The New Business "Best Practice:"

Last month, we discussed how the lack of CMS guidance in liability cases leaves Medicare and Medicare-eligible people ('Beneficiaries') in the dark about paying for injuries and illnesses they've developed due to exposure to the coronavirus. Many companies count on those populations to make their living. Potential coronavirus exposures that occur in their place of business are now creating liability exposures if/when their clients and customers can tie those exposures to their time within those walls. Those company owners who want to both open their enterprise and reduce their risk of liability for inadvertent COVID-19 exposures should review their reopening processes carefully and build in as many "virus-avoidant best practices" as possible.

It's No Longer Business as Usual

It's hard to know where to start reopening a business that has been shuttered since the onset of the COVID-19 pandemic. Every company that routinely welcomes paying customers onto their premises must make accommodations to keep them safe from a potential coronavirus exposure. Employers are doubly taxed: they must provide as safe an environment as possible for their workers and their customers. Not only could an outbreak at their site create resonating workers’ compensation issues, but it also poses a risk of liability issues when it's a customer who falls seriously ill with the disease.

And those concerns layer over the challenges arising when trying to resume 'normal' operations:

Previous vendors and suppliers may not be available, requiring finding new ones or changing out products that are no longer feasible.
In many shops, 'social distancing' requires the reorganization of shelving units, dining tables, services bars, and even cash registers.
That reorganization often results in fewer 'productive square feet,' which will reduce revenues by a comparable amount.
In many jurisdictions, mask-wearing is the order of the day, so customers (should) know to do that. In those jurisdictions where no such mandate exists, business owners must also determine to what extent they want to impose the restriction and how they plan to enforce that new rule.

With so much to think about, it seems apparent that moving forward requires a well-thought-out strategy that balances every contingency, identifies and manages each risk, and maximizes as much as possible the profitability of each transaction.

Managing the Risks Inherent in Reopening During the COVID-19 Pandemic

Perhaps the biggest threat to the reopened company is the risk of inadvertently causing a COVID-19 outbreak. Company owners must manage two separate but similar concerns to ensure their enterprise isn't the next COVID-19 hot spot:

Protecting Workers

Some businesses have a higher risk of triggering an outbreak simply by their nature. Restaurants, hotels, gyms, and spas, to name just a few, must welcome the general public to stay in business. Their workers, therefore, are exposed to whatever contagions their customers carry. The close physical proximity and being indoors contribute to the spread of the virus among patrons and staff alike.

From a workers’ compensation point of view, the answer to one specific question arising from the situation has the potential to impact every employer in the country:

Is COVID-19 an 'Occupational Disease'?

Traditionally, the employer's workers' compensation (WC) insurance policy covers both injuries and 'occupational diseases,' when those arise within the 'course and scope' of the job. The coronavirus and its consequent disease, COVID-19, present a new wrinkle in the discussion about what constitutes 'course' and 'scope' of employment.

'Occupational diseases' typically develop when workers are exposed to toxic substances or materials inherently contained within production processes or employment practices. Firefighters and coal miners frequently develop occupationally-caused lung diseases related to the inhalation of toxic fumes and dust. Healthcare workers often contract the highly infectious conditions they find in their patients, such as tuberculosis or hepatitis.

The coronavirus is not an 'occupational disease' in the traditional sense because its contraction isn't limited to a specific occupation or job. Instead, because it spreads via airborne particles exhaled wherever an infected person might go, it can infect anyone in any position when there are insufficient protections in place to prevent that infection.

The hospitality industry is particularly vulnerable to triggering coronavirus outbreaks because of the frequency of customer turn-over. The more people there are entering the business, the higher the risk that one of them is an asymptomatic person carrying the virus, who, thereafter, unknowingly infects a staff person. Because hospitality workers must - by the nature of their work - interact with potentially infected customers, they can argue that their subsequent infection was, indeed, contracted within the 'course and scope' of their job. Their healthcare costs should be born by their employers WC insurer. The argument tries to move the job-related COVID-19 infection into that class of employment-related 'occupational diseases' that enjoy a "presumption of compensability:" if you contract the virus from a presumed work-based source, then your related healthcare costs are expected to be covered by the WC insurer.

Not surprisingly, there is a lot of push back against the 'presumption of compensability' that limits the employer's opportunity to point out the worker's other possible transmission points (family members, i.e.) and thereby deflect the burden of added COVID-19-related WC premiums.

Data retrieved from its 38 states by the National Council on Compensation Insurance (NCCI) notes that the cost of increased WC premiums driven by COVID-19 infections could rise to as much as $81 billion a year. New York states' estimate (not included in the NCCI study) sets that cost at $31 billion just within its borders, which represents an increase of over 350% over its 'typical' annual WC bill.
Others argue that coverage for COVID-19 isn't contemplated in the 'Grand Bargain' that established the concept of 'workers’ compensation' in the first place. Because a COVID-19 infection doesn't arise from any specific job but instead floats into the workplace arbitrarily on the breath of a customer, client, or some other party, it shouldn't be considered eligible for coverage by WC insurance.

Also, not surprisingly: those arguments and more are now the focus of discussion for more than one state government and WC insurer.

Protecting Customers

We noted last month our belief that COVID-19 cases will trigger thousands of liability lawsuits, as infected sufferers look for ways to obtain and cover the cost of the healthcare services they need. For sufferers who are also 'Beneficiaries,' those lawsuits will take on added significance. This population is at risk for worse infections with more severe symptoms and often take longer to recover. Further, because they often also have underlying health conditions that complicate their COVID-19 case, they are also more likely to suffer permanent damage and injury. In those cases, they will need COVID-19-related healthcare services for the rest of their lives. Lawsuits filed by members of this population will provide the necessary evidence to ensure that CMS doesn't bear the brunt of those added COVID-19-related expenses in its future healthcare payments. By bringing the suit, Beneficiaries will have access to a separate healthcare fund without imperiling their future Medicare healthcare coverage.

Sensible Precautions for All Populations

Fortunately, implementing safeguards and precautions to prevent business-based coronavirus infections protect all populations as much as is possible, considering what is currently known about how the virus spreads. Today's best business practice is implementing a virus-protection plan to avoid getting hit with unnecessary WC or liability claims for COVID-19 infections.

There are two fundamentals to consider when developing your plan: how to make the physical plant safe, and how to modify business practices to keep workers and customers safe.

Steps to Safeguard Your Workplace

A walk through the place of business and a review of current practices will each reveal vulnerabilities that might cause a virus exposure. Manage whatever threats exist, then change your policies to prevent those risks from emerging again.

Studies indicate that social distancing prevents transmissions, so move tables, desks, chairs, seating areas, etc., to sit at least six feet apart.
Studies also indicate that masks work by providing a barrier between an infected person and their uninfected neighbor. If you don't have a mask policy in place, develop one that includes both staff and customers, and enforce it rigorously. One or two lost customers aren't worth the costs incurred by triggering a virus outbreak.
Sanitation matters more now than ever.

- Ensure that cleaning supplies kill viruses; not all do, despite their claims to the contrary.
- Develop company-wide protocols for sanitation management throughout the business day and then monitor those activities every day.
Implement a tracking system for both employees and customers, so you know who's been inside your company doors. Tracking slows the spread of the virus by notifying those who may have been exposed and allowing them to isolate themselves so they don't pass it on.
Develop a Virus Response Plan that details how your enterprise will react when it discovers a possible virus exposure. It will guide your workers as they work to reduce the likelihood of further infection. At the least, it should detail:
- How to determine when and where the exposure occurred so practices can be changed to avoid the circumstance in the future;
- A listing of who might have been exposed, including the identification of both staff and clientele. All should be notified as quickly as possible.
- Which agencies should receive the report of the outbreak, which might be some or all of your local, regional, and nationally based entities.
- Most importantly, the plan should lay out how to return to operations with new systems in place to prevent a similar exposure.

It's abundantly clear that covering the healthcare and related costs of just one COVID-19 case are high, and that they become exponentially greater when staff and customers are the sufferers. Establishing appropriate safety precautions throughout the enterprise to protect both staff and customers is imperative for every business struggling to keep afloat in the wake of the COVID-19 pandemic. It's always better to prevent a disaster than recover from one, and all too often, a COVID-19 outbreak has caused the demise of many excellent companies. Don't let yours be one of them.

The MSA & Liability Cases: Who’s Going to Pay for That?

Decades of continuing silence on the role of Medicare Set Aside (MSA) accounts in liability cases may prove disastrous in the face of the injuries and damages caused by the COVID-19 pandemic. America's aging population is growing, and more people reach Medicare-eligibility every day. Any injuries they suffer due to the virus and its debilitating disease will become an issue for the Centers for Medicare and Medicaid Services (CMS).

Liability Cases Raise Different Issues than Workers Compensation Cases

The challenge is this: any entity - any business, any service provider, and even any individual - could be found liable if something they did or didn't do is proven to have caused a COVID-19 infection in a successful plaintiff. When that plaintiff is also a Medicare recipient or is Medicare-eligible (Beneficiaries), resolving the liability case should also include the establishment of an MSA to ensure compliance with the Medicare Secondary Payer Act (MSP) and to protect CMS from paying for injuries that are rightly attributed to that primary payer.

However, that there are no clear rules in place regarding MSAs in liability cases will create havoc for all entities involved in the issue:

plaintiffs who want to ensure long-term coverage for lingering, COVID-related injuries;
defendants who intend to accept their responsibility for causing those injuries, and
CMS, if it has to pursue primary liability parties who aren't covering the plaintiff's costs.

There’s Not So Much Awareness of MSAs in the Liability Community

Most employers and insurers are aware of the MSP obligations mandated when Beneficiaries are injured on the job (although many entities are looking to limit that liability for workers who contract COVID on the job). However, the general public may not be mindful that those mandates also apply to non-WC cases where a person or entity is deemed responsible for injuries occurring to a Beneficiary outside the workplace setting. The majority of the general public may not have ever heard about the MSP. They aren't aware that the Act requires no-fault and liability insurance to be the primary payer for accidental or 'other situation-related health care services, claimed or released' when the injured party is a Beneficiary. When these cases arise (and they will), those entities grappling with confounding legal concerns will be even more baffled by a lack of CMS guidance on the wisdom of including MSA calculations for the liability lawsuit.

Making things worse are two aspects of the pandemic that are converging ominously:

the rising number of current and eligible Beneficiaries, and
the rising number of COVID patients who are also Beneficiaries.

The American Population is Aging

The 'Baby Boomer' generation, those born between 1946 and 1964, is aging, and now numbers more than 52,000,000. In 2011, the first wave of these 'Boomers' hit Medicare eligibility, and the last of them won't cross that threshold for another nine years. Further, of the 52 million, approximately 45 million are retired and drawing their Social Security Benefits. Those who contract the COVID-19 virus and require medical help to recover from it will have to find another healthcare resource to pay for those services. For many, that identity of that resource may only be revealed in the courtroom.

Non-Workers are Beneficiaries, Too

Almost everyone in that older population group has the potential to be a Beneficiary plaintiff:

As customers and clients - Several classes of senior populations pose unique circumstances in the event of a COVID-19 outbreak:

- Senior homes - The startling number of COVID-19 deaths occurring in nursing homes and assisted living facilities underscores the magnitude of the problem for liability cases: those losses account for as many as 40% of all the COVID-19 deaths in the country. Potentially, each of those deaths also represents a wrongful death lawsuit. Senior home residents who recovered from the disease but still suffer from lingering symptoms are also potential plaintiffs in cases filed against the facility where they contracted the illness.

- Subsidized housing residents - Many seniors live in subsidized housing complexes across the country, and in some cases, apartment management stopped the services that regularly checked in on them. Those stoppages have led to unnecessary deaths, certainly, and caused illnesses to worsen, again impacting the need for long-term healthcare support.

- Participants at public gatherings - despite warnings, many people have elected to gather without masks in public places, such as at the Sturgis Motorcycle Rally in Sturgis, South Dakota, and in the many senior communities in Florida and along the Gulf Coast. When attendees are also Beneficiaries, their only obvious option for medical services may be CMS, but there will also be claims of negligence against the businesses and areas that hosted them. These claims will consequently raise many, many assertions that event participants 'assumed the risk of illness' when they attended, knowing that COVID-19 could be in the vicinity.

As business colleagues - Most businesses deal with other entities, and long-term relationships tend to be more relaxed. Interactions that never posed threats in the past may be overlooked as potential transmission threats now.

As personal friends, too - Friends and neighbors, trusted for years, are now only as safe as their last interaction with their friends and neighbors. In those cases where the only resources available to cover long-term medical care are through a lawsuit, even these relationships become vulnerable to a legal challenge.

Still No CMS Guidance on MSAs for Liability Cases

The CMS has promised some form of 'guidance' on using MSAs in liability cases for years. In its Fall 2018 notification, CMS indicated that the new rules would give Beneficiaries better opportunities to manage their future healthcare needs while also protecting Medicare's interests. It suggested the new guidance would be issued sometime in 2019. That didn't happen.

Instead, in 2020, an updated notice stated that the new rule would 'clarify' that it would be the Beneficiary's responsibility to protect Medicare's interest in the liability suit and that more information would be made available by August. August has now come and gone, and still, no word from CMS about the liability MSA question.

The delay is, however, causing its own angst:

For some, no guidance is good guidance. The ClaimsJournal, an adjunct of InsuranceJournal, asserts that mandating an MSA in every liability suit involved Beneficiaries would be unnecessarily burdensome on the parties within those lawsuits. Their analysis suggests that such a rule would be beyond the scope of CMS's authority and that applying the mandate would dramatically slow the progress of those lawsuits to a swift but fair end. In the interim, Beneficiary health might deteriorate, which would (in the event the parties can't reach a settlement) compel Medicare to assume the responsibility for those costs, as well as the expenses incurred due to the original injury or illness.

For others, any statement by CMS on liability MSAs is, at this point, will be as confusing as no statement at all. In its proposal, CMS could assert any number of parameters, including who would be responsible for what, where limitations and exclusions might lie, and whether there will be financial thresholds to meet before filing. Those unknowns raise their own questions. Additionally, the CMS proposal should also contain a procedure or process to follow to become compliant. The questions raised by the 'theoretical how' and the 'practical how' are many. Not insignificantly, 'when' these new rules come into play is also a question; it often takes months or years to get all the systems in place, and there's usually a long and significant learning curve required for everyone involved.

Clearly, the process of designing and implementing an MSA strategy for liability cases involving Beneficiaries is complex at the best of times. The COVID-19 pandemic makes these, arguably, the worst of times to be mandating the use of such a complicated tool in an entirely new class of cases. However, the MSP is clear: Medicare is the mandatory secondary payor for Beneficiary healthcare costs caused by a third-party. Failing to clarify that point in any Beneficiary-related liability lawsuit threatens the stability of that case resolution, and/or opens CMS to risk of using Medicare funds to pay for another entity's errors.

What we do know is this:

The MSP is still the law and applies to any case where the plaintiff is a Beneficiary.

The large number of beneficiaries who have fallen ill with the COVID-19 virus suggests that at least some of them will file lawsuits against the entities that they believe are responsible for their illness and the costs of the damage it caused.

Even without CMS's official guidance on the specific liability issue, making an effort to get clearance from CMS for an MSA within the COVID-19 liability lawsuit would be best practice:

- It protects the Beneficiary's future Medicare resources;
- It provides appropriate funding for the COVID-19 related medical costs, and
- It protects the interests of CMS by including it in the review and structure of the resulting settlement.

There are (most likely) a lot of Beneficiary-related, liability-based lawsuits on the way. Planning now to manage a possible CMS MSA application within them will save all parties time, money, and stress.