Issue #28      March 13, 2006
 

 

THE “OTHER” GOVERNMENT CLAIM IN WC SETTLEMENTS:  IS THE CLAIMANT A VETERAN?

 

By John J. Campbell, JD, CELA, MSCC

 

Introduction

 

          By now, it has become common practice to check for the possible existence of Medicaid liens and Medicare Secondary Payer claims when settling a workers’ compensation (WC) claim.  However, many practitioners are still unaware of the “other” potential government claim that may need to be satisfied from the WC settlement in cases where the claimant is also a veteran.

 

The “Other” Government Claim

 

          Congress enacted Pub. L. 97-72 in 1981.  Title I, Sec. 106(a)(1) of Pub L. 97-72 (the “VA claim statute”) grants the United States the right to recover reasonable charges in repayment for health care benefits provided to a veteran through the U.S. Department of Veterans Affairs (VA) from certain third parties who would otherwise be liable for the veteran's medical care.  The VA claim statute is codified at 38 U.S.C. §1729, which provides:

 

(a)(1) Subject to the provisions of this section, in any case in which a veteran is furnished care or services under this chapter for a non-service-connected disability described in paragraph (2) of this subsection, the United States has the right to recover or collect reasonable charges for such care or services (as determined by the Secretary) from a third party to the extent that the veteran (or the provider of the care or services) would be eligible to receive payment for such care or services from such third party if the care or services had not been furnished by a department or agency of the United States.

(2) Paragraph (1) of this subsection applies to a non-service-connected disability -

(A) that is incurred incident to the veteran's employment and that is covered under a workers' compensation law or plan that provides for payment for the cost of health care and services provided to the veteran by reason of the disability;

(B) that is incurred as the result of a motor vehicle accident to which applies a State law that requires the owners or operators of motor vehicles registered in that State to have in force automobile accident reparations insurance;

(C) that is incurred as the result of a crime of personal violence that occurred in a State, or a political subdivision of a State, in which a person injured as the result of such a crime is entitled to receive health care and services at such State's or subdivision's expense for personal injuries suffered as the result of such crime;

(D) that is incurred by a veteran -

(i) who does not have a service-connected disability; and

(ii) who is entitled to care (or payment of the expenses of care) under a health-plan contract; or

(E) for which care and services are furnished before October 1, 2007, under this chapter to a veteran who -

(i) has a service-connected disability; and

(ii) is entitled to care (or payment of the expenses of care) under a health-plan contract.

(3) In the case of a health-plan contract that contains a requirement for payment of a deductible or copayment by the veteran -

(A) the veteran's not having paid such deductible or copayment with respect to care or services furnished under this chapter shall not preclude recovery or collection under this section; and

(B) the amount that the United States may collect or recover under this section shall be reduced by the appropriate deductible or copayment amount, or both.

(b)(1) As to the right provided in subsection (a) of this section, the United States shall be subrogated to any right or claim that the veteran (or the veteran's personal representative, successor, dependents, or survivors) may have against a third party.

(2)(A) In order to enforce any right or claim to which the United States is subrogated under paragraph (1) of this subsection, the United States may intervene or join in any action or proceeding brought by the veteran (or the veteran's personal representative, successor, dependents, or survivors) against a third party.

 

38 U.S.C. §1729.

 

          The corresponding regulation states:

 

Sec. 17.101 Collection or recovery by VA for medical care or services provided or furnished to a veteran for a nonservice-connected disability.

(a)(1) General. This section covers collection or recovery by VA, under 38 U.S.C. 1729, for medical care or services provided or furnished to a veteran:

(i) For a nonservice-connected disability for which the veteran is entitled to care (or the payment of expenses of care) under a health plan contract;

(ii) For a nonservice-connected disability incurred incident to the veteran's employment and covered under a worker's compensation law or plan that provides reimbursement or indemnification for such care and services; or

(iii) For a nonservice-connected disability incurred as a result of a motor vehicle accident in a State that requires automobile accident reparations insurance.

 

38 C.F.R. §17.101.

 

          Thus, the VA has authority, similar to that provided to CMS under the MSP statute, to recover from third parties for payments it has made for injury-related medical care for nonservice-connected disabilities.  However, that authority is limited to recovery from the employer or carrier in a WC claim; from a health plan contract; or from an automobile liability policy. 

 

          A “disability” is defined under federal law governing VA benefits as “a disease, injury, or other physical or mental defect.”  38 U.S.C. §1701(1).   Clearly, this definition is much broader than the Social Security Act’s definition of “disabled.”  Thus, a VA claim may exist, even if the claimant is not able to qualify for Medicare or for Disability Insurance Benefits (DIB) under Social Security based on “disability.”

 

          Finally, the VA’s right to recover from third parties is limited to payments for nonservice-connected disabilities.  This means that the claimant’s disease, injury or other physical or mental defect cannot have been “incurred or aggravated . . . in the line of duty in the active military, naval or air service.”  38 U.S.C. §101(17).

 

          While the statute and regulation are silent regarding the VA’s right to recover third party payments received by the claimant, the statute does grant the VA a right of subrogation.  Further, the statute grant’s the VA the right to intervene in the WC case as a party.  It would seem logical that this would imply a duty on the claimant to inform the VA of the existence of the claim in sufficient time to allow it to exercise its right to either institute or intervene in the WC case. 

 

There is no provision under the statute or the regulations that would permit the VA to recover from any third party after there has been a settlement.  However, it would also seem to follow that if a claimant settles a WC claim for medical benefits without notifying the VA, the VA would have the ability to enforce its right against the settlement proceeds in the hands of the claimant.

 

The VA claim statute does not require that the portion of the settlement representing settlement of future medical expenses be exhausted to preserve future VA coverage of injury-related medical care.  Thus, there is no requirement for any type of set aside arrangement regarding future VA benefits for work injury-related medical care.

 

          Finally, the Supplemental Appropriations Act of 2002 provides, in part, that: 

 

. . .for the purposes of enabling the collection from third-party insurance carriers for non-service related medical care of veterans, all Department of Veterans Affairs healthcare facilities are hereby certified as Medicare and Medicaid providers and the Centers for Medicare and Medicaid Services within the Department of Health and Human Services shall issue each Department of Veterans Affairs healthcare facility a provider number as soon as practicable after the date of enactment of this Act:  Provided further, That nothing in the preceding proviso shall be construed to enable the Department of Veterans Affairs to bill Medicare or Medicaid for any medical services provided by the Veterans Health Administration or to require the Centers for Medicare and Medicaid Services to pay for any medical services provided by the Department of Veterans Affairs. . .

 

Pub. L. 107-206, title I, chapter 13, Aug. 2, 2002, 116 Stat. 888 (emphasis added).

 

          This statutory provision makes it clear that, as between Medicare and VA medical benefits, Medicare is the secondary payer.  Thus, Medicare’s secondary payer claim for Medicare overpayments must be satisfied before any VA claim against the settlement. 

 

Conclusion

 

          If a WC claimant is a veteran, he or she may have received medical coverage for work related injuries through the VA.  In such a case, the VA may have a claim for reimbursement of medical benefits from the claimant’s WC settlement. 

 

          A claimant need not be considered “disabled” for purposes of Medicare, Medicaid or Social Security for a VA claim to exist.  Therefore, it is recommended that practitioners contact the VA to determine whether a claim exists in any settlement involving a veteran whose work-related injuries are not service-connected.  In cases involving both a Medicare secondary payer claim and a VA claim, Medicare’s claim must be satisfied first. 

 

The VA’s right to recover pre-settlement payments against third parties is more limited than Medicare’s or Medicaid’s.  However, when that right applies, it must be dealt with as part of the settlement to assure that the portion of the recovery remaining to the claimant will be sufficient to provide for his or her medical and support needs in the future.