Protect yourplaintiff

39
Case dis covery strategie s to protect your plaintiff (3 Part Serie s ) By Patric k Farber, Kevin Ur batsch & William L indahl

description

Broad scope presentation for Consumer Attorneys & Settlement Brokers covering settlement planning, public benefits and first party Special Needs Trusts.

Transcript of Protect yourplaintiff

Page 1: Protect yourplaintiff

Case

disco

very

&

stra

tegie

s to

prote

ct y

our

plain

tiff (3

Par

t

Series)

By Pa

tric

k Fa

rber

, Kev

in U

rbat

sch &

Will

iam

Lindah

l

Page 2: Protect yourplaintiff

Our team of experts

Patrick C. Farber is a structured settlement broker in California. He specializes in settling medi-cal malpractice, physical injury, non-physical injury, product li-ability, workers’ compensation, mass torts, punitive damages, employment and elder abuse cases with structured settlements in court hearings, arbitrations and settlement conferences. 800-734-3910,

[email protected]

Kevin Urbatsch is a principal of the estate

planning law firm, Myers Urbatsch P.C. located

in San Francisco, California. Kevin is a

nationally recognized expert in planning for

persons with disabilities and their families. Kevin

is a Certified Specialist in Estate Planning,

Trust, and Probate Law by the California State

Bar Board of Legal Specialization. He is a

charter member of the Academy of Special

Needs Planners; a member of the National

Academy of Elder Law Attorneys; the California

Advocates for Nursing Home Reform; Wealth

Counsel, the Bar Association of San Francisco,

Probate & Trust Section; and the State Bar of

California, Trust and Estate Section. Kevin is a

regular speaker on special needs planning

issues locally and nationally. He has also

numerous published books and articles on

special needs planning.

[email protected]

Will Lindahl is the Enrollment Director CPT and a professional fiduciary with Fiduciary Matters of San Diego. He has developed online individual & pooled special needs trust administration systems utilized by pooled trust providers, national brokerage firms and banks. He continues to speak and publish materials on individual and pooled special needs trust administration. Will has spoken nationally on protecting Medicaid, SSI and other government benefits, trust administration and Medicare & Medicaid fraud.

[email protected]@myfiduciarymatters.com

Page 3: Protect yourplaintiff

3 hr Series Objectives

Settlement Planning 1 CLE• Case discovery tools to use to identify when special planning for plaintiff is necessary

• QSFs• MSAs

Public Benefits 1 CLE• Identify solutions to protect your plaintiffs government benefits.

• Learn which benefits impact your practice.

Special Needs Trusts 1 CLE• When to use which option• What can be paid from trust• Impact on case & plaintiff• How to utilize & evaluate SNT providers

Page 4: Protect yourplaintiff

Settle

men

t

Plannin

g

By Pa

tric

k Fa

rber

, Kev

in U

rbat

sch &

Will

iam

Lindah

l

Page 5: Protect yourplaintiff

Settlement planning introduction

Settlement Planning is a process that helps recipients of settlement proceeds use those

proceeds to achieve their post-loss goals and transition successfully into their post-settlement

financial lives

Proper settlement planning will include:

Understanding the Plaintiff’s situation

Utilizing the appropriate tools to address Plaintiff’s

situation

Plaintiff’s lawyers (arguably) have a

legal duty to provide

settlement planning for

clients

Page 6: Protect yourplaintiff

SETTLEMENT PLANNING INTRODUCTION (CON’T) Settlement Planning consists of some or all of the following:

Lien and Repayment Resolution Medicare, Medicaid, hospital, doctor etc.

Tax Planning Plan to minimize income and estate taxes

Financial Planning Comprehensive financial plan and possible structured

settlement Estate Planning

Consider Living Trust, Will, Guardianship or Conservatorship, Powers of Attorney and Health Care Directives (aka Living Wills)

Special Needs Planning SNT for Medicaid and Medicare Set Aside for Medicare

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Why is Medicare Set Aside (MSA) necessary?

Congress enacted the Medicare Secondary Payer

(MSP) Statute giving Medicare rights as “Secondary Payer”

This regulation prohibits Medicare

from making a payment when

there is a primary payor involved

Prevents third parties from improperly shifting the payment of

medical care to Medicare

The law provides the Center for

Medicaid and Medicare

Services (CMS) with strong

recovery rights if Medicare’s interests are not protected

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When to consider MSA

Medicare’s interest must be considered in ALL cases where future medical care is considered part of

settlement AND there is a “reasonable expectation” that Medicare will need to pay for such care

However, CMS will only pre-approve

arrangements under specific guidelines:

Worker’s Compensation

Cases

Very Defined CMS Review Mechanism

Personal Injury Cases

No Defined CMS Review

Mechanism – Although some

regions may consider

New CMS Reporting

Requirements

Page 9: Protect yourplaintiff

What is a Medicare Set-Aside Arrangement?

The Medicare Set-Aside Arrangement (MSA) is the preferred method for handling Medicare’s future injury related medical costs

• If the workers compensation settlement meets CMS’ established “review thresholds,” the adequacy of the MSA must be approved by CMS. The review thresholds are:

• Whether claimant is already a Medicare beneficiary at time of settlement and the total settlement is greater than $25,000; or

• The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of settlement and the total settlement is greater than $250,000

If the plaintiff receives both Medicaid and Medicare then the MSA terms should be stated inside an SNT otherwise the MSA would interfere with Medicaid eligibility

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How to determine If Plaintiff is reasonably expected to receive

Medicare?

Red Flags for Litigation Plaintiff or Worker’s Compensation Claimant’s Settlement to Consider Medicare’s Interest are:

Off work for 6 months or longer (SSDI)

Off work for 30 months or longer (Medicare)

Catastrophic injury

Settlement value over $250,000

Age 62.5 or older (i.e., may be eligible for Medicare based upon age within 30 months)

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Qualified Settlement Funds (QSF) Basics

Offers the following benefits: • Allows for immediate lump

sum settlement• Removes defendant from

the process• Time to employ experts• Time to do a financial plan

for Plaintiff• Time to negotiate liens• Preserves ability to do a

structured settlement• Time to establish SNT or

MSA

Trust created pursuant to Treasury regulations• Requires court approval• More costs Trust created

pursuant to Treasury Regulations

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Mechanics of a QSF

Establishing QSFAppoint administratorObtain federal tax ID number (EIN)Settlement between claimants and original defendantsReceive funds from transferors

Phase One:

Settlement between claimants and QSFMay include periodic payments through a structured settlementCourt approval, if requiredAuthorization to distributeIssue 1099s and file tax returns

Phase Two:

Terminate QSF

Phase Three:

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MSA + SNT + SS Annuity + QSF = Happy Plaintiff

Medicare Set Aside takes into account Medicare’s future interest in the settlement

Special Needs Trust preserves SSI and Medicaid eligibility and allows settlement dollars to enhance Plaintiff’s quality of life

Structured settlement provides tax-free growth and guaranteed payments (often for life)

Qualified Settlement Fund allows for immediate payment of settlement or judgment proceeds by defendant, while preserving all options for the injury victim and other claimants without defense involvement

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Case Study

Bri

an

has b

een

off

ere

d a

p

ers

on

al in

jury

sett

lem

en

t of

$1

,500

,000

He is 56 years old, disabled and is receiving SSI, SSDI, Medicare and

Medicaid

He is unclear how he would like to use the

money.

His needs include a new wheelchair van, therapy

costs, and possibly a new home

There are existing Medicare, Medicaid and other liens that need to

be resolved

Defendant’s insurance company refuses to

participate in structured settlement

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Settlement Planning Team

No one professional can address

all issues

Lien Resolution attorney to assist

with negotiation of Medicare, Medicaid and other case liens

Special Needs/Estate

Planning Attorney to assist with public benefits issues,

consider whether SNT or QSF

appropriate case

Medicare Set-Aside specialist to address

Medicare future interests and

whether MSA is needed

CPA to consider tax implications of settlement and financial plan

Structured Settlement

Broker/Financial Advisor to develop

future financial plan and allocate appropriate

amount to annuity

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The Settlement Plan

Gets defendant out of processAllows time to negotiate Medicare, Medicaid and other liens

Establish QSF

Plaintiff’s attorneys’ fees and costs can be immediately paidDevelop Plaintiff’s financial planEstablish SNT to preserve SSI and MedicaidEstablish MSA to address Medicare’s future interest

During QSF Administration

Distribute funds for purchase of structured settlement and fund the SNT and the MSA

Terminate QSF

Page 17: Protect yourplaintiff

Public

benefi

ts

By Pa

tric

k Fa

rber

, Kev

in U

rbat

sch &

Will

iam

Lindah

l

Page 18: Protect yourplaintiff

Who needs Special Planning

Minors

Adults who lack capacity

Adults with disabilities• But not all adults with disabilities – persons with

disabilities come in all shapes, sizes as do their disabilities. Only those who meet the definition of disabled for the purpose of public benefit program enrollment require special needs planning

Wards receiving public benefits• Even if receiving public benefits only certain public

benefit programs require planning

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Why planning is needed

Why

If a person with a qualified

disability is paying private pay their life

savings will be depleted

unnecessarily

Counted as income in month of receipt

Counted as resource first day

of next month

Loss of SSI generally

acceptable, however loss of Medi-Cal can be

devastating. Oftentimes Medi-

Cal is the only health insurance that will provide the plethora of

medical and community

services needed by the client

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Do all persons with disabilities require special needs planning?

Client is receiving (or will be eligible for) SSI or Medi-Cal

Client with disability is so severely disabled that he or she meets the definition of disabled for SSI and Medi-

Cal programs; and

Client with disability lacks capacity or is a minor; OR if

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Defining disability

Someone could be substantially disabled in the commonly understood sense (e.g., if the person must use a wheelchair for mobility). However, that individual would not be considered disabled under the SSI or Medi-Cal rules if he or she holds a full-time job and earns a living wage

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Defining disability for SSI

“Disability” for an adult is defined as the inability to engage in any “substantial gainful activity” (SGA) due to any medically determinable physical or mental impairment, or combination of impairments, that has lasted or can be expected to last for a continuous period of at least 12 months, or result in death.

“Disability” for a minor is defined as a medically determinable physical or mental impairment or combination of impairments that causes marked and severe functional limitations, and that can be expected to cause death or that has lasted or can be expected to last for a continuous period of not less than 12 months

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Public benefit programs

Needs-Based Public Benefits:

Supplemental Security Income (SSI)

Medi-Cal

Entitlement Public Benefits:

Social Security Disability Income (SSDI)

Social Security – Adult Disabled Survivor

Medicare

Other benefit programs

Section 8

Veteran Benefits

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Entitlement benefits

If only public benefit programs are SSDI, Social Security, or

Medicare No special needs planning is

required. Although, it may still be

helpful to plan in some circumstances

However, watch out for dual eligible, meaning

that person with a disability receives both

SSDI and SSI or Medicare and Medi-Cal

There is often lots of confusion from the

person with a disability and their families as to what

types of benefits the person receives so

important to investigate

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What SSI provides

SSI provides a modest monthly cash grant for food

and shelter to disabled, blind, or aged (65 or older)

personsIn 2011, the SSI

federal government maximum

payment is $674 a month for an

individual

Some States supplement this

amount. For example,

California provides a supplement of $171 a month to

the payment

Eligibility for even $1 of SSI (in most

States) means automatic

eligibility for Medi-Cal

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What MediCal can provide

Medi-Cal• Primary medical care coverage, such as doctor visits, diagnostic testing,

emergency services, surgery, hospitalization, prescription drugs, dental services, and optometry services.

• Ongoing care and recovery, such as in-home medical care services, personal care services, occupational and physical therapy, outpatient drug abuse services, nursing facility stays, intermediate care facilities for developmentally disabled individuals, and adult day health care.

• Other medical-related costs, such as medical supplies, durable medical equipment, and transportation for doctor visits

• Provides waiver programs for home and community based services such as the acquired brain injury program or the personal care assistant program which avoids institutionalization

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Specia

l

Needs

Trust

s

By Pa

tric

k Fa

rber

, Kev

in U

rbat

sch &

Will

iam

Lindah

l

Page 28: Protect yourplaintiff

First party Special Needs Trusts

SNT is the only planning tool that allows Plaintiff to

preserve use of litigation proceeds in the future AND to preserve eligibility for needs-

based public benefits(d)(4)(A) SNTs sometimes

called Litigation SNTs or

Payback SNTs

(d)(4)(C) SNTs sometimes

called Pooled SNTs

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Trust Types that preserve government benefits eligibility for

SSI & MediCal 42 U.S.C ' 1396p

Third party Special Needs Trusts

• Funded from funds that do not belong to beneficiary

Individual Special Needs Trust may also be called a (d)(4)(A) trust• Trustee needs to be appointed. Determine who will

hold assets. Pooled Special Needs Trust may also be called a (d)(4)(C) trust• Established & managed by nonprofit association.

Fiduciary acts as advocate for beneficiary.

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Individual Pooled

(d)(4)(A) Trusts (d)(4)(C) Trusts

Separate Trusts Master Trust

State specific State specific

Must be under 65 Any Age

No additional funds after 65 Single funding after age 65

Only parent, grandparent, guardian or a court can establish

Individual may establish

Medi-Cal payback Medi-Cal payback

Cost varies and time consuming Low cost and quick setup

Need government agency approval

Need government agency approval

Comparison

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What can’t a SNT pay for?

Funds to beneficiary• A SNT should not give cash directly to Beneficiary• All disbursements are made to 3rd parties

Food & Shelter• If SNT pays for food, shelter or medical care already being

provided by SSI or Medi-Cal it will reduce (or eliminate) public benefits.

• Shelter is defined as food, gas, electricity, water, sewer, heating fuel, garbage removal, real estate taxes, rent or mortgageSpecial exceptions

• Sophisticated SNT planners may still authorize such disbursements (if State law allows) with a minimal reduction of SSI eligibility

Page 32: Protect yourplaintiff

Funding any SNT by person over age 64

Medi-Cal rule. A person at any age can make a single lump sum transfer

without disqualification. If,

the individual is over age 64 years

of age.

SSI rule. Transfers to SNT will disqualify a

beneficiary for up to 36 months of SSI.

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What can a SNT pay for?

Just about anything. For example:Clothing, telephone (cell phone or land line), Internet, television (cable or satellite), hair and nail care, bedding, laundry, furniture, audio equipment, video equipment, computer equipment, adaptive equipment, toys, musical instruments, electronic devices, maintenance of equipment and household, vehicles, improvements and maintenance of such vehicles, newer and more effective medications than allowed by Medi-Cal, more sophisticated medical or dental or diagnostic work or treatment for which funds are not otherwise available, other nonessential medical procedures (such as massage therapy or acupuncture), periodic outings and vacations (and other items to enhance the Beneficiary’s quality of life, self-esteem, or situation), pre-need funeral and burial expenses, and taxes

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Which SNT type do I use?

Individual

• You plan to have an individual trust drafted by an attorney• You plan to have funds held by a bank or bonded individual other than yourself• Your ward’s funds exceed bank’s minimum funding requirement

Pooled

• Client is over age sixty four and spend down is not advisable • Spend down is not desirable• You are trying to qualify your client for Medi-Cal & / or SSI• You need to keep costs down. Enrollment/administration of Pooled tend to be

less expensive.

Other

considerations

• Individual or Pooled can by used regardless of the size of the case. Some corporate trustees have funding minimums.

• Will the case be court supervised.

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Pooled SNT Trust programs to avoid

Use Individual Trustee

Issue checks themselvesDon’t use

national investment

firm Use proprietary funds

Are not automated

DO NOT USE

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What to look for in Pooled SNT Trust provider

Accept Court Supervised Cases, Annuities & MSA’s

Negotiable remainder once state lien paid

Use national investment firms, state chartered banks and strong support counsel

Multi-state footprint – greater fiscal viability

Automations & reporting systems

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How does it works

Complete

Application

Submit online

Review Enrollm

ent docume

nts

Consult client & notarize

Overnight

funding &

documents

Welcome

packet & client orientat

ion

Page 38: Protect yourplaintiff

Summary

Client must meet disability

requirement to utilize an

Individual or Pooled Special

Needs Trust

Individual or Pooled Special Needs Trusts only protect eligibility for MediCal & SSI

You will still require a court

order to establish an Individual or Pooled Trust

A Pooled Trust MUST be used if client is over age

sixty four

All disbursements must be for the sole benefit of

your client

Eligibility of even $1 dollar of SSI

means automatic eligibility for

MediCal.

Page 39: Protect yourplaintiff

Kevin Urbatsch, Esq.

Myers Urbatsch P.C.100 Spear StreetSuite 1430San Francisco, California 94105

Phone: (415) 593-9944Fax: (415) 896-5068Email: [email protected]

State Support Counsel Charities Pooled Trust & Special Needs Expert

Will Lindahl, MBA, CLPF

Enrollment Director for

CPT Special Needs Trust Provider

Direct: 619-800-6492

CPT Email: [email protected]

Contact information

Patrick Farber1301 Dove St. SteNewport Beach, CA 90064

Phone: (949) 833-3910Fax: (949) 833-3687Email: [email protected]

Settlement Expert