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MSA Update - 3A: Structured Settlement Annuities

By Patrick Hindert

This S2KM blog post begins an Interview with Thomas Spratt about structured settlement annuities and Medicare set-aside arrangements (MSA). This S2KM interview continues two related S2KM series:

• Growing the Structured Settlement Market; and
• Medicare Set-Aside Update.

Thomas Spratt is Senior Vice President of Technical Operations at Protocols. Based in Denver, Colorado, Protocols is a leading MSA specialty company. Tom lives in Manchester, N.H. Prior to joining Protocols, Tom worked as a Manager for Liberty Mutual Insurance Company where he developed and managed Liberty's MSA compliance program. Tom is a national and state-specific jurisdiction expert on employers' liability and workers' compensation. Tom is a member of NSSTA and NAMSAP.

S2KM: Greetings, Tom. Thank you for participating in this S2KM interview.

TOM SPRATT: Thank you. I am glad to have the opportunity to discuss these important issues.

S2KM: What were your MSA responsibilities with Liberty Mutual Insurance Company?

TOM SPRATT: As Manager of Liberty's Home Office Workers' Compensation Department, I was responsible for ensuring Liberty Mutual compliance with the Medicare Secondary Payer (MSP) regulations.

S2KM: In how many MSA cases have you participated? How many of these MSAs were funded with structured settlement annuities?

TOM SPRATT: At Liberty, I was personally involved with hundreds of MSAs over nine years. The first MSA I personally engineered occurred in 1999, well before CMS published their first policy memorandum in July 2001. As for structured settlements, virtually all MSAs in the Liberty program utilized annuities based upon funding criteria I established as Manager. Whenever the MSA funding was $20,000 or more, exclusive of the seed money CMS requires, Liberty utilized a structured settlement annuity.

S2KM: What are your responsibilities at Protocols? Who are your clients and what professional services do you personally provide?

TOM SPRATT: At Protocols, my duties are comprised of assisting clients with establishing, documenting and maintaining Medicare compliance programs. These compliance programs include training for claim and legal staffs as well as involvement in specific cases. Protocols offers a complimentary workshop which covers key Medicare developments since Medicare's inception including MSAs. In addition to Medicare, I also provide workshops about catastrophic claim management which has been my broader specialty for over 30 years. Protocols clients are mainly insurance carriers, self-insured employers and TPA?s.

S2KM: The Centers for Medicare and Medicaid Services (CMS) has stated it receives, on average, 1550 workers' compensation (WC) MSAs per month. In your best estimate, how many of those submissions, on average, involve structured settlement annuities?

TOM SPRATT: I don?t know the total number of structured settlement annuities. It appears to me there are many fewer annuities used than should be. This result may be caused, in part, by the deluge of ?rated age? requests received by annuity providers with a limited overall increase in annuity premium.

S2KM: Who tracks information about MSAs and structured settlement annuities - CMS? NSSTA? NAMSAP? Annuity providers?

TOM SPRATT: I am unaware of anyone who is tracking or reporting the overall number of MSAs funded with structured settlement annuities. CMS has reported that 94% of MSA's submitted to them are ?self administered?. This statistic underscores the need for structured settlement annuities to avoid premature exhaustion of the MSA funds.

S2KM: Who are the leading structured settlement annuity providers for MSAs?

TOM SPRATT: Except for Liberty Mutual, I don?t know which structured settlement annuity providers have the greatest MSA market share. Fortunately, several are very active and competitive in the MSA market.

This concludes Part A of S2KM's interview with Thomas Spratt about MSAs and structured settlement annuities.

Full post as published by Beyond Structured Settlements on September 02, 2008 (boomark / email).