When settling cases involving clients with federal or military healthcare coverage, understanding the complex landscape of lien recovery rights is crucial. This blog highlights key issues and strategies related to federal employee and military healthcare liens.
FEHBA Liens
The Federal Employees Health Benefits Act (FEHBA) covers federal employees, retirees, and their families through specialized health plans administered by private carriers under the Office of Personnel Management (OPM). FEHBA’s preemption of state laws is pivotal; as affirmed by the Supreme Court in Coventry Health Care of Missouri Inc. v. Nevils, FEHBA preempts state laws that might limit these plans’ subrogation rights. This ruling solidified that FEHBA plans can demand full reimbursement from settlements, similar to ERISA plans, although FEHBA plans typically contain more lenient recovery provisions.
To address FEHBA liens, start by reviewing the plan’s language. While FEHBA liens are strong, potential reductions are still possible, given that the plan’s recovery provisions may provide needed negotiating leverage.
Military Liens
Military healthcare programs—such as Veterans Health Administration (VHA), Champ VA, and Tricare—each have distinct reimbursement rights governed primarily by the Federal Medical Care Recovery Act (FMCRA). Unlike other types of liens, these programs do not involve traditional liens but rather direct claims against responsible third parties.
Veterans Health Administration: Recovery rights stem from 38 U.S.C. § 1729 and FMCRA. The VA can pursue reimbursement claims connected to third-party settlements. For the VA, the resolution process involves requesting bills and navigating a tiered review system for compromise or waiver requests.
Tricare: Governed by similar provisions, Tricare’s recovery rights are outlined in 32 C.F.R. §199.12. Tricare does not require set-asides but considers future medical expenses, and recovery claims are managed through the JAG office. Challenges with Tricare include managing attorney fees and determining the military’s right to recover from first-party auto insurance policies.
Key Issues:
- Attorney Fees: Tricare’s form protection agreement often prohibits the government from paying attorney fees, creating complications in settlement negotiations.
- First-Party Auto Insurance: The right to recover from uninsured motorist (UM) coverage is debated and often hinges on specific policy language, as demonstrated in Government Employees Ins. Co. v. Andujar.
Conclusion
FEHBA and military healthcare liens present distinct challenges. FEHBA’s federal preemption necessitates focus on plan-specific language to negotiate reductions, while military liens involve navigating direct claims under FMCRA and managing complex issues like attorney fees and UM insurance recovery.
Working with specialized lien resolution companies can provide essential expertise and prevent costly mistakes when it comes to FEHBA & military liens. If you want to find out more, contact us today to Partner with Synergy for lien resolution.
Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO
