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< Previous10 CLM MAGAZINE SEPTEMBER 2022 T he U.S. Supreme Court recently decided a Medicaid lien case that could have significant implications for injury- related settlements throughout the country. It also serves as a reminder that Medicaid, which is sometimes forgotten in the shadow of Medicare, has interests that must also be considered before a settlement. In Gallardo v. Marstiller, the issue before the Supreme Court was whether states can recover the portion of a settlement that was allocated for future medical expenses. Prior to this decision, a line of cases had interpreted Medicaid’s anti-lien provisions as allowing Medicaid to recover from the medical expense portion of a settlement, but not from proceeds allocated to pain and suffering, lost wages, and other property rights that were recovered. However, the Supreme Court had never addressed whether the Medicaid Act permits states to recover from proceeds allocated for future medical treatment. The plaintiff in Gallardo suffered catastrophic injuries after being struck by a truck while exiting a school bus. Due to the nature of her injuries, the plaintiff will suffer from lifelong disability. Following the incident, Florida’s Medicaid program paid nearly $863,000 to cover the plaintiff’s medical expenses, and the plaintiff continued to receive Medicaid benefits. The plaintiff went on to sue the truck’s owner, driver, and the Lee County School Board, and the case eventually settled for $800,000, with $35,367 expressly designated as compensation for past medical expenses. The settlement did not specifically allocate any amount for future medical treatment, though it acknowledged that a portion of the settlement could represent compensation for future medical expenses. The Medicaid Act requires participating states to make reasonable efforts to recoup the costs of medical care from liable third parties. Under Florida’s Medicaid program, as is also the case in many other states, beneficiaries who receive assistance from Medicaid automatically assign the right to third-party payments for medical care. Thus, in Gallardo, the state was entitled to a presumptive $300,000 for past and future medical expenses, absent clear and convincing rebuttal evidence that the state should be entitled to less. Navigating Uncharted Territory How to Avoid Danger Zones in the Evolving Landscape of Medicaid Liens By Alexander B. Possino Alexander B. Possino, Esq., is an associate at Marshall Dennehey. abpossino@mdwcg.com WORKERS’ COMPENSATIONTHECLM.ORG/MAGAZINE CLM MAGAZINE 11 Rather than accept the presumptive formula calculations, which produce a result similar to many other formulas throughout the U.S., the plaintiff challenged the allocation through an administrative process established by Florida’s Medicaid State Plan. In order to prevail, a recipient in Florida has to prove, by clear and convincing evidence, that a lesser portion of the total recovery should be allocated as reimbursement for past and future medical expenses than the amount that is provided for by the presumptive formula. During the administrative challenge, the plaintiff essentially argued that she recovered only a fraction of the overall damages she sustained, and that Medicaid should recover no more than that same fraction applied to the medical expenses that were incurred, which resulted in the reduced allocation of $35,367. In addition to the administrative challenge, the plaintiff brought lawsuits in state and federal courts alleging that Florida was violating the Medicaid Act by trying to recover from the portion of the settlement that was allocated for future medical expenses. The Florida Supreme Court ruled in the plaintiff’s favor, but the 11th Circuit Court of Appeals ruled that the Medicaid Act did not prohibit a state from seeking reimbursement from proceeds allocated for future medical treatment. Due to the conflict, the Supreme Court agreed to hear the case. In heavy reliance upon the express language of the Medicaid Act, the Supreme Court declared that the act did not limit states’ recoveries to allocations for past medical expenses. The implications of the ruling and the response of state legislatures across the country could have far-reaching ramifications on injury-related settlements. This is particularly relevant in states that have administrative and judicial procedures to ensure a fair allocation of damages, as is the case in Florida, and where a case settles for far less than the alleged damages. Cases often settle for significantly less than the damages that are alleged for a multitude of reasons, such as weakness in theories of liability as well as policy limits of the defendants. Under those circumstances, plaintiffs can no longer argue that their reduced suggested allocation for past medical expenses is fair, and that Medicaid is unable to seek reimbursement for past medical expenses from what was allocated for future medical treatment. Even if a plaintiff can convince a judge to accept his reduced allocation for past medical expenses, Medicaid can take the position that the allocation represents only a portion of the medical recovery to which it is entitled. The effects of the ruling are not limited to those states with specific administrative proceedings for Medicaid challenges, however. Even in states that do not expressly provide for judicial hearings to challenge their statutory formulas, reducing or waiving a portion of Medicaid’s statutory right to reimbursement is a fairly common practice. If an agreement cannot be reached between a plaintiff and Medicaid, the plaintiff may still find himself back in court to argue over a fair allocation in front of a judge. Therefore, regardless of the specific frameworks that are utilized among the states, the Gallardo ruling is likely to embolden Medicaid to seek the maximum reimbursement to which it could be entitled, and it clearly weakens the arguments for Medicaid lien reductions. More generally, this ruling serves as a reminder that the interests of both Medicare and Medicaid must always be taken into account when settling an injury case, a sentiment that does not just apply in the context of personal injury claims and for past medical treatment. Medicaid may have similar interests in the settlement of other injury-related matters, such as workers’ compensation claims. Parties should consider allocating a portion of workers’ compensation settlements for future medical treatment in states that allow claimants to settle future medical benefits. For instance, Pennsylvania is one state that enables claimants and their insurers to settle future medical benefits. If such a settlement is approved by a workers’ compensation judge, the insurer’s liability is fully extinguished and the insurer will deny any future treatment, regardless of the degree of an individual’s treatment needs. Before entering into such a settlement, it is prudent to fully investigate the existence of any Medicaid liens, and to resolve these outstanding liens between the parties involved in the settlement. K12 CLM MAGAZINE SEPTEMBER 2022 A bout eight months ago, I left my job as an associate attorney in private practice to work for a Fortune 500 insurance company as a claims professional. In my new role, I handle litigation claims against rideshare drivers. Moving from counsel to counsel’s client has given me a unique view into the particulars of each role in the claims process. My hope is that the following tips and insights for practitioners will foster a better relationship among professionals on each side and allow for more effective and efficient claims handling. DETAILS, ANALYSIS, AND RECOMMENDATIONS MATTER Too often, I receive reports from counsel that just repeat the allegations, incident facts, and medicals. This is information that we already have. Lacking an analysis of the liability issues or recommendations on settlement value and next steps, the reports are not useful. The most helpful Building Better Relationships An Attorney Turned Claims Professional Shares Advice on How Both Sides Can Work More Effectively Together By Andrew Blackwood Andrew Blackwood, Esq., is a shared economy claims specialist at Allstate Insurance Company. aeb910@yahoo.com CLAIMS MANAGEMENT THECLM.ORG/MAGAZINE CLM MAGAZINE 13 reports offer insights into what the known facts mean for the case in this venue, or with this judge, for example. Likewise, we need to be informed of all details prior to making a decision. I recently received an email from counsel stating something to the effect of, “Plaintiff’s counsel has requested that defense cover court costs, please advise if you approve.” My first question: How much are the court costs? Providing this information upfront would have prevented follow-ups and allowed for quicker closure of the file. I can’t stress this one enough: Please provide details, analysis, and recommendations in your reports to adjusters. TIMELY COMMUNICATION When a claims professional sends a follow-up email to check in on a case, we need a timely response. Period. What is timely? I have found there are two types of attorneys: those who reply within 24 hours, and those who reply after the second or third follow-up, a few weeks after the original request. You can imagine which group is favored by claims professionals. We are not privy to the “boots on the ground” actions of a case and need timely responses to document and manage our files. This raises the question, should an attorney update the claims professional on every step taken and document received in the case, or wait until there is more substance to report? This is difficult to answer, and likely subject to the preference of the individual adjuster. However, in my opinion, it comes down to what could have an effect on the case. I will simply offer that I appreciate quick notifications regarding any court filing, or impact on a court-imposed deadline or settlement value. Too often, I find myself going through the online docket to find out information about a case before my assigned counsel alerts me of the update. Furthermore, it is all right to say, “No new updates.” I would prefer that simple reply to either a summary of the whole case with no new information or no reply at all. We understand that litigation takes time and there may not be any news to report. As long as the claims professional knows what he is waiting on or what the hold up is, a simple “no new updates” reply should suffice. UNNECESSARY DISTRACTIONS Nothing pains me more than to receive a call from an attorney who says, “I’m about to send you a report, but wanted to call and discuss it with you first.” The attorney then proceeds to read the entire report to me. Trust me, I can read. I would much prefer to read the report and then have a phone call with you to discuss my questions, concerns, and opinions. If you tell me everything in your report during our call, then there should be no need for me to read your report that you spent hours drafting. The same goes for when the claim owner changes. There is no need to call the claims professional and give a full case history. We review the entire file upon initial receipt, which should include all of your past reports and communications with the prior adjuster. If we have thoughts, questions, or concerns, we will call you. BEING UPFRONT Understandably, different companies have different reporting guidelines, and those should all be followed. However, some cases do not need much work on the defense counsel side, while others will need a considerable amount of work. If you are unsure about whether we need an initial case report or a status report, it is all right to check with us before preparing. For a straightforward case, a report may not be necessary. Likewise, authority for large expenditures and experts should be established upfront. I often get emails from attorneys that read, “We’ve set up the expert medical examination,” when there is no authority and it is not necessary. Every case does not need an expert. I might need to write that sentence again: Every case does not need an expert. In addition to the assigned claim owner, there are often many different people from the insurance company who are in a file offering their thoughts and opinions on the case strategy. Counsel should have a meaningful discussion with claims professionals on whether an expert is actually needed prior to engaging their services. GET TO KNOW YOUR CLAIMS PROFESSIONAL Fortunately, both as an attorney and as a claims professional, I have had the opportunity to work with the same handful of people on either side. The professionals who stick out the most are the ones who have taken the time to get to know me. I am not saying we have to spend 30 minutes discussing the Super Bowl, vacations, or politics, but a little friendly chatter is nice. Getting to know the professional builds trust, which, in turn, fosters a better working relationship and more efficient claims handling. As the first partner who I worked for straight out of law school used to tell me, “[The cases] are your babies. You have to treat them like that—you have to know everything about them; you have to care for them.” This is our goal, together, and with this in mind, we can accomplish efficient and excellent claims handling. K Too often, I find myself going through the online docket to find out information about a case before my assigned counsel alerts me of the update.14 CLM MAGAZINE SEPTEMBER 2022 F or as long as I can remember, I wanted to be a lawyer. It was ingrained at an early age, along with the knowledge that I was different—an outsider with my own voice that, in time, helped with the realization that I was gay. Since then, the journey has been interesting, and not without its hurdles. But, with far more successes than setbacks, I am very proud to share the path I have forged. My mom was, and still is, a progressive thinker who taught me to respect others and different perspectives, to provide opportunities and a voice to people from marginalized communities, and to promote fairness and help other diverse people gain equal ground. But when I was a young lawyer, in the early 1990s, being “out” in this profession— being free to be myself and speak my personal truth—seemed like a dream. At that time, it felt like something I could not realize without suffering great consequence in my career. And so, many like me lived two different, separate lives—one personal and one professional—never feeling comfortable in either place. In some ways, we felt From Outsider to Insider Why Do I Share My Journey of Personal Acceptance? Because It Leads to Positive Change By Gary Gassman Gary Gassman is co-vice chair, global insurance department, at Cozen O’Connor, ggassman@cozen.com DIVERSITY, EQUITY, & INCLUSIONTHECLM.ORG/MAGAZINE CLM MAGAZINE 15 luckier than other diverse communities, as we were able to hide who we were and steer clear of unfortunate and debilitative prejudice. Whether in the law firm setting, the judiciary, corporate America, or at an insurance company, those of us who were from “other” marginalized communities learned to overcompensate for our differences. Many of us became overachievers, took on every major project, and worked late as well as every weekend. We did things to stand out from our peers in terms of production so that our otherness was not the basis for comparison and would not provide the pretext for criticism. “Let the work speak for itself and the rest will follow,” was the credo for many of us and the only thing that kept us going. Achievement stimulates confidence, and, as my career developed, I found allies and champions who could assist me, speak for me, and help lift me up. The more successful I became, the more accolades I received, and, in turn, the more honest I became with myself and everyone around me. Through those supportive relationships, I slowly became secure enough to live life in the open and begin to chip away at the barriers that those in my generation faced, and I learned the importance of doing more to champion those following behind me. I have made a point of being an outspoken advocate for living personal truth. As a law firm partner and bar association leader, I have taken on the charge of helping younger lawyers and other professionals navigate law firm and bar association issues while being authentic and true to themselves. I am consistently vocal about my sexuality— and about diversity, equity, and inclusivity as a whole—to ensure that all people have equal opportunities to succeed. The quality of the work speaks for itself and should be the benchmark against which all lawyers are judged. In my experience, the best work comes from people who are not burdened with the stress of hiding who they are or who fear for their livelihood if they do not satisfy some antiquated societal norm. Admittedly, we are in a vastly different world today. Younger generations have greater freedom to be themselves. They revel in it, and in many aspects of our society, diversity is sought, encouraged, and required. However, the legal community still has work to do. It remains difficult for many to navigate the line between personal and professional life and finding a work-life balance. I am fortunate to be at a law firm that is extremely supportive of diversity, equity, and inclusion initiatives and my passion in that space. Cozen O’Connor not only encourages me to champion LGBTQ+ lawyers, but also those from other marginalized and diverse communities. We are continuing to increase the number of diverse lawyers at every level, which is exciting. Our summer associate classes are overwhelmingly diverse. I never thought I would see that day. It’s exhilarating. I am an insurance coverage lawyer. I counsel insurance clients about coverage, litigation, claims exposure, and resolution. I communicate with in-house insurance professionals, other lawyers, judges, and mediators virtually every day. While I have had several LGBTQ+ clients over the years, not surprisingly, the vast majority of my clients are straight, white, and know that I am gay. Though I assumed I would be more comfortable with gay clients, speaking freely about our lives, struggles, and triumphs both professionally and personally, I have made refreshingly similar connections with all of my clients. In fact, I have found insurance claims operations to be particularly welcoming in their interactions, as they actively seek a diversity of perspectives from their outside counsel. They expect and highly value counselors whose experiences are not the same and who have faced different hurdles with varying trajectories, as long as the quality of the work is at the highest level. As a member of Cozen O’Connor’s diversity committee and leader of our LGBTQ+ attorney resource group, and as the American Bar Association Tort Trial & Insurance Practice Section (TIPS) diversity officer, vice chair, and chair-elect, I find my clients regularly seek my advice on issues impacting diversity, equity, and inclusion in the workplace. Just having these conversations opens the door to a greater understanding of other people’s experiences and perspectives, which enhances the interpersonal relationships of all those involved. We have come so far and yet we have so much more to do at every level, in every workplace, to protect our future. As we all struggle with an evolving workforce and the current challenges in hiring and retaining lawyers and other professionals, it is imperative to remember how important it is for diverse individuals to see people who look like them in leadership positions, whether in a law firm or an insurance claims organization. That is the truest way to make people feel welcome and non-marginalized, and to support personnel recruitment and retention. I hope that I can continue to make a difference in the lives of everyone I encounter—be they client, colleague, or friend—and further champion my fellow “others” to ensure that we all reap the benefits of broader and more diverse perspectives in our futures. K Just having these conversations opens the door to a greater understanding of other people’s experiences and perspectives, which enhances the interpersonal relationships of all those involved.16 CLM MAGAZINE SEPTEMBER 2022 WE HAVE SEEN SOME IMPRESSIVE ADVANCES RECENTLY IN THE TECHNOLOGIES USED IN FORENSIC INVESTIGATIONS. HOW HAVE ORGANIZATIONS REFINED THESE TECHNOLOGIES TO CONDUCT EVEN MORE THOROUGH INVESTIGATIONS AND BETTER SERVE CLIENTS? PETE FOWLER, PETE FOWLER CONSTRUCTION: This question almost makes my head explode, because in addition to my B.S. in construction management, I have a minor in information systems, and I spent much of the last 25 years building a magical proprietary information system where everything is connected to everything, with the specific intent of making it easier for us to serve clients better, faster, and cheaper. For example, we set up every project in our cloud-based system, conduct onsite investigations using a smart phone application we built, upload high-resolution photos, and make them available to clients via password-protected client access, along with every other document we receive or create. All data integrates into our analysis and reporting seamlessly, and it’s all saved forever, for no additional cost to clients. Along this same line, I recently co-authored an article in Construction Claims Magazine called “Information Overload: In Construction, New Data and Technologies Are Everywhere. How We Use and Process It All Matters.” We address many of the technologies we are seeing in claims, including building information modeling (BIM) and other design tools, proprietary and commercial file and project management applications, and a multitude of imaging technologies, including enhanced PDFs, Matterport, and drones. NATE MACINTYRE, MC CONSULTANTS: Over the past few years, MC Consultants has been utilizing a wide range of technologies to conduct more thorough investigations. One such technology is reality capture technology (MC Virtual-360), which has the ability to provide as-built documentation of buildings and environments to determine or verify existing conditions, before and after easement construction projects, during the course of construction, and during the construction claims process. As opposed to the old way of using point- and-shoot photography and technical notes, we can now deliver survey-grade data that can be viewed through a secure, online viewing platform or through offline, categorized, and geolocated imagery. For example, we can prepare a drone-based 3D model and attach geo-located photographs to the model, which means no more trying to figure out where a particular photograph was taken within a building. HAVE THERE BEEN ANY SURPRISES WITH THE INVESTIGATIVE TOOLS AND TECHNOLOGIES DEVELOPED— PERHAPS A TECHNOLOGY OR TECHNIQUE THAT IS YIELDING UNEXPECTED BENEFITS IN FORENSIC INVESTIGATIONS? NATE MACINTYRE, MC CONSULTANTS: Yes, here is a recent example: I recently completed an investigation of a water loss at a large, multi-family residential project. My investigation time was reduced significantly due to the general contractor’s use of artificial intelligence (AI) and reality capture technology where a 360-degree camera was used to capture and document each phase of the construction process. The images were mapped to the floorplan for a 360-degree virtual tour experience of the jobsite and a proprietary AI engine was then used to automatically organize and geo-locate the images, by date and location. With the use of this technology, I was able to look back through the walls to determine the source of the water loss and prepare a LEADING OUT LOUD CONSTRUCTION SPONSORED CONTENT HOW IS TECHNOLOGY CHANGING THE INVESTIGATION PROCESS? WHAT TRENDS IN CONSTRUCTION LITIGATION HAVE EMERGED? AND FINALLY, WHAT ARE SOME OF THE BIGGEST CHALLENGES FACING THE CONSTRUCTION INDUSTRY TODAY?THECLM.ORG/MAGAZINE CLM MAGAZINE 17 repair recommendation without needing to conduct destructive testing or disrupt occupants. PETE FOWLER, PETE FOWLER CONSTRUCTION: Hands down, Matterport is the surprise winner in construction claims. They say their technology creates “...an immersive digital twin.” It is a proprietary camera+software combination that gained popularity in the real-estate industry for allowing creation of virtual walk-throughs online. For construction, and especially claims, Matterport is a tool to document the conditions of a property at a given point in time. Of course, the camera is expensive, and it requires specialized training and a subscription, so widespread use is not likely. For projects that are halted for some reason, Matterport is perfect, because we can capture almost every inch of a building’s interior at the rate of approximately 1,000 square feet per hour. This is far faster than a thorough forensic investigation can be executed, and the ability to “walk-through” afterward allows us to gain insights that we might miss by only taking photos. HAS THERE BEEN A SHIFT IN TYPES OF CONSTRUCTION LAWSUITS THAT YOU ARE SEEING, AND, IF SO, WHAT IS DRIVING THAT SHIFT? PETE FOWLER, PETE FOWLER CONSTRUCTION: Unfortunately, we are seeing a lot more injury claims; in particular, those that have resulted in death. It’s tragic. Often, these claims come from less-sophisticated parties, including unlicensed contractors, and many of the victims are undocumented immigrants. Of course, we never know if our project experience is related to general market trends or to our specific expertise or niche in the marketplace. NATE MACINTYRE, MC CONSULTANTS: Yes, other MC forensic consultants and I have seen an increase in unfinished or incomplete construction lawsuits this year. Contractors have been struggling with labor shortages, supply chain issues, and communication failures. Quite often, the claim starts with a contractor not being paid timely by a client who has unmet or non-substantiated expectations. The contractor then pursues payment through the right- to-lien process or litigation. The client/ owner then pursues a construction defect counterclaim. GIVEN SOME OF THE CHALLENGES FACING THE CONSTRUCTION INDUSTRY TODAY, WHAT IS THE BEST ADVICE FOR CONSTRUCTION FIRMS TO AVOID CLAIMS AND LITIGATION IN TODAY’S LANDSCAPE? NATE MACINTYRE, MC CONSULTANTS: I recommend all construction firms have professionally written and well-defined contracts in place for every project and all interested parties (including all product manufacturers). Retain legal counsel to assist with drafting your contracts. Ensure everybody working on a project is properly licensed and insured. Overcommunicate when it comes to safety, the schedule, budget, manpower, product lead times, construction phase sequencing, etc. Commit to using technology, or an industry partner that can provide the following services: 360-degree camera reality capture, aerial drones (photograph and map the exterior of all projects throughout construction), and 3D laser scanning of existing surrounding structures before, during, and after construction (this allows for a deviation analysis if something goes wrong). PETE FOWLER, PETE FOWLER CONSTRUCTION: The ABC’s of risk management: Avoid the most dangerous situations. Be really good at what you do. Cover your assets with excellent contracts by smart lawyers and appropriate insurance coverage from smart brokers. Further, focus on high-risk building elements, especially any system that carries or should manage water in, around, or through the building. Apply tried-and-true quality management and continuous process improvement tools, including Lean. K SPONSORED CONTENT NATE MACINTYRE is a forensic building science expert, licensed general contractor (OR, WA, AK, ID), and regional director (PNW & HI) at MC Consultants, Inc. nate.macintyre@mcconsultants.com PETE FOWLER is a construction consultant, professional cost estimator, and president and chief quality officer of Pete Fowler Construction, a licensed general building contractor in California, Nevada, and Oregon. pf@petefowler.com18 CLM MAGAZINE SEPTEMBER 2022 T he deafening sound of howling winds; cars flipped, thrown, or swept away in flood waters; facades ripped off buildings; neighborhoods flattened; entire communities devastated; hundreds of thousands of people and businesses looking to their insurers to help them rebuild or, in some cases, simply survive. That was the scene almost exactly 30 years ago, on Aug. 24, 1992, when Hurricane Andrew, a monster Category 5 storm, roared through the Southeast. With sustained winds reported at 185 mph, it was one of the strongest and most destructive natural catastrophes the U.S. has ever suffered. The storm caused damage to the Bahamas and southern Louisiana, but the brunt of its impact was felt in South Florida. More than 250,000 people were left homeless in Miami-Dade County alone. All told, Hurricane Andrew caused $25 billion in damages. Of that total, $16 billion was in insured losses, which amounts to a whopping $31 billion adjusted to 2021 dollars. These staggering losses caused seven insurance companies to fail. Many more considered exiting the state. In the aftermath, insurance contracts were overhauled in Florida, effectively imposing higher retentions on policyholders. Rates increased dramatically. Dollar deductibles were replaced with percentage deductibles, particularly when it came to covering windstorm damages. Peak Storm Season Have Legislative and Regulatory Reforms Prepared Us for a Better Future? By Taylor L. 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