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Medicare set-asides in maritime personal injury and Jones Act claims.


I.   Introduction

II.  The Medicare Secondary Payer Statute and the Medicare
       A. Introduction
       B. How to Comply: Protecting Medicare's Interest over
            Past Medical Expenses
       C. How to Comply: Protecting Medicare's interest over
            Future Medical Expenses
       D. Penalties for Failure to Comply

III.  Medicare Set-Aside in Maritime Personal Injury and Jones
        Act Claims
        A. Issues with Application of Medicare Set-Aside in
            Maritime Personal Injury Claims
        B. Is Medicare Set-Aside Required?

IV.  Conclusion


Medicare is the national health insurance program enacted by the United States Congress in 1965 for the benefit of the aged, the disabled, and others who might otherwise find it difficult or impossible to secure medical care. (1) Generally speaking, Medicare covers medical costs for:

(1) persons over 65 years of age; (2) disabled persons of any age who are otherwise qualified for Social Security;

(3) persons with end-stage renal disease; and (4) persons over 65, who are not eligible for Medicare or social security, but who purchase a Medicare plan on a monthly basis. (2)

Medicare is funded by a trust fund account held by the US Treasury called the Medicare Trust Fund, which itself is funded by tax revenues, the interest earned on the Trust Fund's investments, and premiums paid by those who are not eligible for premium-free benefits. (3)

When Medicare was created, it was the primary payer of benefits, whereas alternative sources of payment, such as private insurers or employee group health plans, were secondary. (4) Since its enactment, however, the number of individuals who qualify for the Medicare program has grown exponentially--from 19.1 million in 1966 to 54 million in 2014--and is expected to grow to 77 million by 2030. (5) To reduce Medicare costs and extend the life of the Medicare Trust Fund, in 1980 Congress enacted statutory provisions called the Medicare Secondary Payer statute (MSP), (6) which changed Medicare's status from primary payer to secondary payer when additional insurance is available to assume primary responsibility for medical payments. (7) In particular, Medicare would no longer pay for medical expenses "when payment has been made or can reasonably be expected to be made by a primary plan, including ... liability insurance plans." (8) Medicare was also granted a right of reimbursement; in situations where Medicare provides payment for medical expenses that should have been paid by a designated primary payer, the payment is merely conditional and Medicare is to be reimbursed. (9)

Notwithstanding these new requirements for Medicare payments, they have been largely ignored, rendering the MSP statute ineffective. (10) In an effort to enforce these new requirements, Congress amended the MSP statute, imposing new obligations on insurers and self-insured entities to report all payments and settlements for medical expenses of Medicare beneficiaries. (11) Failure to comply with the reporting requirements can result in a civil penalty of $1,000 per claim, per day. (12) The Government also gave notice to medical care providers who requested Medicare payments "of their obligation to notify Medicare if they were aware of the possibility of another payer." (13) Additional warnings to providers for failure to cooperate included the possibility of losing the right to receive future Medicare payments for "as long as two years." (14)

Lastly, the Center for Medicare and Medicaid Services (CMS) 15 created a legal tool known as the "Medicare Set-Aside," which is a "trust or trust-like arrangement set up to hold settlement proceeds" to cover for the projected amount of anticipated future medical expenses related to the injury for which compensation was received, thereby ensuring that Medicare's interest is protected with respect to future medical payments. (16)


A. Introduction

Under the MSP statute, Medicare may obtain secondary payer status if payment has already been made, or is reasonably expected to be made, by a primary plan. (17) This provision "is intended to keep the government from paying a medical bill where it is clear an insurance company will pay instead." (18) The MSP statute defines "primary plan" (19) broadly and includes:
   (a) Group Health insurers; (b) Workers' Compensation
   insurers; (c) No-fault insurers, including medical
   payments coverage and personal liability protection
   coverage; (d) liability insurers and those who self-insure
   for liability, including (but not limited to) auto liability
   insurers, uninsured and underinsured motorist insurers,
   homeowner's liability insurers, malpractice insurers,
   product liability insurers and general casualty
   insurers. (20)

A ship owner's insurance policy that provides coverage for bodily injury or loss is also considered a primary plan. (21)

Although Medicare is a secondary payer, "it often makes the first payment to providers for [a claimant's] health care services." (22) However, these Medicare payments are conditional and subject to reimbursement "when the primary plan make a settlement payment to the beneficiary, accepts liability for the claim, or is adjudicated liable" for the claim. (23) Medicare makes these conditional payments when:

(1) a claim is denied or disputed by the primary payer; (2) the primary payer fails to make a payment; (3) Medicare pays without knowledge of the primary payer's existence; (4) the claimant fails to document the primary payer's existence; (5) Medicare is mistakenly billed, instead of the primary payer; and (6) the beneficiary fails to file a proper claim due to mental or physical incapacity. (24)

If conditional payments are made, then Medicare has a priority right of recovery that is superior to any other right in a settlement or judgment and that trumps even the claimant's right to reimbursement. (25) This right of recovery is often considered a "super lien." (26) A super lien allows Medicare not only to recover the full amount of the conditional payments (even if this amount exceeds the amount the beneficiary receives), but also permits repayment "from virtually everyone involved in a personal injury claim--the parties, the lawyers, the insurers, and even the medical providers." (27) However, Medicare does recognize an attorney's role in assisting beneficiaries in receiving payment from the primary plan, allowing a reduction of "the reimbursement amount owed by any "procurement costs"--the costs the beneficiary paid to an attorney for pursuing her claims." (28) Medicare's right to reimbursement also extends to a claimant's future medical expenses when the primary payer has made a payment intended to cover not only past medical expenses, but also future ones. (29)

B. How to Comply: Protecting Medicare's Interest over Past Medical Expenses

Under the MSP statute, anyone who receives a payment from a third party has an obligation to ensure that Medicare's rights are protected. (30) This duty extends not only to the parties, but also to the lawyers, the insurers, and the medical providers. (31) This obligation to protect Medicare's interest is not limited to those who received a payment either. The MSP statute also imposes this duty on any entity responsible for making a primary payment, such as the claimant's employer, the insurance carrier, the plan or program, and the third-party administrator. (32) Breaching this legal duty will result in grave consequences to every party involved in a claim. Accordingly, attorneys and primary payers should take affirmative steps to ensure Medicare is reimbursed for its conditional payments.

In order to protect themselves against penalties, attorneys and primary payers must first determine whether a claimant is entitled to or eligible for Medicare benefits. (33) Not every injured party is Medicare eligible, or for that matter, even reasonably likely to become eligible for Medicare within the foreseeable future. (34) As a result, the MSP statute is not triggered by each and every settlement. To determine whether a claimant is a Medicare beneficiary, the attorney should ask the claimant directly whether he or she is eligible. (35) Attorneys and primary payers should also obtain the claimant's Social Security number for submission to the Center for Medicare and Medicaid Services (CMS) for verification. (36) Medicare entitlement status is not limited to the typical citizen over the age of 65, but can also include a citizen of any age who:

(1) has been entitled to Social Security disability benefits for 24 months; (2) has received a disability pension from the railroad retirement board if certain conditions are met; (3) has Lou Gehrig's disease; (4) is the child or widow(er) age 50 or older, including a divorced widow(er), of someone who has worked long enough in a government job where Medicare taxes were paid and meets the requirements of a Social Security disability program; or (5) someone who has end stage renal disease. (37)

Furthermore, a claimant's status can change by the time a settlement is reached or final judgment is entered. (38) Thus, it is also critical to revisit the claimant's Medicare status before settling a case, paying a judgment, or making a disbursement. (39)

Once a determination is made that a claimant is entitled to Medicare benefits, "the parties must consider whether Medicare has already made any payment, conditioned upon possible reimbursement." (40) Moreover, Medicare is not required to provide any formal written notice of its recovery rights to parties. (41) Medicare's "super lien" applies despite the insurer's or attorney's lack of knowledge that Medicare has already made payments. Rather, the primary payer has the obligation to notify Medicare, if conditional payments were made for which the primary payer is responsible. (42) Therefore, for injured individuals already receiving Medicare benefits, conditional payments should be researched and analyzed prior to settlement to ensure there are no outstanding expenses. (43)

Furthermore, liability insurance, no-fault insurance, and Worker's Compensation laws or plans ("applicable plans")44 have a strict obligation under the MSP statute to report information regarding any claims to CMS. (45) An applicable plan that fails to comply with the reporting requirement may be subject to a civil penalty of up to $1,000 for each day of noncompliance with respect to each claimant. (46)

Finally, the primary payer or anyone who has received the primary payment must reimburse Medicare for any conditional payments made within 60 days of settlement, final judgment, or award. (47)

C. How to Comply: Protecting Medicare's interest over Future Medical Expenses

Compliance with the MSP statute requires more than just making sure Medicare's past conditional payments are promptly repaid. (48) The protection of "Medicare's status as a secondary payer also requires a sophisticated understanding of how and when to protect" that status in the future. (49) While the MSP statute clearly establishes this requirement that Medicare's interest must be protected, the statute itself does not provide any guidance on how this should be done. One method that has developed in workers' compensation settlements in an attempt to comply with the MSP statute is to "set-aside" a portion of the settlement, commonly referred to as a "Medicare Set-Aside" (MSA) arrangement. (50) The purpose of the MSA is "to cover the costs of future medical expenses so the responsibility for future accident-related medical expenses is not unfairly shifted to Medicare." (51)

An MSA is structured as a separate, interest-generating, bank account or trust often called a "Medicare Set-Aside Trust Fund" (MSA Trust Fund), and the claimant may use the funds in the trust only to pay for "future accident-related medical expenses that would otherwise be covered by Medicare." (52) Once the set-aside has been established, the administrator of the set-aside program will pay expenses related to the claimant's injury until the set-aside has been exhausted. (53) If providers or claimants submit a request for payment of medical expenses to Medicare before the set-aside is exhausted, Medicare will deny the claim and instruct the entity or individual to instead seek payment from the administrator of the MSA Trust Fund. (54)

The MSA Trust Fund can be established as a self-administered trust, "whereby the claimant is the custodian and trustee of the settlement funds." (55) This option allows the claimant to "enjoy[s] the freedom and flexibility of managing his or her own medical treatment and expenses." (56) However, this self-administration also entails "the responsibility of submitting regular reports and supporting documentation to the CMS Coordinator of Benefits, to verify that the settlement funds are in fact being used for qualified expenditures." (57)

At the center of a MSA Trust agreement is the "allocation"; the process of evaluating a claimant's future medical needs to realistically project the extent of "Medicare-qualified expenses a claimant is reasonably likely to incur in the future as a result of the medical conditions upon which the settlement is based." (58) A proper allocation should take into account the following factors: "the claimant's life expectancy, life care plan, medical records for the past two years, nature of the current treatment, anticipated future treatment, medical recovery prognosis, and the ultimately projected amount of future medical treatment." (59)

After the allocation is determined, "the proposed [MSA arrangement] can be submitted to CMS for final approval." (60) The purpose of the submission is to ensure that claimants and carriers accurately allocate an appropriate amount of the settlement and exhaust all other remedies before the claimant turns to Medicare for the costs of future care. (61) CMS requires "the final submission include the allocation and all supporting documentation." (62) CMS also requires a copy of the actual settlement agreement, the total amount of the settlement, the Medicare set-aside amount and arrangement account, a fee explanation, and information identifying the trust administrator. (63)

D. Penalties for Failure to Comply

The MSP statute imposes significant sanctions on any participant in a settlement who fails to comply with reimbursement requirements and misuses Medicare funds.

First, CMS has a direct right of action to recover its conditional payments from the primary payer, as well as from any party or person who received a primary payment, such as: beneficiaries, providers, suppliers, physicians, attorneys, state agencies and private insurers. (64) In addition to a direct right of action, CMS also has a separate right of subrogation to recover from any entity, party, or person entitled to payment from the primary payer. (65) Accordingly, Medicare also has the right to "intervene in any action related to the events which gave rise to the need for the services for which Medicare paid." (66)

Second, if CMS takes "legal action to recover from a primary payer," Medicare is entitled to recover twice the amount of the Medicare primary payment. (67) Furthermore, if a claimant does not timely reimburse Medicare, (68) the primary payer is obligated to do so, "even though it has already reimbursed the beneficiary or other party." (69) In addition, Medicare beneficiaries who settle their claims without a proper allocation for future medical expenses are "at substantial risk of ... having their future Medicare benefits denied ... until [they spend] the entire settlement" on future treatment. (70) Finally, attorneys may also run the risk of a malpractice claim should they fail to comply with the MSP statute if Medicare then seeks reimbursement from a beneficiary whose claim was settled without reimbursing Medicare, or refuses to pay any medical expenses submitted by the Medicare beneficiary for any accident related medical expenses.

The Government has not shied away from imposing these penalties to their full extent. For example, in United States u. Harris, Mr. Harris, an attorney, settled his client's personal injury case for $25,000. (71) He was sued by the United States when he failed to timely distribute Medicare's share of the settlement proceeds within 60 days of receiving the settlement funds. (72) Mr. Harris argued that he could not be held liable under the MSP statute because he had notified Medicare of the settlement, intended to distribute the settlement payment, and had not reached any specific agreement with Medicare as to the amount to be paid. (73) The Court disagreed and did not allow the attorney to contest the amount of recovery sought, noting that if he had any disagreement as to the extent of liability under the MSP statute, he should have challenged it through the administrative appeals process. (74) The Court further pointed out that the Government has a right to recover from any entity that received primary payment, including attorneys. (75) Accordingly, Mr. Harris was ordered to pay the full amount of Medicare's recovery demand plus interest. (76)


The MSP statute applies to the same extent in maritime personal injury cases as in any other cases that involve Medicare beneficiaries. While compliance with the MSP statute for payments of past medical expenses is straightforward, the same cannot be said for future medical expenses. This is because the MSP statute provides no specific guidance on how to properly protect Medicare's future interest in maritime personal injury claims. (77) Moreover, maritime personal injury remedies are so unique in their nature that blind use of MSA by analogy is unwarranted, as it raises many issues with its application.

A. Issues with Application of Medicare Set-Aside in Maritime Personal Injury Claims

There are three traditional maritime remedies available to seamen injured in the service of the vessel or as a result of the negligence of the employer: (1) maintenance and cure; (78) (2) negligence under the Jones Act; (79) (3) and breach of the warranty of seaworthiness. (80) Maintenance and cure is analogous to a workers' compensation claim because it is not based on negligence. On the other hand, Jones Act negligence and breach of the warranty of seaworthiness are fault-based, and considered liability claims.

Maintenance and cure, which is a part of general maritime law, is a remedy that allows a seaman to recover if the seaman is injured or becomes ill in the service to the vessel. (81) The seaman is entitled to receive maintenance and cure even though the injury or illness is not a result of any negligence on the part of the employer or any unseaworthy condition of the vessel. (82) "Maintenance" refers to the ship owner's obligation to pay to the injured seaman a daily living allowance for the cost of food and lodging while he is ill or recuperating from his injuries. (83) "Cure" refers to the ship owner's obligation to pay the seaman's reasonable and necessary medical expenses. (84) The cure obligation continues from the point of injury until the seaman has reached "maximum medical improvement." (85) Maximum medical improvement is defined as the point when there exists no medical procedures available that can cure the injuries of the seaman. (86)

An injured seaman also has a right to recover damages under the Jones Act if the employer's negligence caused or contributed to the seaman's injury while the seaman was in the course of his employment. (87) In order to be a "seaman" under the Jones Act, a worker must meet specific requirements. First, the worker must have a significant connection with a vessel or fleet that is substantial in nature as well as duration. (88) Second, the vessel must be "in navigation." (89) Third, the worker's duties and responsibilities "must contribute to the function of the vessel or to the accomplishment of its mission." (90) Under the Jones Act, an injured seaman is entitled to the same type of pecuniary damages that are available in a personal injury case, such as compensation for lost earnings and lost earning capacity, past and future medical expenses, pain and suffering, and mental anguish. (91) Some courts also allow the seaman to be awarded interest on his damages.

Under the breach of warranty of seaworthiness, a vessel and its operator owe a seaman the non-delegable duty to provide a "seaworthy" vessel. (92) Generally, a vessel is seaworthy if it and all of its appurtenances and equipment are reasonably fit for their intended purpose. (93) If that duty is breached, the vessel owner has an obligation to indemnify any seaman injured as a result of a failure to furnish a seaworthy vessel. (94) Such a duty is based on a strict liability principle and applies against a vessel in rem, or against a ship-owner or bareboat charter in personam, (95) To prevail in an unseaworthiness claim, a seaman "must show that the unseaworthy condition of the vessel was the ... proximate cause of the plaintiffs injuries." (96) Further, damages for breach of the warranty of seaworthiness are identical to those under the Jones Act, and include past and future medical expenses, indemnity for loss of earnings, and pain and suffering. (97)

Many courts and attorneys refer to maintenance and cure as the maritime equivalent to workers' compensation. However, while both remedies are similar in the sense that neither is based on negligence or fault of the employer, they provide vastly different remedies in regards to what they cover, how much compensation can be granted, and the duration of the benefits. For instance, maintenance to injured seaman ranges anywhere from $15 to $40 a day, while an injured employee under workers' compensation is generally paid two-thirds of his average weekly wage during the disability, which may continue for life if the disability is permanent and total. (98) While maintenance and cure benefits last only to the point of maximum medical cure, workers' compensation may last as long as the disability or injury lingers: for months, years, or even a lifetime. (99) In addition, if a seaman is injured because of the negligence of an employer or ship-owner, he can seek additional damages through a Jones Act claim. (100) This is not allowed under the workers' compensation statute, which immunizes employers from further liability after an employee collects the benefits of workers' compensation for a particular injury. (101) Finally, unlike workers' compensation claims, maintenance and cure cannot be paid in a lump sum for the future. (102) Nevertheless, because maintenance and cure and workers' compensation are not predicated on the negligence or fault of the employer or any other party, and potential recovery is limited to medical expenses and indemnity, MSA would be appropriate in the context of maintenance and cure as well. However, the following hypotheticals would seem to suggest otherwise.

Consider a seaman (103) who suffered an injury to his back when two vessels collided. As a result, he underwent a spinal surgery paid for by the ship owner pursuant to the ship owner's obligation to provide cure to the injured seaman. The surgery did not provide any relief and the seaman now needs pain management. However, because pain management may be palliative and relieves only symptoms rather than improving the condition, (104) the seaman is considered to have reached maximum medical improvement and, therefore, the ship owner is not obligated to pay for the additional treatment. Thus, if the case is settled, no MSA is needed because Medicare would not be paying for an obligation owed by a primary payer. If a seaman did not reach maximum medical improvement and needs a second surgery, then it seems that a MSA would be an appropriate method to protect Medicare's interest. However, maintenance and cure is a time limited, quasi-contractual remedy that the seaman may claim for any injury or illness incurred in the service of the vessel and cannot be awarded in a lump sum for the future. (105) This is a substantial distinction from workers' compensation remedy. Therefore, if the basis for maintenance and cure is not related to any breach of legal duty it does not fall within the purview of the Medicare Secondary Payer Act and no MSA is needed.

Now, consider a different situation. The seaman has reached maximum medical improvement and the parties have settled. However, the seaman's condition returns and the seaman is once again entitled to maintenance and cure, which the ship owner is required to pay. This situation presents a potential conundrum for the parties because it is not clear how they could have protected Medicare's interest for future medical expenses since there was no way of knowing that the symptoms would return.

Due to these issues, there is a sound basis to exclude maintenance and cure from the MSA. When the seaman has a claim for maintenance and cure only, to require compliance with the MSA denies the fundamental limited right of maintenance and cure. If the future medical care is not curative and is merely palliative, then the seaman has no right to recover maintenance and cure, and there is no prejudice to Medicare as there is no secondary payer liable for the costs.

The only time MSA would be appropriate in the context of maritime law is when the seaman is entitled to recover for negligence under the Jones Act and/or breach of warranty of seaworthiness. Future medical expenses, therefore, are recoverable in a lump sum, satisfying the requirements of the MSP statue. This distinction between the limited maintenance and cure remedy, Jones Act negligence, and general maritime law warranty of seaworthiness is often missed and conflated. In the situation where future medical expenses are awarded either for Jones Act negligence or breach of the warranty of seaworthiness, the Medicare set-aside is appropriate and should be heeded by the parties.

Nevertheless, different issues arise when a seaman's claim is based on the employer's negligence or unseaworthiness of the vessel. Unlike workers' compensation, settlements under the Jones Act or for breach of warranty of seaworthiness are much more complex. (106) A workers' compensation settlement contains a finite number of potential recovery options: (1) indemnity; (2) past medical expenses; and (3) future medical expenses. (107) On the other hand, Jones Act negligence or breach of warranty of seaworthiness claims contain many more potential recovery buckets when both economic (i.e. past medical expenses, future medical expenses, loss of earning capacity, etc.), and non-economic (pain and suffering, mental anguish, loss of enjoyment, etc.) damages are considered. Typically, workers' compensation settlements specify what portion of the settlement is allocated for future medical benefits, while liability settlements do not. (108) In the absence of a court's findings on the merits, there is no efficient mechanism to determine what the intention of the primary payer was in making payment to the seaman. However, even if a settlement specifies what portion is designated to medical expenses or pain and suffering, "Medicare will not recognize efforts to allocate those damages unless the allocation is based on a court order issued on the merits of the case." (109) To this point, the CMS Manual expressly provides,
   The only situation in which Medicare will recognize
   allocation of liability payments to nonmedical losses is
   when payment is based on a court order on the merits of
   the case. If the court order or other adjudicator of the
   merits specifically designate amounts that are for
   payment of pain and suffering or other amounts not
   related to medical services, Medicare will accept the
   court's designation. Medicare does not seek recovery
   from portions of court awards that are designated as
   payment for losses other than medical services. (110)

Another facet of Jones Act and breach of warranty of seaworthiness claims is that they apply the legal doctrine of comparative fault, which reduces damages in proportion to the fault of the claimant. (111) This is important to note because CMS's current methods to calculate a set-aside amount are based on the full-value, no-fault, nature of workers' comp statutes. (112) Consider the following situation. A seaman is injured and requires future treatment. After a trial on the merits, the judge finds that the defendant is 75% at fault, and the seaman is 25% at fault. The trier of fact lists damages as follows: past medical expenses--$7,000; future medical expenses--$20,000; pain and suffering--$30,000; and future lost wages--$3,000. The following questions then arise: What amount should be set aside in order to protect Medicare's interest? Should Medicare's right of reimbursement for the future medical expenses also be reduced by 25%? Or should Medicare recover the full amount to the detriment of the claimant? If so, then how does this promote the purpose of having Medicare in the first place? In fact, there is no benefit whatsoever if the Medicare beneficiary has to pay out of pocket for part of the future medical treatment.

In some cases, the issue arises when parties to a settlement agree that a MSA arrangement is appropriate, but cannot obtain the approval of the CMS for the set-aside amount. This is because there is no formal and uniform CMS review process in the liability arena, as there is in worker's compensation. (113) As a result, "some of Medicare's Regional Offices will agree to review and approve MSAs in liability cases, while other Regional Offices refuse to do so." (114) Even when CMS reviews the set-aside amount, there are significant delays between submission of the MSA and ultimate approval. (115) That process is not conducive to allowing parties to move forward. (116) In the past, parties would seek the court's approval of the set-aside allocation amount for future medical expenses.

For example, in Smith v. Marine Terminals, the United States District Court for the Eastern District of Arkansas was asked to determine a set-aside amount in a Jones Act case. (117) The plaintiff, Billy Smith, "ask[ed] the Court to confirm and/or determine a reasonable allocation representing the future cost of medical treatment" after CMS refused to consider a proposed MSA amount. (118) In making this determination, the Court addressed what the law requires when a case is settled on behalf of a Medicare beneficiary. The Court stated that because Mr. Smith was a current recipient of Social Security Disability benefits and currently Medicare eligible, the parties were obligated to reasonably consider and protect Medicare's interest consistent with the Medicare Secondary Payer Act. (119) Mr. Smith filed a maritime tort suit against the employer under 33 U.S.C. [section] 905(b) and the Jones Act after being injured on a floating barge. (120) The Court dismissed the Jones Act claim finding he was not a seaman, but not his maritime tort claim against the employer. (121) The parties ultimately reached an agreement to settle the suit. (122)

As part of the settlement, the parties agreed to retain the services of a company, a vendor, to determine the MSA allocation amount and submit it to CMS for final approval. (123) The MSA was created and submitted to CMS for final review and approval. (124) The vendor determined the appropriate set-aside amount to be $14,647.00. (125) After CMS requested more information and the vendor responded, CMS "failed to consider and approve the [vendor's] competent MSA determination...." (126) Because CMS refused to review and approve the MSA, the settlement was put at risk due to the chance that CMS would later determine that the set-aside amount was insufficient. (127) Accordingly, the parties requested that the Court determine the set-aside amount. (128) The court found the MSA of $14,647.00 was "a reasonable estimate and determination of the future expected medical treatment" that Mr. Smith would require. (129) Further, the Court concluded as a matter of law that the parties had reasonably considered and protected Medicare's interest in the settlement. (130) The set-aside amount of $14,647.00 was deemed to have "fairly and reasonably" taken "Medicare's interest into account." (131) The Court ordered that the full amount of the set-aside be placed in a separate bank account for Mr. Smith "for the exclusive payment of future medical expenses incurred for treatment of the injuries sustained in the accident." (132) Last and most importantly, the Court ordered that the parties "rely upon the Court's acceptance of the MSA at $14,647.00" despite the lack of CMS approval. (133)

This case raises several questions. Does the court have jurisdiction to determine a set-aside amount? Will CMS consider this court's approval sufficient to comply with the MSP statute? Having been given the opportunity to approve the proposed set-aside, is CMS now collaterally estopped from asserting that the set-aside was insufficient? Is the issue now also res judicata? Although potentially liable, did the parties have any other option? Again, the answers to these questions remain unclear. There is a great deal of disagreement among practitioners on whether a MSA is required in maritime personal injury cases at all. Some practitioners assert that a MSA is required, while others maintain it is not.

B. Is Medicare Set-Aside Required?

Practitioners who argue that the MSA is necessary in maritime personal injury claims cite the MSP statute, which places a general obligation on liability insurers and beneficiaries to protect Medicare's interest in any settlement, whether it is for past or future payments. (134) They also point out that strict reporting requirements in any settlement, together with CMS required approval of allocations exceeding a certain amount, make the MSA arrangement necessary. (135)

Practitioners who contend that the MSA is not required base their argument on a narrow interpretation of the MSA statute. (136)

In particular, they assert that the MSP statute is too broad to draw any definitive answer regarding the statute's application of future medical expenses in the maritime personal injury context. (137) Furthermore, those practitioners argue "that if Medicare were to attempt to impose a mandatory requirement for MSA ... it would be unenforceable ... because of the ambiguous language of the MSP Act," (138) and thus inconsistent with the "fair notice" doctrine. (139)

Under the fair notice doctrine, parties must receive fair notice before being deprived of property. (140) When there is no notice, as when "the regulation is not sufficiently clear to warn a party about what is expected of it--an agency may not deprive a party of property by imposing civil or criminal liability." (141) Finally, practitioners also rely on the statement issued by CMS in 2005, which addressed whether a seaman's claim under the Jones Act was subject to the provisions of 42 C.F.R. [section] 411.40--the section in the Code of Federal Regulations that applies to worker's compensation claims. (142) The CMS statement clarified that "although [CMS] recognizes that the Federal Jones Act ... serve[s a] function similar to worker's compensation, ... the Federal Jones Act [was not] enumerated within 42 C.F.R. [section] 411.40." (143) Therefore, the requirements of 42 C.F.R. [section] 411.46 (the provision that requires allocation of a certain sum for future medical expenses) (144) are not applicable in settlements or judgments made under the Jones Act. (145)

To further complicate the debate, in the last few years courts have arrived at different conclusions whether the MSA arrangement is required. In Big R. Towing, Inc. v. Benoit, the United States District Court for the Western District of Louisiana recognized an obligation to set aside funds for future medical expenses and allocate funds in Jones Act suits. (146) In this case, Mr. Benoit was employed at Big R. Towing as a captain aboard a tugboat when he suffered a back and hip injury while performing deck work. (147) Mr. Benoit's treating physician recommended surgery for his back and hip. (148) However, "there was a dispute among the medical doctors as to whether" his need for surgery was related to his preexisting spinal condition or was a result of the accident. (149) Big R. Towing filed for declaratory relief on the issue of whether benefits were due to the accident. (150) "Benoit filed a counterclaim seeking damages under the Jones Act and general maritime law." (151) Before the proceedings were completed, the parties agreed to settle.

Because Mr. Benoit was receiving Social Security disability benefits, "part of the consideration for the settlement was that [he] would be responsible for protecting Medicare's interest under the [MSP] statute." (152) The court was asked to determine whether Mr. Benoit should be required to set aside funding for future medical expenses to protect Medicare's interest as a secondary payer. (153) Following a hearing, the court concluded that it was "reasonably expected that [Mr. Benoit] may become a Medicare beneficiary in the future", and thus, required that a sum of $52,500.00 be set aside "to protect Medicare's interest as the secondary payer for the future medical expenses arising out of the injuries alleged." (154) The court stressed Medicare's secondary payer status and the parties' obligation to reasonably consider and protect Medicare's interests in the settlement. (155)

Three years after the Benoit decision, the United States District Court for the District of New Jersey came to a completely different conclusion, although the suit was neither under the Jones Act nor under general maritime law. In Sipler u. Trans Am Trucking, Inc., the Court held that no federal law requires set-aside arrangements in personal injury settlements for future medical expenses. (156) Mr. Sipler was injured when a truck owned by Trans Am Trucking struck a bus he was riding. (157) The case settled on the eve of trial. (158) The settlement provided that Trans Am Trucking would pay Mr. Sipler "$225,000 in exchange for a release from all claims arising out of the accident." (159) These were the only terms discussed and agreed to at that time. (160) Defense counsel drafted a release and the case was dismissed without prejudice; the Court retained jurisdiction to enforce the settlement. (161)

Defense counsel sent a proposed release containing provisions that Mr. Sipler's private insurance would not pay for claims arising out of the accident because those injuries were preexisting and Medicare would not pay for any future treatment for injuries "arising out of the accident." (162) 163 Upon reviewing the terms, Mr. Sipler's "counsel refused to accept [those terms]", and "[d]efense counsel refused to consummate the settlement agreement without those provisions." (163) In response, Mr. Sipler's counsel requested the Court to enforce the existing settlement. (164) In bringing the motion to enforce the settlement, Mr. Sipler's counsel argued that federal law does not require language in the settlement documents noting his obligation to Medicare or to establish a set aside. (165) The Court agreed with this argument. (166) Specifically, the Court held that "no federal law requires set-aside arrangements in personal injury settlements for future medical expenses." (167) The Court noted that while "[MSA] is prudent in settlements for future medical [expenses] in the worker's compensation context", they are not required outside of that context. (168) Furthermore, the Court reasoned that requiring "personal injury settlements to specifically apportion future medical expenses would [be] ... burdensome to the settlement process and, in turn, discourage personal injury settlements." (169)

A similar result was reached in Bruton v. Carnival Corp., where the United States District Court for the Southern District of Florida held that there is no requirement to establish a MSA Trust Fund from the settlement proceeds to satisfy claims for future medical expenses. (170) In Bruton, Ms. Bruton filed a suit against Carnival Corporation "for injuries ... suffered [from a slip and fall] onboard one of the defendant's cruise ships." (171) In December 2011, the parties reached a settlement during a mediation conference. (172) In the settlement, the parties executed a Mediation Settlement Agreement, which required Ms. Bruton to "execute a general release with approved confidentiality provisions and Medicare provisions." (173) Following the mediation, the defendant sent Ms. Bruton the settlement agreement, containing provisions related to Medicare. (174) Ms. Bruton agreed to some of the provisions, but objected to specific provisions requiring her to establish an MSA Trust Fund. (175) Specifically, she agreed she had reached "Maximum Medical Improvement as relating to the incident, no part of the monetary settlement [was] intended to provide compensation for future medical expenses incurred by Medicare." (176) She also agreed that "the parties were unable to obtain from Medicare the amount of past medical expenses, if any, incurred by Medicare as a result of' the incident. Finally, Ms. Button also "agree[d to] satisfy any Medicare lien amount out of the monetary settlement amount herein." (177) However, Ms. Bruton objected to the following language which required her to create a set-aside account:
   [Plaintiff] further agrees to retain a portion of the
   amount in a trust account administered by their
   undersigned attorneys for three (3) years from the date
   settlement funds are received or until Medicare provides
   [Plaintiff] with written notice that any claim for
   reimbursement, as authorized by the Medicare
   Secondary Payer statute ... has been waived or
   resolved, whichever occurs first. (178)

After deleting the MSA language, the plaintiff returned the modified release to the defendant. (179) However, the defendant refused to tender payment based on the plaintiffs deletion of the MSA provisions. (180) Ms. Bruton subsequently filed a Motion to Compel Settlement, arguing that the Agreement did not require her to establish a Medicare Set Aside Trust account, and that the account was not required by law. (181) Further, the plaintiff argued that the defendant was adequately protected because she agreed to satisfy any Medicare liens or claims, as part of the settlement agreement, and further agreed to fully release the defendant from any future obligations that may arise in relation to the underlying accident. (182) The defendant, on the other hand, refused to finalize the settlement without a Medicare set-aside trust account "based on the overriding need of the defendant to consider the interests of Medicare." (183)

In addressing this issue, the Court began by explaining that under Florida law it is "the party seeking to enforce the agreement [who] has the burden of showing 'assent by the opposing party'" and proving "there was a meeting of the minds or mutual or reciprocal assent to certain definite propositions." (184) The Court noted that, to have an enforceable settlement, the agreement must be "sufficiently specific and mutually agreeable", and that a "contract results if the acceptance of an offer is absolute and unconditional, and identical with the terms of the offer." (185) Here, the Court concluded that although an agreement was reached, this did not require Ms. Bruton to establish an MSA Trust account. (186)

In addition, the Court noted that, as part of this agreement, the plaintiff agreed to be "responsible for any claims or liens by Medicare," and to "indemnify and hold harmless [the defendant from any liens, suits, or actions arising under the [MSP] statute." (187) The Court found that the settlement agreement without the MSA language adequately "addresse[d] the defendant's concerns about Medicare's interests and its own liability for Medicare liens." (188) More importantly, the Court also expressly clarified that "there [was] no legal requirement that the settlement in this personal injury lawsuit include an [MSA] trust account." (189) Therefore, the Court held that the plaintiff fulfilled her obligations under the Agreement, and ruled that, by failing to tender timely payment, the defendant breached the agreement. (190)

Despite heavy controversy among attorneys and courts, the MSA allocations are not required in any context. Confusion first began after CMS issued a series of memoranda providing specific guidance on how and when MSA allocations should be utilized alone with "a structured approval process for workers' compensation MSAs." (191) As a result, many attorneys mistakenly assumed that the law required MSA allocations. (192) However, the MSA is only a "recommended" method to protect Medicare's interest for future medical expenses. (193) The MSP statute neither mentions nor requires it. Moreover, CMS is a federal agency and, as such, its interpretations lack the force of law. (194) Although CMS has advised that "Medicare's interest must be protected ... CMS does not mandate a specific mechanism to protect those interests." (195) The law "does not require a set-aside in any situation." (196)

Traditionally, MSA allocations were used in workers' compensation cases as an effective and preferred vehicle for protecting Medicare's interest as for future medical expenses. (197) Not until recently did CMS recommend MSA for personal injury cases as well. For instance, effective July 6, 2009, Medicare expanded the definition of a "Set Aside Arrangement" in its Medicare Secondary Payer Manual, to include no-fault and liability settlements:
   Set-aside Arrangement--An administrative mechanism
   used to allocate a portion of a settlement, judgment or
   award for future medical and/or future prescription
   drugs expenses. A set-aside arrangement may be in the
   form of a Worker's Compensation Medicare Set-Aside
   Arrangement (WCMSA), No-Fault Liability Medicare
   Set-Aside Arrangement (NFSA) or Liability Medicare
   Set-Aside Arrangement (LMSA). (198)

Certainly, providing for an MSA in a maritime personal injury claim is one way to prove to Medicare that the parties have considered and attempted to protect Medicare's status as a secondary payer. (199) Beneficiaries and attorneys "may conclude it is better to establish an MSA than face the uncertainty" of being penalized by Medicare. (200) Nevertheless, because establishing an MSA "raises so many complicated and divisive issues between the parties," (201) each attorney must decide how much risk he or she is willing to accept in order to avoid establishing the MSA.


Despite the lack of any specific statute or regulation governing how to comply with the MSP statue with respect to future medical expenses, there remains the general obligation on Medicare beneficiaries, attorneys, and primary payers to protect Medicare's future interest in every case. While it is clear that MSA is not mandatory, the MSA is considered the most prudent and preferred method for preventing the potentially burdensome shifting of future medical expenses to Medicare. However, because maritime remedies are unique, blind use of MSA by analogy is unwarranted. Therefore, the decision whether to use MSA should be case specific, weighing all the pros and cons of its use. There is no question that using the MSA in maritime personal injury cases may affect the prospects of settlement, increase costs, and considerably retard the settlement process.

Without clear directives from CMS on how the MSA should be applied in maritime personal injury claims, and in particular cases that are purely claims for maintenance and cure, parties will have to face challenges. On the other hand, if Medicare's interest is not protected, parties will face severe penalties for non-compliance. Because there are serious penalties for failure to reimburse Medicare or to protect its interests, all parties involved in the case should take affirmative steps to ensure Medicare is reimbursed for past and future medical expenses. Failure to do so places the litigants and also the attorneys at risk. Certainly, an established procedure by CMS requiring litigants to submit proposals to CMS for approval or disapproval would be the most effective and efficient way. In addition, changes in the statute or regulations are needed, which would require a determination by CMS within a period of time after submission when the parties are represented by counsel, and an automatic approval should the determination not be made within that period of time. In that event, a state or federal Court that has jurisdiction over the case would by statute have the right to determine the adequacy of the proposal.

Olga V. Fofanova, J.D. Candidate 2016, Loyola University New Orleans College of Law; B.A. 2009, South Ural State University, Russia.

(1.) Medicare covers citizens over age 65, and citizens of any age who: (1) have been entitled to Social Security disability benefits for 24 months; (2) received a disability pension from the railroad retirement board and meet certain conditions; (3) have Lou Gehrig's disease; (4) are child or widow(er) of 50 or older, including a divorce widow(er), of someone who has worked long enough in a government job where Medicare taxes were paid and meets the requirements of the Social Security disability program; or (5) have end stage renal disease. Social Security Administration, Pub. No. 05-10043, Medicare 5-7 (2015), available at

(2.) Id.; see also Christopher C. Yearout, Big Brother Is Not Just Watching, He's Suing: Medicare's Secondary Payer Statute Evolves in Aggressive Pursuit of Fiscal Integrity, 41 CUMB. L. Rev. 117, 119 (2011).

(3.) Yearout, supra note 2, at 119.

(4.) Patrick T. Bergin, The Medicare Secondary Payer Statute: Litigators Beware, MDLA Quarterly, at 115, 119, available at 0%28June%202009%29.pdf.

(5.) Id.

(6.) Norma S. Schmidt, The King Kong Contingent: Should the Medicare Secondary Payer Statute Reach to Future Medical Expenses in Personal Injury Settlements?, 68 U. PITT. L. REV. 469, 471 (2006).

(7.) Id.

(8.) Id.; 42 U.S.C. [section] 1395y (2012).

(9.) Schmidt, supra note 6, at 471.

(10.) Id.; See also Stephanie Frazier Stacy et al., DRI Defense Practitioner's Guide to Medicare Secondary Payer Issues, The DRI Defense Library Series, at 5 (2010) [hereinafter "DRI"].

(11.) DRI, supra note 10, at 5.

(12.) 42 U.S.C. [section] 1395y(B)(i) (2012).

(13.) John W. Merting, Personal Injury--Medicare Set-Aside Requirements: What You Must Know (And Do) Before You Settle, 1 Ann.2005 ATLA-CLE 61 (2005).

(14.) Id.

(15.) The Centers for Medicare & Medicaid Services is a federal agency within the United States Department of Health and Human Services that administers and manages the Medicare program. How Medicare is Funded, MEDICARE.GOV, https :// (last visited Oct. 29, 2015).

(16.) Merting, supra note 13; see also Aaron D. Frishman, Medicare Set-Aside in Personal Injury Cases: Is There a Standard Method of Practice?, 8 Nat'l. Acad. Elder L. Att'y 163, 164 (2012), available at e_Set_Asides.pdf; see also What is a Medicare Set-Aside and When do you Need One?, Special Needs Answers,

(17.) 42 U.S.C. [section] 1395y(b)(2)(A) (2012).

(18.) Evanston Hosp. v. Hauck, 1 F.3d 540, 544 (7th Cir. 1993).

(19.) "Primary plan" and "primary payer" are the same term and are used interchangeably.

(20.) 42 C.F.R. [section][section] 411.20, 411.40, 411.50 (2014).

(21.) Vessel owners and operators who employ seamen will have either protection and indemnity insurance or be enrolled in a P&I Club such as West of England, Skuld or equivalent. Both insurance protections provide coverage for the maintenance and cure obligations as well as any indemnity for medical expenses if there is liability under the Jones Act, 46 U.S.C. [section] 30104, or general maritime law.

(22.) Christopher S. Berdy & W. Steven Nichols, The Medicare, Medicaid and Ship Extension Act of 2007: A Practitioner's Introduction to Resolving Personal Injury Liability Claims by Medicare Beneficiaries, 76 Def. COUNS. J. 393, 395 (2009).

(23.) William E. Pipkin, Jr. & Conley W. Knott, In Plain Language: Medicare and the Secondary Payer Statute, 48 No. 3 DRI FOR DEF. 44 (2006).

(24.) 42 C.F.R. [section][section] 411.45(a), 411.53(a) (2014); Berdy & Nichols, supra note 22, at 395; DRI, supra note 10, at 5 (Medicare will not make conditional payments under the following conditions: (1) a third party payer plan alleges that it is a secondary payer to Medicare; (2) a plan limits payment when the individual is entitled to Medicare; (3) a plan provides covered services for younger employees and spouses, but not for employees and spouses who are 65 and older; (4) a proper claim is not filed, or is not filed in a timely manner, for any reason other than the physical and mental incapacity of the beneficiary; or (5) a group health plan fails to furnish needed information to the Centers for Medicare & Medicaid Services to determine whether or not an employer plan is primary to Medicare).

(25.) 42 C.F.R. [section] 411.24(c) (2014); Schmidt, supra note 6, at 474.

(26.) Schmidt, supra note 6, at 471.

(27.) 42 C.F.R. [section] 411.24(c)--(e) (2014); DRI supra note 10, at 7-8; Schmidt, supra note 6, at 475.

(28.) 42 C.F.R. [section] 411.37(a) (2014); Berdy & Nichols, supra note 22, at 395; see also Medicare Secondary Payer (MSP) Manual, Ch. 1, section 20, CMS.GOV,

(29.) 42 U.S.C. [section] 1395y(2) (2012).

(30.) 42 C.F.R. [section] 411.24(g) (2014)

(31.) Id.

(32.) 42 C.F.R. [section] 411.24(e) (2014).

(33.) DRI, supra note 10, at 10.

(34.) DRI, supra note 10, at 10.

(35.) DRI, supra note 10, at 10.

(36.) DRI, supra note 10, at 10.

(37.) DRI, supra note 10, at 10.

(38.) DRI, supra note 10, at 10.

(39.) DRI, supra note 10, at 10.

(40.) Daniel W. Hayes, Medicare and Liability Settlements: How to Spot Issues and Consider Medicare's Interests, TEAGUECAMPBELL.COM,

(41.) DRI, supra note 10, at 10-11.

(42.) 42 C.F.R. [section] 411.25(a) (2014).

(43.) Hayes, supra note 40 ("The Medicare beneficiary (or a beneficiary's attorney with a valid Consent to Release) can retrieve up-to-date conditional payment amounts from three sources: (1) website; (2) By telephone using the "MSPRC Self Service Information Feature" (1-866-677-7220). The following information is necessary in order to use this self-service feature: case identification number (found on all MSPRC correspondence); beneficiary's date of birth; first five letters of beneficiary's last name as it appears on Medicare card; last 4 digits of beneficiary's Social Security number (or full Medicare number); and (3) Medicare Secondary Payer Recovery Portal, which is a newer option. The MSPRP web portal is available for anyone to access, upon enrollment, by uploading a valid Consent to Release or Proof of Representation to the active claim file. The web portal allows access to the most recent conditional payment information and provides the ability to upload documents, request updates, dispute items based on relatedness, and submit settlement information.").

(44.) 42 U.S.C. [section] 1395y(b)(8)(E)(i) (2012).

(45.) See 42 U.S.C. [section] 1395y(b)(8)(E)(i) (2012); 42 U.S.C. [section] 1395y(b)(8)(A) (2012).

(46.) 42 U.S.C. [section] 1395y(b)(8)(E)(i).

(47.) 42 U.S.C. [section] 1395y(b)(2)(B)(ii); 42 C.F.R. [section] 411.24(h) (2014) (The primary payer's responsibility for payment is not limited to just those situations where the primary payer accepts liability for the injuries which required medical treatment. It can be also demonstrated by a judgment, by a payment conditioned on giving a waiver or release to the primary payer or its insured, and can be demonstrated by other means including but not limited to a settlement, award, or contractual obligation).

(48.) DRI, supra note 10, at 6.

(49.) DRI, supra note 10, at 6.

(50.) DRI, supra note 10, at 24.

(51.) DRI, supra note 10, at 24.

(52.) DRI, supra note 10, at 24.

(53.) Pipkin & Knot, supra note 23.

(54.) Pipkin & Knot, supra note 23.

(55.) Pipkin & Knot, supra note 23.

(56.) Pipkin & Knot, supra note 23.

(57.) Pipkin & Knot, supra note 23.

(58.) Pipkin & Knot, supra note 23.

(59.) Pipkin & Knot, supra note 23.

(60.) Pipkin & Knot, supra note 23.

(61.) Pipkin & Knot, supra note 23.

(62.) See generally Pipkin & Knot, supra note 23.

(63.) Pipkin & Knot, supra note 23; see also Workers' Compensation Medicare Set Aside Arrangement (WCMSA) Reference Guide, CMS.GOV, WCMSA-Reference-Guide-Version-13-copy.pdf.

(64.) 42 U.S.C. [section] 1395y(b)(3) (2012); 42 C.F.R. [section] 411.24(c)(2) (2014).

(65.) 42 C.F.R. [section] 411.26(b) (2014).

(66.) DRI, supra note 10, at 9.

(67.) 42 C.F.R. [section] 411.24.

(68.) Id. (within 60 days of receiving a primary payment).

(69.) See id. [section] 411.24(i)(l).

(70.) Merting, supra note 13.

(71.) United States v. Harris, No. CIV.A. 5:08CV102, 2009 WL 891931, at *1 (N.D.W. Va. Mar. 26, 2009).

(72.) Id.

(73.) Id.

(74.) Id.; see also 42 U.S.C. [section] 1395ff(b)(l)(A) (2014); 42 U.S.C. [section] 1395ff(a)(3)(C)(I) (Any challenge to the amount owed by the defendant to reimburse Medicare has to be raised in an administrative proceeding within a 120-day period or is otherwise waived).

(75.) Harris, 2009 WL 891931, at *1.

(76.) Id.

(77.) Matthew Garretson, Medicare Set Aside Analysis Under The Medicare Secondary Payer Act, 1 Handling Motor Vehicle Accident Cases 2d [section] 6B:12.

(78.) The Osceola, 189 U.S. 158, 175 (1903).

(79.) 46 U.S.C. [section] 30104 (2012).

(80.) The Osceola, 189 U.S. at 175.

(81.) Id.; see also Aguilar v. Standard Oil Co. of N.J., 318 U.S. 724, 730 (1943); see also Warren v. U.S., 340 U.S. 523, 525 (1951).

(82.) Vella v. Ford Motor Co., 421 U.S. 1, 4-5 (1975) (explaining that the ship owner's duty to provide maintenance and cure arises irrespective of whether the illness or injury is suffered in the course of the seaman's employment, and negligence on the seaman's part will not relieve the ship owner of responsibility.); see also Omar v. Sea-Land Serv., 813 F.2d 986, 989-90 (9th Cir.1987) (explaining that a plaintiff may not recover for maintenance and cure where the injury or illness results from the plaintiffs own willful misbehavior.); See also Aguilar, 318 U.S. at 730 n.6.

(83.) See Calmar S.S. Corp. v. Taylor, 303 U.S. 525 (1938).

(84.) Calmar S.S. Corp. v. Taylor, 303 U.S. 525 (1938).

(85.) See Vella, 421 U.S. at 5 (explaining that a seaman is entitled to receive maintenance and cure from the date the seaman leaves the vessel until the seaman reaches the point of "maximum possible cure.").

(86.) Id.

(87.) 46 U.S.C. [section] 30102 (2006).

(88.) Chandris, Inc. v. Latsis, 515 U.S. 347, 368 (1995).

(89.) Id. (explaining that a vessel is "in navigation" if it is engaged as an instrument of commerce or transportation on navigable waters. To recover under the Jones Act, a vessel does not have to be in motion at the time of a worker's injury in order for him to recover.); see also Lozman v. City of Riviera Beach, 133 S. Ct. 735, 740 (2013); see also Stewart v. Dutra Const. Co., 543 U.S. 481, 497 (2005).

(90.) Chandris, 515 U.S. at 368.

(91.) Bartholomew v. Universe Tankships, Inc., 279 F.2d 911, 916 (2d Cir. 1960).

(92.) Gifford v. Am. River Transp. Co., 833 F. Supp. 2d 684, 690 (W.D. Ky. 2011); see also Mahnich v. Southern S.S. Co., 321 U.S. 96, 100-01 (1944).

(93.) Gifford, 833 F. Supp. 2d at 690.

(94.) Mahnich v. Southern S.S. Co., 321 U.S. 96, 99 (1944).

(95.) Carrol E. Neesemann, The Law of Unseaworthiness and the Doctrine of Instant Unseaworthiness, 28 Md. L. Rev. 240, 250 (1968); see generally Gifford, 833 F. Supp. 2d at 690.

(96.) Gifford, 833 F. Supp. 2d at 690.

(97.) Bartholomew, 279 F.2d at 916; see also Miles v. Apex Marine Corp., 498 U.S. 19, 22-23 (1990).

(98.) 33 U.S.C.A. [section] 908(c) (West 2001) (under the Longshore and Harbor Workers' Compensation Act, the compensation rate to disabled employees is 66% their average weekly wages subject to an annual maximum disability).

(99.) 33 U.S.C.A. [section][section] 902(10); 906; 908.

(100.) See generally Romero v. Int'l Terminal Operating Co., 358 U.S. 354, 35556 (1959) (Plaintiff brought three claims against the defendant: (1) damages under the Jones Act and unseaworthiness; (2) maintenance and cure; (3) negligence).

(101.) 33 U.S.C. [section] 905(b) (an employee covered by the Longshoreman and Harbor Workers' Compensation Act is limited to an exclusive remedy in workers' compensation).

(102.) Calmar S.S. Corp. v. Taylor, 303 U.S. 525, 531-32 (1938).

(103.) Assuming the seaman is a Medicare beneficiary or soon to be eligible to become one.

(104.) See Arthur A. Crais, Jr., Maintenance And Cure--A Trifecta For Seamen? Atlantic Sounding Co. v. Townsend, Messier v. Bouchard Transportation and Boudreaux v. Transocean Deepwater, Inc., 14 LOY. MAR. L.J. 13, 20-25 (2014) (discussing therapeutic, palliative and curative medical care).

(105.) Calmar, 303 U.S. at 531.

(106.) Garretson, supra note 77.

(107.) Id.

(108.) Garretson, supra note 77.

(109.) DRI, supra note 10, at 12; see also Dep't of Health & Human Servs., Centers for Medicare & Medicaid Servs., Transmittal 25, Update Medicare Secondary Payer (MSP) Manual Publication 100-05 to reflect statutory changes in the Medicare Modernization Act (MMA) Ch. 5 [section] 50.1 (2005), available at mittals/downloads/R25MSP.pdf.

(110.) See Dep't of Health & Human Servs., Centers for Medicare & Medicaid Servs., Pub. 100-05, Ch. 7 [section] 50.4.4 (2003), available at

(111.) See generally David R. Owen & J. Marks Moore III, Comparative Negligence in Maritime Personal Injury Cases, 43 La. L. Rev. 941 (1983), available at lalrev.

(112.) Matthew L. Garretson, Making Sense of Medicare Set-Asides, 42 Trial, May 2006, at 64, 70.

(113.) Memorandum from Sally Stalcup, MSP Regional Coordinator, Department of Health and Human Services (May 25, 2011), available at [hereinafter "Stalcup Memo"].

(114.) DRI, supra note 10, at 25.

(115.) Jason D. Lazarus, The New Frontier Of Liability Medicare Set Asides: What Should Be Done When Settling A Liability Claims With A Medicare Beneficiary?, SYNERGY SETTLEMENT SERVICES, ier_-_LMSAs.pdf.

(116.) Id.

(117.) Smith v. Marine Terminals of Arkansas, No. 3:09-CV-00027-JLH, 2011 WL 3489806, at *1 (E.D. Ark. Aug. 9, 2011).

(118.) Smith v. Marine Terminals of Arkansas, No. 3:09-CV-00027-JLH, 2011 WL 3489806, at *1, *3 (E.D. Ark. Aug. 9, 2011).

(119.) Id. at *3-5.

(120.) Id. at *1.

(121.) See Smith v. Marine Terminals of Arkansas, Inc., No. 3:09CV00027 JLH, 2010 WL 4789167, at *7 (E.D. Ark. Nov. 17, 2010) (order granting motion to determine Medicare Set Aside).

(122.) Smith, 2011 WL 3489806, at *2.

(123.) Id.

(124.) Id. at *1, *3.

(125.) Id. at *3.

(126.) Id. at *3, *5.

(127.) Smith, 2011 WL 3489806, at *3.

(128.) Id. at*l.

(129.) Id. at *4.

(130.) Smith v. Marine Terminals of Arkansas, Inc., No. 3:09CV00027 JLH, 2010 WL 4789167, at *4 (E.D. Ark. Nov. 17, 2010).

(131.) Id. at *5.

(132.) Smith, 2011 WL 3489806, at *5.

(133.) Id.

(134.) Interview with Robert Campbell, Partner, Williamson Fontenot & Campbell LLC, in Baton Rouge, La. (Sep. 2, 2015).

(135.) Id.

(136.) Interview with Robert Campbell, Partner, Williamson Fontenot & Campbell LLC, in Baton Rouge, La. (Sep. 2, 2015).

(137.) Frishman, supra note 16, at 164.

(138.) Id. at 167.

(139.) Id.

(140.) Id. at 168 (citing Gen. Elec. Co. v. U.S. EPA, 53 F.3d 1324, 1328-29 (D.C. Cir. 1995)).

(141.) Id.

(142.) Letter from Eve Fisher, Health Insurance Specialist, Dep't of Health & Human Servs., to John W. Merting (Feb. 3, 2005) available at ldaa6457400420 49592.pdf?targetType=atlapub-pdf&originationContext=document&transition Type=DocumentImage&uniqueld=92cb4369-cf41-4c87-9850-la2222d2f249& contextData=(sc.DocLink).

(143.) Id.

(144.) 42 C.F.R. [section] 411.46 (2015). (indicating Medicare will not pay for any future medical expenses until the total future medical expenses related to the employee's injury equals the amount of the settlement, which was allocated to future medical expenses).

(145.) 42 C.F.R. [section] 411.46 (2015); See also Letter from Eve Fisher to John W. Merting, supra note 142.

(146.) Big R Towing, Inc. v. Benoit, No. CIV.A. 10-538, 2011 WL 43219, at *3 (W.D. La. Jan. 5, 2011).

(147.) Id.

(148.) Id.

(149.) Id.

(150.) Id.

(151.) Benoit, 2011 WL 43219, at *2.

(152.) Id.

(153.) Id. at *3.

(154.) Id. at *4.

(155.) Big R Towing, Inc. v. Benoit, No. CIV.A. 10-538, 2011 WL 43219, at *4 (W.D. La. Jan. 5, 2011).

(156.) Sipler v. Trans Am Trucking, Inc., 881 F. Supp. 2d 635 (D.N.J. 2012).

(157.) Id. at 636.

(158.) Id.

(159.) Id.

(160.) Id.

(161.) Sipler, 881 F. Supp. 2d at 636.

(162.) Id.

(163.) Id.

(164.) Id.

(165.) Id.

(166.) Sipler, 881 F. Supp. 2d at 637.

(167.) Sipler v. Trans Am Trucking, Inc., 881 F. Supp. 2d 635, 637 (D.N.J. 2012).

(168.) Sipler v. Trans Am Trucking, Inc., 881 F. Supp. 2d 635, 637 (D.N.J. 2012).

(169.) Id.

(170.) Bruton v. Carnival Corp., No. 11-21697-CIV, 2012 WL 1627729, at *1 (S.D. Fla. May 2, 2012).

(171.) Id.

(172.) Id. at *2.

(173.) Id.

(174.) Id.

(175.) Bruton, 2012 WL 1627729, at *1.

(176.) Id.

(177.) Bruton v. Carnival Corp., No. 11-21697-CIV, 2012 WL 1627729, at *1 (S.D. Fla. May 2, 2012).

(178.) Bruton v. Carnival Corp., No. 11-21697-CIV, 2012 WL 1627729, at *1 (S.D. Fla. May 2, 2012).

(179.) Id.

(180.) Bruton, 2012 WL 1627729, at *1.

(181.) Id.

(182.) Id.

(183.) Id.

(184.) Id. at *2 (quoting Ribich v. Evergreen Sales & Serv., Inc., 784 So.2d 1201, 1202 (Fla. Dist. Ct. App. 2001).

(185.) Bruton v. Carnival Corp., No. 11-21697-CIV, 2012 WL 1627729, at *2 (S.D. Fla. May 2, 2012) (quoting Vital Pharms., Inc. v. S.A.N. Nutrition Corp., No. 06-60646-CIV, 2007 WL 1655421 at *6 (S.D. Fla. June 6, 2007); Ribich v. Evergreen Sales & Serv., Inc., 784 So.2d 1201, 1202 (Fla. Dist. Ct. App. 2001).

(186.) Id.

(187.) Id.

(188.) Id.

(189.) Id.

(190.) Bruton, 2012 WL 1627729, at *3.

(191.) DRI, supra note 10, at 24; Kathryn Bucher et al., Setting The Record Straight: Dispelling Medicare Myths in Tort Settlements, For Def., May 2013, at 52, available at Medicare_Myths_in_Tort_Settlements_May_2013.pdf.

(192.) Bucher et al., supra note 191, at 52.

(193.) DRI, supra note 10, at 25.

(194.) See, e.g., Christensen v. Harris County, 529 U.S. 576, 587 (2000) (noting that it is well settled that "interpretations contained in policy statements, agency manuals, and enforcement guidelines lack the force of law") (citing Reno v. Koray, 515 U.S. 50, 61 (1995)); see also Sipler v. Trans Am Trucking, Inc., 881 F. Supp. 2d 635, 638 (D.N.J. 2012).

(195.) Stalcup Memo, supra note 113, at 1.

(196.) Stalcup Memo, supra note 113, at 1.

(197.) DRI, supra note 10, at 25.

(198.) Medicare Secondary Payer (MSP) Manual, supra note 28 (emphasis added).

(199.) DRI, supra note 10, at 27.

(200.) DRI, supra note 10, at 27.

(201.) Bucher et al., supra note 191, at 52.
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Author:Fofanova, Olga V.
Publication:Loyola Maritime Law Journal
Date:Jun 22, 2016
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