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Solving the Professional Liability Puzzle with the Right Pieces
This document discusses three medical malpractice case studies and how to structure settlements for each. Case 1 involves an improper vaccination leading to permanent injury in a 21-year old male. Options are presented for structuring the $450,000 settlement amount. Case 2 is a slip and fall leading to head injury in a 53-year old male. Several structured settlement options are proposed to fund his $200,000 annual lost wages. Case 3 involves a kidney transplant in a 35-year old male where structuring $400,000 is discussed. Key issues addressed across the cases include Medicare reporting requirements, liens and set asides, underwriting and ratings to reduce costs, and preserving government benefits through special needs trusts.
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Solving the Professional Liability Puzzle with the Right Pieces
- 1. Sedgwick © 2013Confidential – Do not disclose or distribute. Solving the Professional Liability Puzzle with the Right Pieces
- 2. Sedgwick © 2012Confidential– Do not disclose or distribute. Speakers Terri Kielhorn, JD, LLM ERM Deputy & Director, Professional Liability, University of California Michael Merlino II, Esq. Medicare Compliance, Sedgwick Dan Weberg, CCCS Manager, Structured Settlements
- 3. Sedgwick © 2012Confidential– Do not disclose or distribute. Case #1 Improper vaccination
- 4. 4 Case #1: ImproperVaccination
- 5. 5 Case #1: Issues • Lessmoney = better settlement Structure settlement • Does the case have to be reported? Medicare Reporting
- 6.
- 7. 7 • $450,000 costas of March, 2013 • 30 Years Certain and Life thereafter: Company A: $1,354.38/month Company B: $1,415.38/month Company C: $1,350.93/month Company D:$1,481.92/month • Company D has best rates and is 9% better than Company C. Case #1: 21 year old male without Underwriting
- 8. 8 Case #1: 21year old male with Underwriting • $450,000 cost as of March, 2013 • 30 Years Certain and Life thereafter: Company A, Rated Standard: $1,354.38 Company B, Rated Standard: $1,415.38 Company C, Rated Age of 25: $1,377.00 Company D, Rated Age of 27: $1,508.35 • Company D has best rates and is 10.2% better than Company A • 3.48% IRR
- 9. 9 Case #1: KeyDiscussion Points Comparison shopping Rated Age Improved rate of return with Rated Age Contingencies Low interest rate environment Inflation protection Internal Rate of Return (IRR)/ taxable equivalent yield (TEY)
- 10. Sedgwick © 2012Confidential– Do not disclose or distribute. Case #2 Slip and Fall
- 11. 11 Case #2: Slipand Fall
- 12. 12 Case #2: MedicareSet-aside (MSA) Date of Injury Medicare Lien MSA SettleCase
- 13. 13 Case #2: MedicareSet-aside • How should we address in settlement? With WC Without WC
- 14. 14 Case #2: 53-Year-OldMale with Head Injury • $200,000/year loss of income Option 1: $16,667/month for 12 years until retirement age. Cost: $2,172,860 Option 2: $16,667/month for 20 years Certain and Life (Rated Age 63) Cost: $3,692,424
- 15. 15 Case #2: Continued •20 years certain and life; and • $8,333/month to Wife for • 20 years certain and life. • Cost: $4,001,156 Option 3: $8,333/month to Claimant for life
- 16. 16 Case #2: Continued •$3,526.25/month for 15 years, and • $1,500,000 lump sum in 15 years • Cost: $1,500,000 Option 4: Bond Approach
- 17. 17 Case #2: KeyDiscussion Points No medical to consider Wage Loss Allocation of recovery Attorney Fees Guarantee Period The “Bond Approach” Diversification / Guarantee Funds
- 18. Sedgwick © 2012Confidential– Do not disclose or distribute. Case #3: Kidney Transplant
- 19. 19 Case #3: KidneyTransplant
- 20. 20 Case #3: MedicareLien Date of Injury Medicare Lien MSA SettleCase
- 21. 21 Case #3: MedicareLien • Tips for proper resolution: Obtain Medicare lien information from the source: MSRPC.INFO Get the information EARLY Share with opposing party Negotiate the terms for resolution at mediation Incorporate terms in settlement documents
- 22. 22 Case #3: 35-Year-OldMale, Kidney Transplant • Spend $400,000 (Rated Age 60) $1,963/month for Life Only OR $1,784.25/month for 20 Years Certain & Life
- 23. 23 Case #3: KeyDiscussion Points Plaintiff Brokers Funding of Special Needs Trust with Structure Preservation of Government Benefits Strict Income and Asset Restrictions Type A Trust vs. Type C Trust Exempt Assets Allocation to Spouse
- 24. Sedgwick © 2012Confidential– Do not disclose or distribute. Summary/Conclusion
- 25. Sedgwick © 2012Confidential– Do not disclose or distribute. Questions?
Editor's Notes
- #5 21 year old male with significant medical history, including common variable immunodeficiency disorder which limits ability to handle infection was given live vaccine which was contraindicated.He was subsequently diagnosed with varicella infection and progressive outer retinal necrosis caused by the live vaccine. Retinal necrosis of the left eye is currently stable but there are continued risks for diminution. The visual acuity on the left is currently 20/60 but on the right the patient is only able to see light and movement. Economic damages consist of future wage loss and future health care needs. The claimant is expected to live an additional 54.6 years. Medicaid has paid claimant’s past medical care, including the care resulting from the error. They have asserted a lien. The claimant is not currently a Medicare beneficiary.
- #6 TERRI: “Let’s start with the Medicare issue, does this case have to be reported to Medicare?”
- #7 TERRI follow-up: “I thought we had to report if the person was going to be on Medicare in the near future?”
- #8 TERRI to DAN: “What can a structure do to address the impact this will have on the plaintiff’s earing capacity over his lifetime?”
- #12 Plaintiff, a 53 year old married male suffered a syncope episode and he fell and hit his head while on job related travel. He was diagnosed with a myocardial infarction and blood was noted to be in his ear; the head CT was initially read as negative and he was taken to the cath lab for a percutaneous intervention and stent placement. As part of the procedure he was given anticoagulants. The final read of the head CT was basilar skull fracture and possible subarachnoid hemorrhage. Unfortunately, anticoagulation continued for several hours and as a result the patient suffered a traumatic brain injury and is unable to walk, speak, or perform activities of daily living. He is incontinent and his mental status is greatly diminished. He lives at home with his wife and receives 24 hour nursing care as well as physical, occupational and speech therapy. Plaintiffs claim he will not return to work and he had intended to work to age 66-2/3 years of age. Plaintiff is also receiving WC benefits for the same injury. Plaintiff is currently a Medicare beneficiary as a result of his injuries. His economic damages include past and future medical care, and lost wages, including stock options
- #13 TERRI. “Mike, let’s talk about the future impact of this claim. Does Medicare expect me to do a Medicare Set-aside like they do in Worker’s Comp cases?”
- #14 TERRI: “What about the person having WC benefits? How would I address that in the settlement documents?”
- #15 Different – border, colorTERRI to DAN: “Even with the future medical being cover by WC, the plaintiff is still going suffer a significant wage loss, what would you recommend to supplement that income?”
- #20 Plaintiff, a 35 year old male, underwent a kidney transplant with a donor kidney that had a large cyst. The kidney was removed 2 months later when it was discovered to be cancerous. Currently the plaintiff is on dialysis while awaiting a donor kidney. Plaintiff is seeking past and future wage loss. His medical insurance is through Medicare. Significant charges were paid by Medicare. He is also a Medicaid recipient.
- #21 TERRI: “Mike, in this case, I am much concerned about the Medicare lien. How do I address those?”
- #23 Instead of math – can you discuss creative approach?TERRI TO DAN: ” We have some preliminary conversation with plaintiff attorney. They have a broker they want to work with. They are contemplating the need of a specials needs trust. How will that effect our settlement offer.?”
- #25 TERRI: “Ask DAN and MIKE if there are any closing comments.”
- #26 TERRI: Asks audience about questions.