Attorneys Fees on MSA Funds Confirmed in N.J.


The New Jersey Superior Court recently considered whether Medicare regulations and CMS allowed an attorney to recover attorneys fees for creating a settlement obtained on behalf of a client in a civil suit from the Medicare set aside funds itself.   Surprisingly, they said Yes.

The Court in Hinsinger v. Showboat  (L-3460-07, released 5/19/11) reviewed the provision in the Code of Federal Regulations 42 C.F.R. 411.37 permitting the reduction of procurement costs from MSP recoveries in conjunction with the CMS Memo of May 7, 2004 regarding attorney set up costs associated with MSA trust accounts and found no reason why attorneys fees shouldn't apply to procurement of MSA recoveries in civil settlements as well as other primary insurance such as workers comp.

This case would approve taking attorney's fees on procurement of workers compensation MSA funds as proper under the Code of Federal Regulations.  I know of no controlling case law in Illinois governing the subject to the contrary but, the propriety of taking attorneys fees on funds created for MSA accounts has come up many times in discussions.

This New Jersey civil case would seem to stand for the proposition that attorney's fees for procurement of MSA funds are proper in both personal injury and workers compensation settlements.  42 C.F.R. 411.37 permits the costs borne by the party against which CMS seeks to recover be deducted from Medicare's recovery amount.

Read the Hinsinger article on the MedVal  Official Medicare Set Aside Blog by Jennifer Jordan and Ryan Roth.   It happens to be my best source for keeping up with all things Medicare Set Aside and MSP compliance.   I have previously endorsed Jennifer Jordan's excellent new book on MSP Compliance and Medicare Set Asides .  It is a must read for attorneys and industry professionals involved in MSA or MSP compliance, mandatory claim reporting and those who need insight into CMS  requirements and procedures.   The book covers the regulations, the statutory revisions and relevant case law all in one  place with practical instruction, commentary and recommendations for MSP compliance. 

The problem remains presently that CMS and Medicare do not currently recognize any reduction in the approved MSA funds for attorneys fees for workers comp.  It seems a fairly standard practice in Illinois to allow attorneys fees on most subrogation claims where the settlement funds recovered for the client are paid out to a 3rd party lien holder interest pursuant to the Common Fund Doctrine.  It remains to be seen however whether regular Medicare coverage will kick back in on an MSA fund account that has been reduced for attorneys fees. 

At least in a civil case, the New Jersey ruling would tend to support a claim that Medicare's interests in the litigation were adequately protected even where the MSA future medical funds were reduced by attorneys fees.

Contact our office to speak with an  Illinois workers comp attorney to discuss open medical rights and Medicare set aside fund coordination in Illinois workers compensation claims.

Chicago workers compensation attorney  -- 8-18-11