Safe to say that last week’s national ECS webinar, “In Depth on Liability Settlements” was one for the books. The level of engagement throughout the session came as no surprise given that liability claims introduce an entirely different layer of complexity with evolving risks, reporting obligations, and settlement considerations that are far less straightforward than they initially appear.

The volume of thoughtful questions submitted during the webinar reinforced just how nuanced these claims can be and how frequently organizations are looking for practical guidance in this space. In keeping with our commitment to deliver actionable strategies, we are addressing several of the many questions raised in the chat. 

Q. When you say no fault you mean PIP or similar, correct? You do not mean a liability situation where there is NO liability and there is no fault on the part of our insured? In an example where a claimant made a claim, it was denied as no merits what so over, never pursued claim at all after denial. now several years his dr office says he has a claim open. Can we now terminate as a claim was never pursued and he confirmed he decided to not pursue or do anything further. can we terminate from our side or do we need to send a letter?

A. Yes, exactly. No fault insurance which in CMS’ parlance is PIP, homeowner’s medpay, and anything similar where first party coverage is provided. In the example that you cited, the claimant never actually had a claim so you can absolutely terminate ORM on that case to the extent that it’s ever been reported as such. It’s important to note that an ORM claim doesn’t become reportable until the primary payer is notified that the person has been injured and is aware that they received treatment. If they did not receive treatment, then there is nothing to report at all (example, person trips and falls but doesn’t go to doctor to treat a gash on their leg that heals with home remedies – nothing to report).

Q. If a portion of the settlement is paid to Medicare for reimbursement, is the amount paid to Medicare included in the TPOC total amount?

A. Great question. In a liability case the general answer is yes but care should be taken if Medicare is paid in addition to the agreed-upon amount in the settlement release. The reason is that Medicare’s demand is based on the agreed upon settlement amount. Example:

1. $20,000 settlement with $20,000 going to plaintiff. Post settlement a demand is made for $5000 which the claims payer pays direct to Medicare per agreement of the parties that the claims payer would pay whatever demand is issued. In that case you’d update the record to $25,000 as the TPOC amount.

    

2. Same $20,000 settlement but the claims payer holds back funds and pay $15k to the plaintiff and the remaining $5000 is paid to Medicare – that’s a $20,000 TPOC.

    

Basically, it depends on the framework of the settlement.

Q. Is Loss of Consortium claims no longer reportable?  Are mental distress claims still required to be reported? 

A. Correct, loss of consortium claims are generally not reportable because there is no actual injury that’s being claimed. The only time claims do in fact become reportable is when there’s an injury. Emotional distress claims can become reportable if there’s a physical manifestation of that stress that results in actual treatment (i.e. hospitalization). Otherwise it is not reportable if the claimant makes a vague and unsupported claim of emotional distress.

Q. Why would there be any Traditional Medicare payments made if the claimant was on a Medicare Advantage plan during the life of the claim?   

A. This is a good question. There are some situations where there can be a Medicare Part B overlay with Medicare Advantage. While not typical, this will happen. The more typical scenario is that a person will have the MAP make most of the medical payments (particularly the catastrophic payments post incident) so that if you are aware that a person is on the same plan all through the life of the claim you’d primarily be focused on MAP.

We hope this article provides additional clarity surrounding the evolving compliance considerations tied to liability settlements and helps your organization approach these claims with greater confidence. To view the full webinar, click here. If you have any questions, do not hesitate to reach out to the ECS Compliance Team at mspcompliance@examworkscompliance.com.