Sunday, June 27, 2004

Local SSA Interpretation Limits Fee Reduction to Lifetime Pro-Ration of Indemnity

When preparing Sciarotta Language for Compromise and Release Agreements, Counsel typically does not show the attorney's contingent fee coming out of the Medicare Set Aside Amount. This is Medicare's directed procedure, according to a May 7, 2004 All Regional Administrators memorandum. Thank You to Judge Torrey for the memo reference

Counsel instead applies the whole counsel fee to the net amount representing future indemnity. The fee then may exceed 20% of the indemnity amount, but the context clearly shows the fee has been reallocated in accordance with Medicare's directive.

The lifetime pro-ration calculation is performed on the net amount after Medicare set aside and attorney's fees. Recently, however, a counsel from the Pittsburgh area has been instructed by representatives of the Social Security Administration to allocate only a pro rata portion of the fee to the indemnity.

If SSA limits the fee reduction to 20% of the indemnity amount, the Claimant will have to be asked: "Do you understand a portion of the attorney's fee in this case amounting to (the attorney's fee on the Medicare set aside amount) will be included as your income from this settlement for the purpose of calculating your future entitlement to social security disability benefits?"

Pennsylvania Workers' Compensation Practice and Procedure Reference 26.24