A Common Issue After Settlement
Early in my career, I represented a young union iron worker who sustained a career-ending hand injury. Mike lived in Down east Maine, in a seacoast village. He graduated from high school and decided that furthering his education was not for him. Post high school he worked various entry level positions until a relative told him about an opportunity to work with his union. The job promised training, travel, and most importantly and opportunity to work hard and be rewarded handsomely for his labor. Mike accepted the challenge and signed on.
While working on a project, there was a mis-judgement, some inattention, leading to an accident resulting in a severe crush injury to Mike’s dominant hand and arm. It was clearly a work-related injury covered by workers’ compensation. I had represented a co-worker who referred Mike to me. I reviewed the matter, advised him of his rights, and made sure he was fully protected. His case was accepted without dispute. Mike went through a series of surgeries, a good deal of physical and occupational therapy, and was left with a hand and arm that were never going to hang iron again.
He looked for work within his physical limitations, his innate abilities, and prior work experience. Nothing he found would allow him to replicate his union wage. The law at the time required his former employer to pay indemnity benefits for any total or partial wage loss short fall. The statute had no durational limit. As long as Mike could not reproduce his pre-injury earning capacity, he was entitled to indemnity benefits.
His medical providers speculated he would likely need periodic follow-up care, but no major treatment was anticipated. The workers’ compensation carrier approached with a settlement offer. It was attractive but less than what we valued the claim. Settlement discussions commenced and within a few weeks we agreed on settlement terms. As I recall, Mike was in his late twenties at the time. His settlement was presented to a workers’ compensation commissioner at a formal hearing. There was testimony, medical exhibits were introduced, and a review of the settlement documents. The settlement was approved without a problem. At the time it was the largest settlement of my young career.
During the settlement process, Mike and I had conversations about what to do with the settlement proceeds. I offered names of financial consultants, partners in my firm that I had consulted with on other cases and trusted. When the settlement check arrived I sat down with Mike and had a “come to Jesus” discussion with him, emphasizing the fact that the check represented all he was going to receive to replace what he could earn if he had two good hands. He assured me he understood. He said he had a plan to buy a boat and self-employ as a fisherman. I remember thinking commercial fishing is physically demanding work.
I lost track of Mike. Some years later I ran into him while visiting the community where he lived. He looked rough around the edges. I learned the commercial fishing venture was a disaster. Mike lost the boat, the gear, and all the money he invested. He admitted he had no idea how to successfully operate a business and his settlement proceeds were exhausted.
After that conversation I would think about Mike’s case every time I represented a settling injured worker. If only there were a safety net available to assure injured workers like Mike would be protected from pursuing bad ideas.
CMS Highly Recommends Professional Administration to Claimants After Settlement
This past Fall, I had occasion to resurrect the memory of Mike’s claim. I was reading the CMS October 10, 2019, Workers’ Compensation Medicare Set-Aside Arrangement Reference Guide, Version 3.0. In the Guide, I was pleased to see the section on Administrators. In that section, the Guide recommends professional administration generally and specifically provides: “CMS highly recommends professional administration where a claimant is taking controlled substances that CMS determines are ‘frequently abused drugs’ according to CMS’ Part D Drug Utilization Review (DUR) policy.”
It appears CMS recognizes that after settlement injured workers are left without the multiple safety nets available to a claimant pre-settlement. Once the claim settles, legal counsel, the adjuster, the nurse case manager, and others step away from the claim, leaving the injured worker for the first time on his own. Not only that, but he now has a sum of money at his disposal that he did not have before. Yes, even with a Medicare Set Aside (MSA), if it is self-administered, he controls those funds.
In the Guide, CMS recognizes the professional manager steps in to help manage the complexities of medical care after settlement and is there to manage the MSA funds. Additionally, the professional manager inevitably provides post settlement guidance and support to the settling employee. He is no longer on his own. Unlike Mike, these injured workers can be particularly prone to harm because of prescription medication they are taking and complex treatment they may need. Mike, even without a medical challenge, had significant post settlement problems.
This guidance is compatible with the trend to help address the drug epidemic that has plagued our country in recent years. I don’t believe we can protect all post settlement claimants from making poor decisions. I do believe that this CMS guidance makes good sense and should be widely adopted by most settling parties who have an MSA. I also suspect my former client, who has grown wise through his expensive mistake would likely support this recommendation.