The petitioner seeks to vacate an Award on Stipulation, served and filed on January 16, 2008.  We conclude the petitioner has established good cause and grant the petition to vacate the award.

Melvin Hert, the petitioner, worked for Carlson Companies and contended that he sustained Gillette-type^[1] personal injuries on March 4, 2003, and March 3, 2004.  On the alleged dates of injury, Carlson Companies was insured by Lumberman’s Mutual Insurance Company, with claims administered by Crawford & Company.  Carlson Companies and Lumberman’s, the respondents here, denied liability for the claimed injuries.

The petitioner, then represented by counsel, filed a claim petition alleging that he sustained personal injuries to his cervical and lumbar spine arising out of his employment.  He sought temporary total and/or permanent total disability benefits, permanent partial disability benefits, rehabilitation benefits, and medical expenses.  In January 2008, the parties resolved these claims and entered into a stipulation for settlement.  In exchange for a lump sum payment of $50,000, the petitioner agreed to settle, on a full and final basis, all claims he might have had against the respondents arising out of the two disputed injuries.  The petitioner also closed out all claims for future medical treatment resulting from those two injuries.  The parties further agreed to protect the rights of Medicare and request approval of the settlement from the Center for Medicare and Medicaid Services [CMS].

Medicare is statutorily precluded from paying a beneficiary’s medical expenses when payment has been made or can reasonably be expected to be made under a workers’ compensation plan.  42 U.S.C. § 1395y(b).  The burden of future medical expenses in workers’ compensation cases may not be shifted to Medicare.  When future medical expenses are a component of a workers’ compensation settlement, all parties are required to protect Medicare’s interests as to treatment expenses Medicare would otherwise be obligated to reimburse.  If Medicare believes a workers’ compensation settlement does not protect its interests, Medicare may refuse to cover the beneficiary’s medical costs related to the work injury until treatment expenses equivalent to the settlement proceeds have been incurred and paid.  42 C.F.R. § 411.46 et seq.; CMS Memo, July 23, 2001.

Effective April 25, 2006, CMS review of a proposed settlement is required when the employee is a Medicare beneficiary at the time of the settlement and the total settlement proceeds exceed $25,000.  CMS Memo, April 25, 2006.  The recommended method to protect Medicare’s interests is a Medical Set-aside Arrangement [MSA], which allocates a portion of the workers’ compensation settlement for future medical expenses.  The amount of the set-aside is determined by CMS on a case-by-case basis.  Once CMS determines that the set-aside amount has been exhausted and accurately accounted for to CMS, Medicare will pay future medical expenses related to the workers’ compensation injury.^[2]

At the time of the settlement in the present matter, the petitioner was a Medicare beneficiary,^[3] the total settlement was greater than $25,000, and the settlement closed out the petitioner’s claims for future medical expenses related to the alleged personal injuries.  Accordingly, CMS review of the proposed settlement was required.  In the settlement document, the respondents recognized their obligation to protect Medicare’s interests, agreeing to arrange for a MSA in an amount to be determined by CMS, to abide by the determination of CMS, and to place funds into the MSA account sufficient to comply with CMS’s determination.  The respondents further agreed to honor the terms of the settlement, to hold the petitioner harmless, and to arrange for the final MSA allocation as determined by CMS.  The MSA was to be funded through an annuity to be purchased by the respondents.  An award on stipulation was served and filed on January 16, 2008.

The respondents initially retained Gould & Lamb to assist them in establishing the MSA account.  According to the respondents’ pleadings, the estimate of Gould & Lamb called for a significantly larger MSA account than the respondents had contemplated at the time of the settlement.  The respondents then elected not to fund the MSA in the recommended amount, discharged Gould & Lamb, and attempted to deal with CMS directly.  In February 2008, the respondents forwarded documentation to CMS seeking approval for an MSA account of $5,000.  The respondents received no response from CMS and, in early 2009, counsel for the respondents consulted with Cambridge Gallagher Settlements, seeking assistance in establishing the MSA.  Cambridge Gallagher determined that the respondent’s request to establish a MSA was likely never reviewed by CMS.  Thereafter, counsel for the respondents asked the petitioner to sign authorizations that would allow CMS to review certain medical information.  The petitioner refused to execute the authorizations.

The petitioner contends that, since 2008, he has continued to require medical care and prescription medication to treat his personal injuries.  He asserts that Medicare has refused to pay these medical expenses and that he has been forced to pay nearly all of these expenses himself,^[4] due to the lack of the MSA.  Accordingly, the petitioner asks this court to vacate the award on stipulation.

Minn. Stat. §§ 176.461 and 176.521, subd. 3, cover this court’s authority over petitions to vacate.  A petitioner must show cause for this court to vacate an award, which includes a mutual mistake of fact or fraud.  Minn. Stat. § 176.461.  The petitioner asks this court to vacate the award on stipulation on these bases.

In the stipulation, the parties specifically provided that the “employee will be eligible to receive Medicare benefits for the claimed work injury-related medical expenses after the set-aside arrangement account becomes fully exhausted.”  Clearly, both parties understood that a MSA was necessary to insure payment of the petitioner’s future treatment expenses.  However, according to the respondents, the Gould & Lamb estimate for the set-aside account “called for a significantly larger MSA allocation that [sic] the parties contemplated at the time of the settlement.”  (Resp. Brief).  As a result, the respondents determined not to fund an MSA at that time.  Rather, they attempted to deal with CMS directly, and, again, no MSA was established.  It has now been over three years since the date of the award, and still no MSA is yet in place.  It seems obvious that both parties intended that the MSA be timely established.  Further, it appears that, at the time of the settlement, both parties misapprehended the feasibility and cost of establishing an MSA.

A mutual mistake of fact occurs “when both parties to a stipulation misapprehend some material fact relating to the settlement.”  Shelton v. Schwan’s Sales Enters., 53 W.C.D. 110, 113 (W.C.C.A. 1995).  The petitioner contends that, because of the parties’ mistaken understanding, he has not received coverage from either the insurer or from Medicare for his ongoing medical expenses.  It was the intent of the parties to the settlement to protect the petitioner from just this situation.

The respondents contend the petitioner has made compliance with the terms of the stipulation impossible by refusing to sign releases necessary to establish the MSA.  However, the respondents have not demonstrated that those releases are necessary or why any required releases were not obtained at the time of the settlement.  In any event, too much time has now elapsed to excuse the respondents’ failure to fulfill the terms of the settlement agreement.  Under the specific circumstances of this case, we conclude that good cause has been established, and we vacate the January 18, 2008, award on stipulation.