The original Medicare statute, 42 U.S.C. 1395, contains no provisions for a Medicare set aside in liability cases. The original statute provided for a set aside in worker’s compensation cases and those provisions have been extended by policy but not by regulation to liability cases. The CMS website has memos which shed light on the CMS expectations regarding Liability Medicare Set Asides (LMSA) but these memos technically have only the power of persuasion.
The Big R Towing case blessed the establishment of a LMSA. The Schexnayder case held that CMS approval of a LMSA is not required. The Guidry case in 2011 again approved a LMSA proposal. The United States Supreme Court in Chevron, 467 U.S. 837 (1984), set forth the analysis for determining whether an agency policy is enforceable. To be enforceable Congress must have spoken clearly on the issue or the agency’s position must be a reasonable interpretation of the statute.
The Medicare statute is silent as to LMSAs and Congress has not otherwise addressed LMSAs. The MSP Act is at best vague and ambiguous regarding the issue of LMSAs. Medicare has not me the Chevron test. In Christensen v. Harris County, 529 U.S. 576 (2000), the United States Supreme Court held that internal agency interpretations and memorandums have the power of persuasion only. Nonetheless, the prudent practitioner would be well advised to thoroughly document their file including showing the factors considered in determining if a LMSA is appropriate and preparing an allocation showing the amounts allocated to each element of damages.
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