such a requirement.

For plaintiffs who decide they would like to create an MSA, the preferred method, Meligan says, is a segregated account, not commingled, that is used solely to pay “future Medicare allowable expenses.” If a plaintiff does create such an account, it become prima facie evidence that they plaintiff has thought to protect the Medicare trust fund. The advantage of such an account is that it provides a fund to pay those expenses, and when the fund is depleted, Medicare is liable to pay those accident-related medical expenses for the rest of the plaintiff’s life.

As to who sets up an account, Meligan suggests that the plaintiff should hire a firm experienced in working with personal injury claimants, not with defendants. Defense counsel, especially in workers’ compensation cases, are eager that the MSA be just the right size to receive CMS approval. But, Meligan points, out, there is no requirement for approval in liability cases. Plaintiffs and their counsel should hire a firm that can help them decide if an MSA is even necessary. If so, there should be an allocation such that not one extra dollar goes into the MSA account. Meligan and his firm, SPI, are experienced at handling these situations and in dealing with defense counsel.

Jack Meligan is the Chairman and founder of Settlement Professionals Inc., Portland, Oregon, a company created to work with personal injury victims in structured settlements. He is a widely recognized settlement industry authority. He helped develop the curriculum for the nation’s only professional Registered Settlement Planner designation, a designation he has held since 2009.  For more than 29 years, SPI has forged new paths, developing comprehensive, innovative solutions to protect victims and attorneys all over the U.S. The Settlement Channel is a featured network of Sequence Media Group.

Posted on December 8, 2015 .