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Workers comp claimant's ex-wife entitled to part of Medicare set-aside: Court


OTTAWA, Illinois—A workers compensation claimant's ex-wife is entitled to a portion of Medicare set-aside funding for his work injury, an Illinois appellate court found Wednesday in a split 2-1 ruling.

The case, In re Marriage of Christopher Washkowiak and Rosana Washkowiak, involves a couple who married in 2004 and filed for divorce in 2009, about a year after Mr. Washkowiak suffered a work-related injury while employed by Northern Pipeline Construction Co. Inc., court records indicate.

A trial court's 2010 judgment of dissolution of marriage awarded Ms. Washkowiak 17.5% of the “net proceeds” from a $435,000 workers comp settlement agreement Mr. Washkowiak reached with Pipeline.

The agreement released Pipeline from paying “all past and future” workers comp benefits and included a $70,000 MSA as part of the $435,000. The MSA is an interest-bearing bank account funded to pay for future medical and prescription drug costs stemming from Mr. Washkowiak's work injury.

MSAs provide money for medical care that normally would be covered by Medicare, so parties to a settlement agreement are in compliance with the Medicare Secondary Payer Act.

A dispute arose over whether Mrs. Washkowiak was entitled to 17.5% of the $70,000 MSA with Mr. Washkowiak, arguing that the MSA funds were not net proceeds from his settlement with Northern Pipeline.

Instead, he argued that the funds were set aside solely to satisfy Medicare’s interests.

But a trial court found that the $70,000 set-aside amounted to net proceeds to be included in calculating Ms. Washkowiak’s 17.5% share.

An Illinois 3rd District Appellate Court majority agreed, finding among other things that the $70,000 are net proceeds and that Mr. Washkowiak can replace the money in the MSA from the remainder of his $435,000 settlement that did not originally flow into the MSA.

“Petitioner can provide that 17.5% from the settlement funds and still leave $70,000 in the MSA,” the majority said. “This is in no way inequitable. (Ms. Washkowiak) receives 17.5% of the net proceeds; Mr. Washkowiak gets the rest. From his remaining 82.5%, he places (or leaves) $70,000 in (the) MSA.”

But in a dissent, Justice Mary McDade wrote that “because the MSA funds were set aside for the sole purpose of satisfying Medicare's interests, I would find that they are not part of the ‘net proceeds’ of the settlement.”