One of the hottest (and least favorite) issues that plaintiff’s lawyers all across the country are grappling with right now can be stated in one word, subrogation. Subrogation issues in the personal injury context arise when a third-party payer of medical bills (usually Medicare, Medicaid or a private health insurance company) makes a claim for reimbursement out of the subsequent personal injury settlement.
Addressing subrogation issues prior to and after settlement has added an entirely new and oftentimes difficult component to personal injury practice, and a failure to be aware of the issues can present significant traps for the unwary practitioner.
Medicare Liens
If a personal injury client is on Medicare, their attorney needs to immediately begin preparing to deal with the subrogation issue. Medicare liens are often referred to as super liens because the attorneys themselves have the affirmative duty to see to it that Medicare is repaid out of the personal injury settlement for any funds that Medicare may have expended – and the attorney may become personally liable if he or she fails to pay. See 42 USC 1395y(b)(2)(B) and 42 CFR section 411.24.
Promptly notifying Medicare of the claim and securing a written itemization of the amount of money that Medicare has paid (i.e., the lien amount) is critical in any personal injury case. You can find more information at the Center for Medicare Services website.
Medicaid Liens
When it comes to Medicaid, you should generally refer to your own state Department of Medicaid in order to determine the ins and outs of the various notice requirements and subrogation handling. Most state Medicaid departments have detailed instructions available online as to both the policy and procedure that need to be reviewed to avoid any missteps.
Medicaid subrogation liens can be some of the most difficult to deal with, as many state Medicaid department are underfunded and understaffed, and waiting on lien information can take months. You may want to settle the case and get your money, but your attorney is still waiting on the Medicaid lien information and is hesitant to settle the claim without it.
In these circumstances, a careful review of the itemized billing statements from the medical providers may reveal what the providers received as payment from Medicaid, thereby allowing the attorney to calculate the anticipated Medicaid lien and settle the case. Of course, in pursuing this option, you’re taking a risk because if Medicaid’s claimed lien comes back higher than expected, your attorney will have to dispute the lien with Medicaid, request that the client pay (an unlikely scenario), or pay himself or herself.
Private Health Insurance Liens
With respect to subrogation liens asserted by private health insurance companies, the companies generally rely on language in certain health insurance contracts that provides for reimbursement out of the settlement for any funds that the company previously expended on its insured’s medical bills.
The big issue in these types of cases often becomes whether the health insurance company can produce a copy of the actual health insurance contract with the requisite subrogation language that was in effect at the time of the incident. Oftentimes a collection firm will send a letter to your lawyer indicating that it represents the health insurance carrier and requesting that your attorney promise to pay the health insurance carrier’s contractual lien out of the settlement. An itemization of bills paid is often enclosed.
Your lawyer may then request that the collection firm provide a copy of the actual health insurance contact in order to confirm the plan does in fact include the requisite contractual subrogation language. While sometimes the contract will be produced without incident, oftentimes the collection firm will fail to produce an actual signed or certified health insurance contract with subrogation language – but will still insist on the legitimacy of their claim and continue to demand payment.
In this circumstance, your attorney is faced with the question of whether to pay the claimed lien, or whether to refuse and deal with the potential for a breach of contract lawsuit against the client-insured down the line. Communication is critical at this juncture, as your attorney should be fulling informing you of the situation and the available options in order to make a decision that’s right for you (in writing, of course).
In sum, subrogation liens add a whole new dimension of work and headaches to the handling of personal injury claims. It is absolutely critical for practitioners to be aware of the laws and requirements imposed upon them in order to avoid any unpleasant surprises arising before or after the settlement of a personal injury case.
