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A Resolution Authorizing the Funding of a Medicare Set-Aside Annuity in an Amount Not to Exceed $127,851.71 in Connection with a Workers’ Compensation Settlement
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Introduction
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It is requested that the Village authorize the initial funding of a Medicare Set-Aside Annuity (“MSA”) in relation to the Workers’ Compensation settlement previously authorized by RES 16-004 to satisfy the Village’s duty of cooperation with its excess Workers’ Compensation insurer.
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Recommended Action
Authorize the initial funding and the execution of any necessary agreements.
Prior Board Action
The Village previously approved a settlement in this Workers’ Compensation matter on January 4, 2016 (RES 16-004).
Background
The Village is approaching its self-insured retention (“SIR”) limit for this file ($600,000). The Village’s excess worker’s compensation insurer is responsible for payment of all amounts in excess of the SIR. The insurance company has provisionally negotiated a Medicare Set-Aside annuity (“MSA”) to close the ongoing medical liability. Under the Village’s insurance policy, the Village is obligated to cooperate with the resolution of claims above the SIR limit.
Timing Considerations
Once the Insurance Company is obligated to expend funds on the file, rather than establishing the MSA, the Village risks its ongoing coverage and relationship with its excess carrier.
Financial Impact
The MSA requires a payment of $127,851.71 to be established. There is currently $18,901.34 left in balance of the Village’s SIR on this claim, which the Village would pay, with Safety National funding the remaining $108,950.37. Accordingly, the Village would initially pay $127,851.71 to establish the MSA, and Safety National would reimburse the Village $108,950.37.
The amount paid by the Village is paid out of the Village’s self-insured retention fund, subject to reimbursement by the insurer.
Operations Impact
Authorizing the agreement and closing this file will reduce the time spent on the matter by in-house legal staff, HR staff, and outside counsel.
DEI Impact
There is no DEI impact associated with this item.
Community Input
There is no community input associated with this item.
Staff Recommendation
Authorize the funding MSA and authorize execution of any required agreements.
Advantages:
• This fully resolves the ongoing medical obligations of the Village and satisfies the Village’s obligations to its excess insurer under the Village’s policy.
Disadvantages:
• There are no disadvantages to this recommendation.
Alternatives
Alternative 1:
The Board can elect to decline to initially fund the MSA.
Advantages:
• There are no advantages to this option.
Disadvantages:
• Declining will result in litigation risk and cancellation of the Village’s excess Workers’ Compensation policy.
• The Village may face additional liability and medical exposure.
Anticipated Future Actions
There are no anticipated future actions associated with this item.
Prepared By: Tony S. Fioretti, Assistant Village Attorney
Reviewed By: Greg T. Smith, Village Attorney
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Resolution