1-1-2018; Biery + Ignoffo Analyze Cook Cty MSA Ruling with Nat'l Impact; IL WC Costs Will Drop Under This Administration, Happy New Year!! and more

Synopsis: Another Six-Figure Reminder That You MUST Consider Medicare’s Interests When Ending All Litigation!! Analysis by Shawn R. Biery, J.D., MSCC and Matt Ignoffo, J.D., MSCC

Editor’s comment: We constantly have clients contact us regarding “guidance” they have received which creates more confusion on whether they “need to do an MSA” or explaining why they don’t believe Medicare applies to their case.  We again confirm YOU MUST ALWAYS CONSIDER MEDICARE’S INTERESTS. This doesn’t mean you always need an MSA, or frankly, that you need to do more than identify the MMI release in many cases. But you always should take a look and see if Medicare has any potential impact on any settlement—not just workers’ compensation.

In a recent (November 26, 2017) United States District Court for the Northern District of Illinois opinion on Paraskevas v. Price, the Court concluded that Medicare did not abuse its discretion in finding the state court settlement order was not on the merits and was therefore not binding on CMS when seeking reimbursement of conditional payments. In the claim, the Court found settlement compensated Plaintiff not only for the wrongful death action, but also the estate's survivor claims in connection with the medical malpractice claim and because of that compensation, Medicare had a right to reimbursement for conditional payments. Medicare had sought that reimbursement in a decision and the Court found that Medicare's decision was affirmed, and Plaintiff owed $105,000 plus interest in reimbursement of conditional payments.

Briefly, Toula Paraskevas ("Plaintiff") sued Thomas E. Price as the Secretary of the United States Department of Health and Human Services ("Defendant," "Medicare," or the "Secretary"). Plaintiff was the surviving spouse of her deceased husband George Paraskevas ("George"), who had been diagnosed with prostate cancer in April 2007 and passed away on January 2, 2012. From George's diagnosis until his death, Medicare conditionally paid medical bills totaling $253,546.73 on George's behalf.

In 2009, Plaintiff and her husband George filed a medical malpractice lawsuit in the Circuit Court of Cook County, Illinois against George's primary care physician, his urologist, and their respective practice groups. In fall of 2012, Plaintiff tentatively settled the case, both the estate's survival claims and the wrongful death claims with George's primary care physician and his practice group for $250,000 plus costs. Those defendants were dismissed from the case. However, they were again added to the case on September 11, 2013 after the tentative settlement broke down. On September 23, 2013, the state court granted the urologist and his practice group's motion to dismiss for failure to state a claim. The primary care physician and his practice group remained in the case. The state court also granted Plaintiff leave to file a second amended complaint; however, counsel failed to file the second amended complaint.

In December 2013, settlement was tentatively set with the PCP and his practice group paying $250,000 plus costs of $8,664.10, totaling $258,664.10 (an amount which had been previously agreed upon) and $175,000.00 of same was to be distributed to the next of kin, with $25,000 going towards attorneys' fees and $8,664.10 for expenses. Plaintiff's counsel prepared the required documents for filing the settlement in the state court and requesting distribution of the settlement proceeds to the next of kin.  

Plaintiff then filed the second amended complaint, eliminating the estate's survival claims pursuant to the ISA, leaving only the wrongful death claims pursuant to the IWDA. In conjunction with the second amended complaint, Plaintiff filed what she called a "Motion to Approve Settlement and Distribution, to Confirm that Settlement is Made Exclusively Pursuant to the Wrongful Death Act, and To Dismiss." The motion stated that the "settlement should be ascribed wholly to damages in the wrongful death action," and therefore not based on the value of the medical bills paid by Medicare, in what Medicare (and most informed observers!) saw as a clear attempt by Plaintiff to deny Medicare reimbursement of the $253,546.73 it had paid on George's behalf.

Plaintiff was at least smart enough to alert Medicare as to the settlement proceedings and they did engage in discussions about Medicare's potential entitlement to reimbursement from a settlement but did not reach an agreement prior to the approval of settlement on February 3, 2014. The state court approved Plaintiff's settlement for $250,000 plus $8,664.10 in costs without any hearing essentially signed the order verbatim as prepared by Plaintiff counsel.

On January 27, 2014, the MSPRC had issued a final demand letter, seeking reimbursement in the amount of $171,537.04 in the event that Plaintiff settled her state court case. On February 10, 2014, Plaintiff appealed the MSPRC's final demand letter. There was a considerable delay. A redetermination decision was not issued within the requisite sixty-day period, so Plaintiff filed a federal claim for declaratory relief. The District Court heard the case and dismissed the case for failure to exhaust administrative remedies. Plaintiff then proceeded through the administrative process and was unsuccessful at every stage (several appeals and requests for redetermination).

Of note, on January 6, 2016, the ALJ held a telephonic hearing with Plaintiff's counsel appearing on her behalf and in response to the ALJ directly inquiring as to the existence of a formal written agreement memorializing Plaintiff's state court settlement, Plaintiff's counsel represented that he believed there was a general release and that he would provide that release for the record. However, he could not do so. After the hearing concluded, Plaintiff submitted two affidavits obtained from her attorneys. The affidavits explicitly stated that Plaintiff's counsel and opposing counsel could not locate any written settlement agreement.

The final level prior to this Federal District Court decision was a MAC review of the ALJ's decision. The MAC determined that Plaintiff attempted to convert her lawsuit containing estate survival and medical malpractice claims into a wrongful death suit exclusively under the IWDA in order to shield herself from having to reimburse Medicare. The MAC also found that Plaintiff's counsel "did not document, in any way, the assertions that the matter was settled exclusively under the IWDA." Moreover, Plaintiff made no mention and provided no explanation for the fact that the settlement recovery was identical to the amount of the preliminary settlement that fell apart. The MAC rejected Plaintiff's position that the state court made a determination on the merits when it signed the order stating that the lawsuit and settlement were pursuant to only the IWDA. Notably, the MAC found that there was nothing in the record that reflected whether the Illinois court ever held a hearing on this matter. On August 16, 2016, the MAC ultimately affirmed Medicare's entitlement to reimbursement but reduced the total dollar amount to $105,000.00 plus interest.

This Federal District Court found Plaintiff's position lacking in complete truth and concluded Medicare not only had the statutory authority to seek reimbursement, Medicare also, as a federal body implementing federal law, did not waive its objections by not appearing in the state court proceedings. The MAC's decision was affirmed, and the Secretary's final decision stands.

There are always arguments for both positions, however the over-riding position should always be that Medicare’s interests are considered. This reimbursement could have been further limited if the Plaintiff would have made the effort toward Medicare earlier in the case in our opinion. There are also various strategies we likely would have employed to lessen the impact of the conditional payments—but it is always easier to critique after the fact than to litigation in the moment. Our continuing message to our readers and clients who are handling such claims is patent—ALWAYS CONSIDER MEDICARE’S INTERESTS.

We have two MSCC certified attorneys at Keefe, Campbell, Biery & Associates, including our name-partner Shawn R. Biery who authored the bulk of this article. As you can see from this ruling, it is crucially important to consider everything in front of you when resolving claims and to utilize an actual knowledgeable counselor at your side when determining how to manage the many facets of litigation. We have those folks available at Keefe, Campbell, Biery & Associates and are available to assist. Contact any of our attorneys and we will find a way!

We appreciate your thoughts and comments. Please post them on our award-winning blog. For specific Medicare issues, you can also always reach our certified Medicare consultants Shawn R. Biery at sbiery@keefe-law.com and Matt Ignoffo at mignoffo@keefe-law.com.

Synopsis: Gene Keefe Assures My Readers--IL WC Benefits Will Keep Dropping Under This Administration. The IL Appellate Court, WC Division Takes the Helm On Steering the Lower Courts To Follow IWCC Rulings for Better or Worse. Kudos to Our Justices for Adherence to the Law!

Editor’s comment: Our IL Appellate Court, WC Division critiqued a Circuit Court judge for “injudicious” conduct when he openly claimed the IL Workers’ Compensation Commission was pre-determined to reach a particular outcome, and found substantial evidence supported the Commission’s decision. In the last couple of years, the Appellate Court, WC Division seems to have heard the call to lower WC benefits/awards. They appear to be letting the IWCC make the controlling decision on causation and other fact-based issues and this Commission seems to be about as fair and moderate as I can recall in a legal career spanning almost four decades.

In Sysco Food Service of Chicago v. IWCC, No. 1-17-0435WC, issued 12/22/2017, Claimant was a food delivery driver. While working on Nov. 6, 2009, Donohue claimed he fell out of the back of his truck and landed on both knees.

Six days later, on Nov. 12, 2009, Donohue first sought medical treatment from Dr. Regan at the Illinois Bone and Joint Institute. Dr. Regan ordered an MRI of Claimant’s left knee, revealing a tear at the posterior horn of the medial meniscus. Dr. Regan recommended surgery, and Donohue underwent the procedure in January 2010. Donohue returned to work, without medical restrictions. On Feb. 22, 2010. Claimant returned to see Dr. Regan, complaining of significant pain in his left knee. Dr. Regan noted swelling in the knee and took Donohue off all work.

The employer sent Claimant to see Dr. Kevin Walsh for an IME in July 2010. Dr. Walsh noted Claimant had a degenerative condition of the knees but said the condition had not been caused or accelerated by Donohue’s work accident. Dr. Walsh also opined Claimant could return to work without any restrictions.

Dr. Regan released Donohue to return to work in August 2010 and recommended Donohue wear a knee brace. Claimant worked an 11.5-hour shift on his first day back and complained of pain to a supervisor at the end of the day. The next day, Sysco’s nurse called him and told him he could not return to work because of the condition of his left knee.

Sysco arranged a “fit for duty test” for Claimant in September 2010. The test report indicated Claimant was able to perform the duties associated with his job, but he might not be able to perform successfully over an entire shift.

In November 2010, Dr. Regan reported Claimant was fit to return to full duty as a truck driver. Dr. Walsh saw Claimant that same month. He opined Claimant did not require work restrictions as a result of the 2009 work accident but said it would be reasonable to restrict Donohue’s activities because of the degenerative knee condition. Sysco still did not allow Claimant to return to work as a delivery truck driver. It offered him an alternative position as a security guard instead.

In June 2011, Dr. Regan opined he believed the 2009 accident caused the meniscal tear in Donohue’s knee, and the accident “probably aggravated a pre-existing chondromalacia” as well. Dr. Regan further noted Claimant had degeneration in the left knee and said he could not issue an opinion as to whether the degeneration was caused by the normal aging process or was related to the 2009 accident.

Arbitrator Erbacci heard the claim and found Claimant entitled to benefits for the torn meniscus in his left knee but determined the continuing degeneration was not compensable.

The Illinois Workers’ Compensation Commission panel, led by Commissioner Lamborn upheld the Arbitrator’s decision, but Cook County Circuit Court Judge Robert Lopez Cepero reversed to add the degeneration as compensable. Judge Cepero noted the Commission did not reference Dr. Regan’s June 2011 report and suggested the Commission willfully ignored it because it was “determined to reach a particular outcome.” Judge Cepero summarily ruled Claimant was entitled to wage loss differential benefits under Section 8(d-1) and ordered the claim back to the IWCC for the purpose of calculating the amount due to Claimant in wage differential benefits.

On remand, the IWCC awarded Claimant wage differential benefits of $394.68 per week, commencing on Jan. 16, 2012.

The employer then appealed. At the second trip to the reviewing courts, Circuit Court Judge James McGing reversed the IWCC’s wage differential award, finding the Commission miscalculated Claimant’s award. After another remand, the IWCC recalculated Donohue’s wage differential benefits as $347.51 per week. Another appeal by the employer followed. After the third time the claim was in the Circuit Court, Judge McGing upheld the award.

The Illinois Appellate Court, WC Division then considered all three appeals for the first time. After reviewing the record, the Appellate panel found Judge Cepero erred in reversing the IWCC’s finding there was no causal connection between the degenerative condition of Donohue’s knee and the work accident.

The Appellate Court acknowledged both Drs. Regan and Walsh documented the presence of a degenerative condition, and the majority said it was up to the Commission, and not the reviewing courts, to assess the persuasive weight of each doctor’s opinion on causation. The Appellate ruling said it was clear the IWCC considered Dr. Regan’s June 2011 report/opinions but the Commission panel accorded no weight to his statement Claimant’s work accident “probably aggravated a pre-existing chondromalacia.”

The Appellate ruling said the fact the IWCC decision did not make specific note of the report/opinion in its original decision was not, on its own, sufficient to support a conclusion the Commission ignored the report. The Appellate ruling also confirmed the content of the report also did not justify a finding the IWCC’s conclusion on compensability was against the “manifest weight of the evidence,” in light of Dr. Walsh’s contrary opinion and Claimant’s testimony his knee was “as good as it was before the operation.”

In seeing the Circuit Court determine the IWCC’s causation ruling relating to the degenerative condition was against the manifest weight of the evidence, the Appellate Court said Judge Cepero “impermissibly reweighed the evidence and usurped the Commission’s fact-finding function.” The ruling further confirmed there was “simply no justification” for Judge Cepero to accuse the Commission of being determined to reach a particular outcome. “The accusation is not only without support in the record, it is injudicious,” the court said. The Appellate Court ruling went on to find Judge Cepero also erred in ordering the Commission to summarily calculate and award wage differential benefits to Donohue.

The Appellate Court confirmed Claimant was not medically restricted from pursuing his usual and customary line of employment as a truck driver, and it noted he said he was willing to return to the job. The problem was Sysco would not return him to work based on its belief he was physically unfit to do his job. In order to qualify for a wage differential award, the Appellate Court outlined, “a worker must be partially incapacitated from pursuing his usual and customary line of employment ‘as a result’ of an injury.”

Sysco’s belief Claimant couldn't work as a truck driver for them doesn't mean he was incapacitated from pursuing his usual and customary line of employment, the appellate ruling said. “Clearly, the reasons given by an employer for not restoring an injured employee to his pre-accident position may be relevant to the question of whether the employee is incapacitated from pursuing his usual and customary line of employment in a case where the employee’s physical ability to return to his usual line of work is a disputed issue,” the court outlined, but they found this was not such a situation. As Claimant said he was ready, willing and able to return to work as a truck driver, and his treating physician authorized him to return to work without restrictions, the court said he was not entitled to wage differential benefits.

To read the decision, Sysco of Chicago v. IWCC We appreciate your thoughts and comments. Please post them on our award-winning blog.