North Carolina: Medicare Set-Aside Agreement’s “Seed Money” Must Be Paid Despite Injured Employee’s Death

In an unusual case showing the importance of careful drafting of settlement agreements, a North Carolina appellate court recently held that an employer’s comp carrier was required to pay a deceased employee’s estate some $19,582.37 as “seed money” called for under a Medicare Set-Aside Agreement (“MSA”), in spite of the fact that between the time the agreement was executed and the required date of any payment, the injured employee died unexpectedly and, accordingly, there was no possibility that future medical payments would ever be owed by anyone.  Prior to the employee’s death, the parties entered into a settlement agreement regarding the employee’s workers’ compensation claim whereby the carrier paid a lump sum of $250,000, plus various costs and expenses.  As a part of the settlement, the carrier also agreed to the funding of the MSA in the amount of $186,032.51, with $19,582.37 “seed money” and payments of $9,247.23 annually for 18 years, if the employee was living.  The Industrial Commission found that an implied condition of the mediated settlement agreement was that the employee be alive for the defendants to be required to fund the MSA. The appellate court disagreed, finding the seed money to be a guaranteed benefit.

Reported by Thomas A. Robinson, J.D.

LexisNexis Online Subscribers: Citations below link to Lexis Advance. Bracketed citations link to lexis.com.

See Holmes v. Solon Automated Servs., 2013 N.C. App. LEXIS 1238 (Dec. 3, 2013) [2013 N.C. App. LEXIS 1238 (Dec. 3, 2013)]

See generally Larson’s Workers’ Compensation Law, § 132.05 [132.05]

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law.

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