WCMSAs in Cases Where There are Both a WC Claim and a Third Party Liability Claim

This issues has come up a couple of times recently. What happens when the injured party is trying to settle a liability claim (that is related to a WC claim), but the WC claim still remains open?

Here is your answer from CMS (which makes sense):

WCMSAs in Cases Where There are Both a WC Claim and a Third Party Liability Claim
(Ref: 4/21/03 Memo Q19)

Third party liability insurance proceeds are also primary to Medicare. To the extent that a liability settlement is made that relieves a Workers’ Compensation (WC) carrier from any future medical expenses, a CMS approved Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) is appropriate. The WCMSA would need sufficient funds to cover future medical expenses incurred once the total third party liability settlement is exhausted. The only exception to establishing a WCMSA would be if it can be documented that the claimant does not require any further WC claim related medical services. A WCMSA is also not recommended if the medical portion of the WC claim remains open, and WC continues to be responsible for related services once the liability settlement is exhausted.
For additional information concerning the Workers’ Compensation Medicare Set-aside Arrangement (WCMSA) process, please click on the links to our other WCMSA pages.

scroll down the page to the bottom to find this paragraph.