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55 Ferncroft Road Suite 201
Danvers, MA 01923

(866) 630-CPSC Toll-free
(978) 774-0540 Facsimile

www.CPSCmsa.com

In Miller v. Workers’ Compensation Appeal Board, 2007 WL 4615440, a decision dated January 4, 2008, the Commonwealth Court of Pennsylvania affirmed the denial of a Widow Petitioner’s request to enforce a Compromise and Release Agreement (“C&R” or “C&R Agreement”). The Court held that Medicare’s approval of the C&R was a condition precedent to the parties’ Agreement. The Employer refused to finalize the C&R Agreement without first ascertaining the Claimant’s Medicare status and ensuring that Medicare’s interests were considered, so as to guard against potential liability under 42 U.S.C. 1395y(b)(2)(A)(ii), the Medicare Secondary Payer Act (“MSP”).

The facts of the case were such that on June 15, 1989, the Claimant-Employee sustained a work-related injury to his right ankle while employed by Electrolux (“Employer”). By letter dated March 24, 2004, Claimant’s Counsel accepted Employer’s January 16, 2004 offer to settle the claim in full for a lump sum of $25,000.00. The Employer confirmed the Claimant’s acceptance of the offer by letter dated April 1, 2004, in which the Employer additionally requested that Claimant’s Counsel confirm Claimant’s Medicare status for purposes of Medicare approval of the C&R Agreement. On November 25, 2005, the Claimant died of causes unrelated to his work injury, at which time the proposed C&R Agreement was neither executed nor submitted to the Workers’ Compensation Judge (“WCJ”).

Subsequently, Rochelle Miller, the Claimant’s widow (“Widow Petitioner”), petitioned the WCJ for enforcement of the C&R Agreement. The WCJ denied her petition and dismissed the claim, on the basis that the C&R Agreement did not meet the requirements of Section 449 of the Workers’ Compensation Act (“Act”). That is, the WCJ found that the C&R did not satisfy the subparts of the Act requiring that a compromise and release agreement be signed by both parties and notarized or attested by two witnesses. In addition, the Act’s required resolution hearing, during which a claimant confirms his or her comprehension of the legal significance of a C&R Agreement, never occurred in this case. The WCJ also determined that because the Claimant’s death was unrelated to his work injury, the Widow Petitioner was not authorized to execute the C&R on the Claimant’s behalf.

The Widow Petitioner appealed the WCJ decision to the Board, maintaining that the delay in filing the C&R was due to the Employer’s mistaken belief that Medicare approval of the proposed Agreement was a necessary condition precedent. The Board rejected this argument and held that a decision to seek Medicare approval did not exempt the Claimant from the requirements of Section 449 of the Act. Further, the Board concluded that no evidence established Employer’s actions as deliberately intended to delay approval of the Agreement.

The Commonwealth Court of Pennsylvania, to which the Widow Petitioner ultimately appealed, affirmed the decisions of both the Board and the WCJ. The Court looked to the plain language of the Act, noting that death is not recognized as providing exception to Section 449’s statutory requirements of signatures, notarization, and a hearing. The Court additionally cited relevant case law, specifically referring to Blessing v. Workers’ Compensation Appeal Board, 737 A.2d 820 (1999).

In Blessing, a C&R Agreement was found invalid, where a claimant had signed and submitted the agreement, but died of unrelated causes prior to his employer’s execution of same and before the required hearing. Similarly, in Lebid v. Worker’s Compensation Appeal Board, 771 A.2d 79 (2001), the Court noted that it would have been erroneous for the WCJ to approve an agreement that had not been a signed writing submitted by an employer.

The Widow Petitioner herein set forth several arguments in her appeal seeking approval of the C&R Agreement, all of which were rejected by the Court. The Widow Petitioner maintained that the traditional analysis under Section 449 of the Act was inapplicable; specifically, she asserted that no statute or regulation authorizes Medicare’s approval of the Agreement, that the insurer’s refusal to file the Agreement after a confirmation in writing was unconstitutional, and that the Claimant’s hearing before the WCJ had been deterred due to the Employer’s erroneous position that Medicare approval of the Agreement was necessary.

The Court concluded that the Employer in this case proposed the $25,000.00 settlement amount for future indemnity and medical benefits, clearly not intending to remain responsible for the Claimant’s future medical expenses. The Court held that Medicare’s approval of the C&R was a condition of the parties’ Agreement—that is, the Employer refused to finalize the C&R Agreement without first ascertaining the Claimant’s Medicare status and ensuring that Medicare’s interests were considered, so as to guard against potential liability under 42 U.S.C. 1395y(b)(2)(A)(ii), the Medicare Secondary Payer Act (“MSP”). As the Court discussed, the MSP clearly requires that whenever future medical expenses are relative to a C&R Agreement, Medicare’s interests must be adequately considered; otherwise, pursuant to policy memoranda, the Center for Medicare and Medicaid Services (“CMS”) has a right to recovery against any entity that received a portion of a third party payment. The Court therefore did not address the Widow Petitioner’s argument as to whether Medicare’s approval of the C&R Agreement was necessary, as it was irrelevant where there was never an underlying agreement in existence. Here, the Court held that the parties did not have the essential, contractual meeting of the minds with respect to the issue of protecting Medicare’s interests, and as a result, there was never a finalized C&R Agreement for WCJ approval.

Finally, the Court noted that it additionally rejected the Widow Petitioner’s contention that the Employer’s requirement of Medicare approval violated due process. The Court cited Fratta v. Workers’ Compensation Appeal Board, 892 A.2d 888, 894 (2006), a case in which the Board decision to deny a widow participation in the compromise and release process was upheld, with the conclusion that the “compromise and release of workers’ compensation claims is [not] a constitutionally protected interest.”

By Collin B. McDonald, Esq., Legal Counsel for Crowe Paradis Services Corporation

DRI’s Medicare Interactions and Compliance Committee

The Defense Research Institute (DRI) has created a new committee for Medicare Interactions
and Compliance. This represents an integral part of the workers’ compensation practitioner’s obligations.

Heading up this new committee is Rob Lewis of Crowe Paradis. If you have any questions or would like to become involved, please contact Rob at rlewis@cpscmsa.com.

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