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A CMS Donnybrook in Philadelphia?

May 25, 2011

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I was in the Philadelphia Court of Common Pleas earlier today on a trial calendar
call. For better or worse, I walked into a donnybrook of a CMS argument before
Judge Moss, involving amicus insurers from all over the country and the majority
of the Philadelphia asbestos bar. The issues before Judge Moss were, among
others, whether: (a) an insurer can refuse to allow plaintiff to hold set aside
CMS funds (pending a CMS determination) because, in effect, the
defendants/insurers don't trust plaintiff's counsel and would therefore prefer
to hold the money in their own escrow; (b) in asbestos cases with a pre-1980
exposure whether CMS has rights to the funds; and (c) whether the CMS <a href="https://www.cms.gov/MandatoryInsRep/Downloads/NGHPUserGuideV3.1.pdf">guidelines</a>
contain inherently contradictory rules and regulations, which thereby render
them ineffective if a defendant insurer attempts to rely upon them in stating
why it can't release funds in a particular case?
The orders have yet to
be issues and will no doubt be the subject of an appeal, but underscoring all of
the arguments was a common problem -- a failure to communicate. Too often the
claims examiner/defense attorney fail to make clear to plaintiff's counsel (in
writing so that a paper trail exists) that payment of the settlement is
conditioned upon: (a) a finding by CMS that plaintiff is not eligible; or (b) if
there is a finding of eligibility by CMS then either (i) plaintiff agrees that
the settlement proceeds are not payable until after CMS announces/renounces its
recovery rights, or (ii) CMS’s name goes on the check. Based upon today's
arguments, it appears that Philadelphia's judiciary would find this good
evidence of defendant/insurer intentions if a plaintiff filed a motion to force
payment with costs and interests. Carriers and their attorneys might want to
modify their best practices accordingly. After all, an ounce of prevention is
worth two of cure.
For more information about this post, please contact
Bob Cosgrove at <a href="mailto:rcosgrove@wcmlaw.com">rcosgrove@wcmlaw.com</a>.

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