The New York State Workers’ Compensation Board will no longer approve Section 32 Agreements that contain Medicare Indemnity and Hold Harmless language. The Board announced that it would not approve settlements wherein the claimant was required to “indemnify and hold the carrier harmless for any payment made by Medicare for treatment of claimant’s work-related injuries prior to the execution of the Section 32 Waiver Agreement.”
The Board cited the “disparity in bargaining power and financial resources between individual claimants and insurance carriers” as the reason for this change, stating these actions are “unfair and unconscionable.” A link to the announcement can be found here.
Prior to this announcement, a carrier or self-insured could attempt to include settlement language wherein the claimant agreed to indemnify, defend and hold the carrier or self-insured harmless from any recovery action by Medicare. Specifically, claims payers sought protection from situations where Medicare could request payment of past, current, or future medical expenses for the claimant. Moreover, carriers and self-insureds could use these clauses as a means to avoid adverse consequences in the event the claimant misappropriated the settlement funds, potentially compromising the claimant’s right to Social Security or Medicare benefits.
What does this mean for settlements in New York?
When thinking about settlements with a Medicare beneficiary, it is imperative to have rock-solid language surrounding past payments (Conditional Payments) along with future benefits (Medicare Set-Aside Arrangements). Regardless of the Board’s announcement, here are five key settlement language considerations:
At the end of the day, the announcement clarifies the rules of the road for settling parties, but does not alter recommended settlement best practices. Claims payers should never simply rely upon this type of provision. Settling parties are reminded that the best practices remain the same: identify conditional payments and create a roadmap to dispute, appeal and – only when necessary – pay them; determine whether a Medicare Set Aside is needed and, if it is, ensure that adequate funds are identified and set aside; and lastly, the goal of all Medicare compliant settlement language should be to ensure that all parties understand their Medicare responsibilities both pre and post settlement.
ExamWorks Clinical Solutions offers a full suite of services to assist parties in addressing conditional payments Medicare Set-Aside arrangements, and we consult with parties daily to assist with the development and review of Medicare-compliant settlement language. We will continue to monitor the situation and will provide updated guidance if and as required. If you need help with any aspect of Medicare Secondary Payer Compliance, please contact our Director of Conditional Payment Services, Lou Porrazzo, Esq.