Is a workers comp claimant's ex-wife entitled to a portion of his MSA for his work-related injury?

05.17.12 | Permalink

By: Brooke L. Ehrlich

A Medicare Set Aside (“MSA”) is a fund of money “set aside” from a total settlement amount used to pay Medicare for future medical treatment related to a claim. More specifically, MSAs are used to pay future medical expenses related to the injury that would otherwise be payable by Medicare as a secondary payer. The amount of an MSA is determined on a case by case basis, taking into consideration the injury, treatment and age of the claimant, among other factors. A MSA can be created by depositing cash in a specially designed account or through the creation of structured settlement annuity. 

On March 9, 2012, an Illinois appellate court addressed the unique issue of whether a workers compensation claimant’s ex-wife was entitled to a portion of his MSA for his work-related injury.

The case, In re Marriage of Christopher Washkowiak and Rosana Washkowiak, involved a couple who married in 2004 and filed for divorce in 2009, roughly one year after Mr. Washkowiak suffered an injury while working for Northern Pipeline Construction Co. Inc. (“Pipeline”). Mr. Washkowiak reached a $435,000 settlement agreement with Pipeline, which included a $70,000 MSA. The MSA was established as an interest-bearing bank account funded to pay for future medical and prescription drug costs anticipated to arise from Mr. Washkowiak's work injury.

During the divorce proceedings, a dispute arose over whether Mrs. Washkowiak was entitled to a portion of the $70,000 MSA. Mr. Washkowiak argued that the MSA funds were not net proceeds from his settlement with Pipeline but rather, funds set aside solely to satisfy Medicare’s interests. The trial court disagreed and found the $70,000 set aside amounted to “net proceeds” which should be included in calculating Ms. Washkowiak’s share of the marital assets.   The 3rd District Appellate Court of Illinois agreed with the trial court, finding the $70,000 are to be considered “net proceeds.” Further, the Court noted Mr. Washkowiak can replace the money taken from the MSA with the remainder of his $435,000 settlement that did not originally flow into the MSA.   

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