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New rules requiring insurance companies to report information about lawsuit settlements to Medicare are stirring up a heated controversy among personal injury and insurance defense attorneys.
The rules took effect on January 1.
The debate is over whether lawyers should be creating Medicare set-aside trusts in personal injury settlements to protect Medicare's secondary payer interest for future medical expenses.
Liability insurers, including self-insurers, must track certain information about Medicare-eligible plaintiffs' claims, including personal information about the plaintiff and the plaintiff's attorney.
Insurers will begin submitting their reporting to Medicare on April 1.
The reporting requirements now give Medicare a way to track settlement payments that some attorneys believe is intended to enforce secondary payer rights against future medical payments, not just past payments.
They predict official Medicare set-asides, a la workers comp set-asides, are just around the corner. Many are not waiting for a rule; they are doing Medicare set-aside trusts now.
"I think it is advisable. If you don't do a Medicare set-aside, you take the risk of exposing the entire settlement," said John J. Campbell, an elder law attorney in Denver, Colo.
But some adamantly dispute this approach, noting that there is no law imposing liability for future medical payments, never mind a rule mandating set-asides.
"There is no liability for future medicals. To read [the reporting requirements] as extending obligations that never existed before in the area of future medicals is to read something into the law," said Sally Hart, an attorney at the non-profit Center for Medicare Advocacy in Tucson, Ariz.
She added that setting up an expensive and unnecessary set-aside trust is not in a plaintiff's best interests and could pose ethical concerns.
Matthew Garretson, president of The Garretson Firm in Cincinnati and author of "Negotiating and Settling...