by John Darer® CLU ChFC MSSC CeFT RSP CLTC
What is a Medicare Set Aside Arrangement (MSA)
A Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) is a financial agreement that allocates a portion of a workers’ compensation settlement to pay for future medical services related to the workers’ compensation injury, illness, or disease. These funds must be depleted before Medicare will pay for treatment related to the workers’ compensation injury, illness, or disease .
Once the funds in the WCMSA account have been exhausted and Medicare has been provided with information to document that payments from the account were appropriate, Medicare will begin paying for the beneficiary’s Medicare covered eservices that are related to the work related injury or disease. { Note that Medicare expenses that are not related to the work injury or disease are no affected by the WCMSA and are reimbursed by Medicare unless another entity under 42 U.S.C. 1395y(b) is primary payer.
For Medicare Set-Asides (MSAs), it is important to note that a Medicare Set-Aside allocates for all future medical and pharmacy expenses related to the work injury, that are covered and otherwise reimbursable by Medicare
The Argument for Professional Administration of Medicare Set Aside Arrangements (WCMSA, LMSA or NFMSA)
Medicare Set Aside arrangements are intended to not only protect Medicare's interest, a requirement of the Medicare Secondary Payer Act (MSP), but to also protect the settling injured worker (or plaintiff if Liability MSA) from the loss of Medicare benefits. Ongoing compliance requires, among other things, keeping track of medical bills, sorting through and having the knowledge to determining what procedures, equipment and medication is covered by Medicare and filing attestations. Compliance requires attention to detail that the injured workers or personal injury victim may not be able to, or willing to handle. A number of professional administrators charge cost efficient one time fees and some have harnessed technology and group buying discounts to enhance the value and accessibility to clients. Call me at 888-325-8640 if you would like more details.
Long Beach CA Insurance Agent and Daughter Charged With Embezzlement and Money Laundering of Injured Workers' MSA Funds
According to its July 21, 2017 press release, investigators with the California Department of Insurance Investigation Division, Tom Fallon, 63 and daughter Christina Fallon, 28 embezzled $273,954 from the injured workers who entrusted him to invest their Medicare set-aside settlement funds with his agency, Fortis Financial Insurance Services, Inc. Tom Fallon then simply diverted their funds into his own accounts, spending the money for their personal use, and with business ventures that include Big Daddy’s Cigar Lounge at 5844 E. Naples Plaza in Long Beach. CA. The Los Angeles County District Attorney's Office filed a criminal complaint against Tom and Christina Fallon on July 14, 2017, charging two counts of Theft by Embezzlement PC 504 and 487(a), and 15 counts of Money Laundering PC 186.10 including PC 186.11(a) (3) white collar crime enhancements. If convicted of all charges, the defendants face a maximum sentence of more than 16 years in state prison
By stealing from injured workers who depend on the funds for future care, the Fallons may have left many victims without the resources they need for medical treatment.”
A Structured MSA and a Professional Administrator Would Have Mitigated the Embezzlement Risk
It is unclear who advised the injured workers to use the Fallon's or Fortis. It does not appear that the MSAs that were the subject to the conduct that led to the Fallons arrest were Structured WCMSA. One wonders what the applicant attorneys' advice was when settling the cases. The amount of money that the victims could have saved between structuring the MSA and the discounts offered by certain administrators would be meaningful.
If you are thinking that embezzlement is a one-off consider this case where an improperly exhausted MSA by Sister while Claimant in Jail was not Dischargeable in Sister’s Bankruptcy N RE DAVID K. JOUETT and SABRA B. JOUETT, Debtors. STEPHEN E. HUBANKS, Plaintiff, v. DAVID K. JOUETT and SABRA B. JOUETT, Defendants. Case No. 13-10005-M Chapter 7 Adv. No. 13-01015-M UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA 2014 Bankr. LEXIS 950 March 12, 2014, Decided
The July 10, 2017 release of the Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide Version 2.6 appends Section 17.1, the section covering MSA administrators, with a single sentence:
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