Hepler Broom, LLC

Garretson Resolution Group Introduces Product to Streamline Medicare’s Recovery and Reporting Requirements in Malignant Asbestos Injury Cases

March 2, 2016

Garretson Resolution Group (Garretson) conducted a meeting in January, 2015 attended by HeplerBroom, other members of the asbestos defense bar, and counsel for asbestos plaintiffs. At the meeting, it introduced its new Asbestos Malignancy Alternative Resolution Process (which Garretson refers to as the AMP).  Garretson stated that several years ago, it reached an agreement with the Centers for Medicare and Medicaid Services (CMS) pertaining to settlement of non-malignant asbestos injury cases.  Garretson said that this earlier agreement was designed to streamline the process of reimbursing the Medicare program pursuant to Medicare Secondary Payer rules for conditional payments made for medical treatment of beneficiaries.  Another stated goal of the non-malignant agreement was to give a level of certainty to all parties involved in this type of asbestos injury case of the dollar amount due to satisfy Medicare’s recovery claim.  Garretson also told the group it previously reached a similar agreement with CMS pertaining to resolution of certain pharmaceutical injury claims.

Garretson used the January meeting to outline the details of its latest program, the AMP, designed to facilitate resolution of malignant asbestos cases.  Garretson asserted that negotiations with CMS over the parameters of this program reached fruition in July, 2015.  It is now marketing the AMP as a way to resolve CMS’ recovery claims over settlement proceeds in malignant asbestos cases and exempt the settlements from the reporting requirements of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA §111).  The meeting pertained primarily to these claims raised in Missouri and Illinois cases.

Qualifying asbestos-related injury claims resolved pursuant to the AMP satisfy CMS’ recovery claims for conditional payments made under Medicare Part A and Part B.  Medicare Secondary Payer recovery claims for both past and future medical care are resolved under the AMP.  Claimants must be Medicare beneficiaries on or before the settlement date for a claim to qualify for the AMP.  Their asbestos injury claim must fall under certain injury categories.  These injury categories are: 1. Malignant, and 2. Serious asbestotic conditions.  Medicare beneficiaries that settle an asbestos injury claim under the AMP are exempt from the reporting obligations of MMSEA §111.  CMS affirmatively states for MMSEA §111 purposes, Participating Beneficiaries should not report asbestos-related settlements, judgments, awards, or other payments for claims resolved pursuant to the AMP.

CMS will accept as payment in full for its conditional payments a fixed dollar amount, it calls a “modeled amount”, for each AMP participating settlement based on the injury category a claimant falls under.  Claimants must reimburse CMS a larger “modeled amount” for malignant asbestos claims than for serious asbestotic claims.  Claims can also be re-categorized from asbestotic to malignant if a claimant later receives an asbestos-related settlement for a malignant asbestos injury.  CMS calls this a “Progressive Injury”.  When settling a claim for a “Progressive Injury”, a claimant will receive credit for reimbursement amounts paid for the prior asbestotic injury.  However, the claimant will also be required to reimburse CMS up to the full “modeled amount” for a malignant claim.  CMS also caps its recovery under either “modeled amount” at 29.5% of any asbestos-related settlement received by a clamant.  Under certain circumstances, CMS will agree to accept a “modeled amount” as reimbursement for medical payments made under a Medicare Advantage Plan (Part C).

Even under the AMP, CMS’ policy memo of August 19, 2014 remains in effect.  Where all of the requirements under this memo are satisfied and exposure to asbestos is “claimed, released, or effectively released” only for the period prior to December 5, 1980, CMS will not seek recovery from these settlements.

CMS tasks Garretson with collecting sufficient documentation of the facts of each settlement reached by a claimant and reconciling and reporting them to CMS.  The agreement between CMS and Garretson is in effect and applies to settlements reached on or before December 31, 2020.  To participate in the AMP, a Plaintiffs’ firm must agree to resolve all of its current and future inventory of malignant asbestos and serious asbestotic cases through this program.  Garretson requires a written agreement between itself and a Plaintiff’s firm wanting to participate in the AMP.  Finally, CMS states it will not reduce or waive its recovery claim due to an assertion that any portion of a settlement is for loss of consortium or wrongful death damages.

Defense counsel raised several questions during Garretson’s meeting.  The first pertained to the language of the agreement between CMS and Garretson.  The terms only explicitly exempt claimants from the reporting requirements of MMSEA §111.  Counsel questioned whether this exemption only applies to the claimant or extends to Defendants.  They were concerned that their clients or their insurance carriers would still be required to report settlements governed by the AMP.  They also asked who would bear the cost of the $1,000 per day penalty under MMSEA §111 if it is later discovered a settlement that should have been reported wasn’t reported.  Counsel questioned how recovery for claims of wrongful death, loss of consortium, and Medicare Part C and Part D not covered by the AMP would be administered.  Finally, there was a discussion whether there would be a need for claimants/plaintiffs to provide a Medicare Form B with a settlement release when there is no obligation to report the settlement to CMS under the AMP.  Garretson suggested the parties seek to amend the Madison County Standing Order which currently requires claimants/plaintiffs to provide Form B with all executed settlement releases.  Garretson stated that it would review all applicable statutes and these questions, and possibly seek to clarify its agreement with CMS if necessary.  HeplerBroom will participate in future discussions among the involved parties regarding Garretson’s AMP.