A number of prominent Medicare experts disseminated Legal Alerts last week to the effect that changes may be occurring with respect to the requirements for CMS to approve zero allocations. These changes would spell bad news in New Jersey for employers who want to settle disputed cases on a Section 20 basis. According to Martin Cassavoy of ISO Claims Partners in his October 27, 2016 News Alert, the Workers’ Compensation Review Contractor (WCRC) has stated that CMS will soon require the following for approval of a zero allocation:
- The case or the body part in question has been denied throughout the case;
- There has been no medical or indemnity payment for the denied case or body part; and
- There is either a finding from a hearing by the Judge of Compensation relieving the carrier of liability or a report from the treating physician recommending no future treatment.
No official enactment of these requirements has occurred to date, but if this is the new approach that CMS is going to adopt, it will be very hard for employers to obtain zero set aside allocations in New Jersey and other states. Compensation judges in New Jersey have enormous caseloads. They have not historically been actively involved in ruling on Medicare issues. If a judge now has to determine that no compensable workers’ compensation claim exists, that will create a long back-up of trials on cases that were formerly resolved simply and efficiently by way of Section 20 settlements.
Attorney Heather Schwartz Sanderson, Esq., Chief Legal Officer for Franco Signor, LLC., wrote in her Alert: “Our recommendation has always been where the workers’ compensation claim is completely denied, no medicals have been paid, and the claim is settling on a compromise basis CMS approval is not recommended.” Ms. Sanderson’s statement makes sense since Medicare would have been and would continue to be the primary payor in this situation. Her reasoning is persuasive and should be considered by employers. She argues that there should be no allocation for future medical care in the above situation.
Our office will continue to update clients if these changes are adopted by CMS. Thanks to Marita Tortorelli, Assistant Vice President of PMA Insurance Companies for bringing this issue to the undersigned’s attention.
