In Episode 9 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus talks to Bruce Stern of Stark & Stark. They discuss his efforts on getting Megan’s Law through the legislature, his work and education on traumatic brain injuries, obtaining economic recovery for clients, and the importance of doing work outside of your office.
Learn more here.
May 13, 2021
Plaintiffs’ lawyers largely understand settlement proceeds which are subject to a claim of lien must be protected in trust, even against the client’s interests or wishes. An attorney may not serve as the “sole arbiter” of a lien dispute, take it upon herself or himself to decide the dispute in the client’s favor, and distribute the disputed funds. Generally, liens must be amicably resolved or adjudicated at impasse. Perhaps the most misunderstood concept in the resolution of direct hospital/provider liens, is what I call the “lien debt dichotomy.” The lien debt dichotomy is simply a name I have given to the myriad of issues and decisions that flow from or turn upon, the distinction between a lien and a mere debt.
I have long believed the disconnect and the root of much of the confusion regarding direct provider liens versus mere medical debts flows from their place in an entirely different silo in the lien resolution world. Upwards of 80% of clients are covered by some form of health insurance. Whether public (Medicare, Medicaid or certain state, county or municipal “Health Care Districts”) or private insurance (the Blues, Uniteds, Cignas, and Aetnas, to name the big plans), or even self-funded or insured ERISA plans–health insurers in most states, and under federal law in the case of ERISA, have “reimbursement lien rights” against tort recoveries. Accordingly, Plaintiffs’ attorneys must identify, negotiate, and resolve reimbursement liens in more than eight out of ten clients’ recoveries. As we all know from common experience, we do not owe a debt to our health insurers when they pay out our health benefits. We, and our injured clients, have benefits under a plan, that plan pays for our healthcare, and that is it; but when there is a tort recovery, everything changes. Tort recoveries themselves, under various legal doctrines, contracts, and statutory regimes, create a right of reimbursement: a lien against the settlement proceeds allowing these plans to recover (to be reimbursed) the benefits they have paid. The very high percentage of clients facing these reimbursement liens has, in the Author’s opinion, trained many lawyers to believe accident-related medical care automatically creates a lien (it does not); and to ignore the importance of debts when it comes to direct provider liens (which is a mistake).
When a patient does not have health benefits, or a patient’s healthcare providers do not bill a patient’s health plan, there are no payments to reimburse. Stated simply, if a provider was paid by a plan, the plan often has a reimbursement lien, but if the provider has not been paid at all for accident-related care, the provider may (or may not) have a direct provider lien. This article focuses on the latter: providers who have treated a tort victim and have not yet been paid.
As stated at the outset, liens against settlement proceeds must be resolved or adjudicated, and the Plaintiffs’ attorneys face significant exposure, both ethically and legally, if liens are ignored. There are essentially only two (2) ways a provider gets a direct lien against a tort recovery. Firstly, direct provider liens can be created by contract. The most familiar version of these contractual liens is the Letter of Protection (LOP) or some similarly styled agreement between a lawyer and a provider (or a client and a provider) in which the client agrees to pay the provider from a future settlement if the provider agrees to treat and forbear collection until the tort case settles. These agreements are often the only way an uninsured accident victim can obtain non-emergency accident-related care. While Emergency Medical Treatment and Labor Act (EMTALA) ensures hospital emergency rooms will treat and stabilize an uninsured injury victim, the same is not true of future, scheduled care. The contract itself is the genesis of the providers’ lien rights, as well as the “law of the case.” Therefore, the terms, requirements, and legal exposure depend entirely upon the language of the agreement. The second way a provider is given direct lien rights against recovery proceeds is by statute (or in some cases, by County Ordinance). These “statutory” liens often include perfection requirements and carry impairment provisions, set priority, and even limit or define lien amounts. If unsure, the best way to determine whether a provider has a lien against a settlement is to ask. At the outset of every post-settlement negotiation, the Author’s practice is to inquire whether each known provider is pursuing a lien, and if so, request documentation supporting their alleged lien rights.
In short, liens attach to settlements, while debts attach to people. A lien secures a debt to the settlement proceeds, requiring the lien amount to be protected in trust. Absent a lien, a provider is a mere creditor with an unsecured debt. The fact that a provider rendered accident-related care is irrelevant to whether their interest is a lien or a mere debt. Perhaps the best analogy is a mortgage and a home loan. A mortgage is a security instrument, an agreement that attaches a debt to real property. If a bank merely loaned money to purchase a house but did not require a security interest to protect the loan, the homeowner could simply sell the home, spend the proceeds, and never pay the bank back. The same is true of a non-lienor medical provider. If a surgeon, for example, performs a spinal fusion on a tort victim and fails to require a contractual lien against the settlement, the patient could recover his damages from the tortfeasor and refuse to pay the doctor whose bills the medical special damages were based upon. Accordingly, determining whether a medical provider has a lien against the settlement, versus a mere debt against the patient, is not only required to analyze the attorney’s ethical and legal requirements and exposure, but it also drives negotiation strategies and distribution procedures. If there is not a lien, it is up to the client whether they wish to pay a provider anything at all from the settlement. Clients are free to refuse such payment and force providers to pursue traditional collection actions to collect on their debts.
Most Plaintiffs’ attorneys are familiar with the concept of equitable distribution. While procedure and formulae vary, an equitable distribution is essentially a court-ordered “fair” division of a limited settlement. The most common split is to award a third to each of the interested parties: one third to the attorney, one third to the client, and the last third split pro-rata among the medical lienholders. But remember, only lienholders have claims to the settlement proceeds. Providers who do not have any such lien rights are mere creditors and should not properly participate in an equitable distribution. After all, lienholders went to the trouble of obtaining a security interest while mere creditors did not; why should the mere creditors who did not be permitted to dilute the positions of the lienholders as related to their share of the settlement? Again, consider the mortgage analogy. Only lienholders would be able to lay claim to the proceeds of a sale, while mere creditors would have to secure and execute traditional judgments against the general assets of the debtor, which may or may not include remaining proceeds from the sale of the property.
Once a lien has been identified, a Plaintiff’s lawyer’s marching orders are clear: amicably resolve the lien or have it adjudicated. This legal interest in the settlement proceeds must be respected, and protected, until such time as the lien rights are released. The first step is always to identify all the known terms of the lien (whether found in a contractual agreement, statute or ordinance). Once the lien terms are clear, and their meaning agreed upon with the lienholder, attorneys must determine whether a deeper reduction is available through an equitable reduction or a reduction to a reasonable value. This decision typically turns on the amounts of the settlement and of other liens. If a settlement is limited, and an equitable distribution is likely to obtain better results for the client, agreements with all lienholders should be sought, in accordance with a distribution schedule setting out their pro-rata shares of a “fair” position of the proceeds (such as one third, as discussed above). Be careful to make offers contingent on the agreement of all lienholders and be prepared to file for formal equitable distribution with the Court, if all such agreements cannot be secured amicably.
When it is confirmed that a provider does not have lien rights (a confirmation the Author highly recommends be obtained in writing), all bets are off and negotiation leverage swings heavily to your favor. Best practices include explaining the client’s options, including paying the debt from the proceeds, or electing not to and instead of awaiting traditional collections activity from the provider. It is unquestionably in the client’s best interests to resolve debts when possible, while they have proceeds and counsel (two things they likely will no longer have, by the time the provider sues them). Accordingly, clients should be made acutely aware of the potential exposure and adverse effects of such a future collection action and reminded they will be unrepresented at that time; however, the providers do not know the client’s true intentions. The leverage created by threatening to give the money to the client and pay the provider nothing from the settlement is substantial and effective.
Understanding the “lien debt dichotomy” is paramount to ensuring effective resolution of direct provider liens. Identifying which medical providers have liens, and which have mere debts, is a critical first step. Once confirmed, liens can be negotiated based upon either equitable principles or analysis and negotiation towards reasonable value. Mere debts should also be negotiated along both “equitable” and “reasonable value” lines, but your negotiation position is much stronger and providers, given the choice between something or nothing, often make the right decision.
May 13, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
The conditional payment recovery process in a workers’ compensation claim is not always smooth. Although the workers’ compensation insurance carrier will generally resolve any conditional payments in an accepted claim, the injured employee and counsel may find themselves in receipt of a post-settlement conditional payment notice or demand that identifies the injured employee as owing reimbursement to Medicare. This article will provide an overview of the conditional payment recovery process and identify ways to help you better navigate this process.
The obligation to address conditional payments stems from the Medicare Secondary Payer Act. It prohibits Medicare from making payment when “payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no-fault insurance.” (42 U.S.C.§1395 y(b)2(a)). The exception to this occurs when payment is not reasonably expected to be made “promptly.” In that situation, Medicare can make payment on the condition that the payment is reimbursed to the appropriate Medicare Trust Fund when the beneficiary receives a settlement, judgment, award, or other payment from a primary plan.
There are two separate conditional payment recovery contractors involved in a workers’ compensation case: Commercial Repayment Center (CRC) and the Benefits Coordination & Recovery Center (BCRC). The CRC is involved in recovery when the debtor is the workers’ compensation plan, while the BCRC is involved when the debtor is the Medicare beneficiary. Both the CRC and the BCRC are only involved in conditional payment recovery when the injured employee is enrolled in the traditional “fee for service” Medicare Parts A and B plans. When an injured employee is enrolled in a Medicare Advantage Plan (Part C) or Prescription Drug Plan (Part D), conditional payment information must be secured from the plan; it will not be provided by the CRC or the BCRC. Since Medicare Part C and D Plans also use the MSP Act as their recovery vehicle, these reimbursement claims should not be overlooked. Part C plans have become very aggressive in their recovery efforts and are successfully using the double damages provision of the Medicare Secondary Payer Act to pursue law firms so it is very important to address these claims as well as conditional payments.
The conditional payment process in a workers’ compensation claim involving a Medicare beneficiary generally begins with the workers’ compensation carrier’s Section 111 mandatory insurer reporting. If the case is accepted, the carrier’s Responsible Reporting Entity (RRE) will report an Ongoing Responsibility for Medical (ORM) for the accepted diagnosis codes to Medicare. This report will result in the CRC initiating a conditional payment search to look for payments made in connection with the reported injuries. If the CRC identifies conditional payments, it will seek recovery from the workers’ compensation plan as the debtor. When the claim settles, the RRE must also make a Section 111 Total Payment Obligation to Claimant (TPOC) report to Medicare. It is important to note that the Section 111 reporting is separate and distinct from the beneficiary’s obligation to report a pending workers’ compensation claim to the BCRC.
Once the TPOC report is made, the conditional payment debt is then transferred to the Medicare beneficiary. This moves the recovery claim from the CRC to the BCRC. This transfer occurs even though the case was accepted by the workers’ compensation carrier. The carrier however will not be able to address any outstanding conditional payments identified by the BCRC without having properly executed authorizations from the beneficiary. The beneficiary’s attorney will also need properly executed authorizations to access conditional payment information from the BCRC.
Conditional payment issues may arise during the transfer of the debt from the CRC to the BCRC. Since the CRC may have an internal policy whereby, they do not pursue recovery in debts below a certain dollar amount, the CRC may issue a close-out letter to the workers’ compensation carrier. This closeout however does not mean that the BCRC will not pursue the remaining balance. The practitioner can avoid the surprise of an open BCRC claim by checking the web-based Medicare Secondary Payer Recovery Portal (MSPRP) a few weeks after settlement to ensure that there are no open conditional payment claims with the BCRC. A comprehensive list of claims will be provided if you search the MSPRP using the date of accident rather than the case number, since the BCRC may have multiple claim numbers for it.
Another issue that may come up post settlement involves the BCRC’s inappropriate attempt to demand conditional payments that were already addressed by the CRC and successfully disputed by the workers’ compensation carrier. This issue can best be resolved by working with the carrier to provide the BCRC with the CRC’s favorable appeal determinations.
The above examples serve to highlight some of the post-settlement conditional payment issues that may come up in a settled case. The following tips may help you to address them:
Synergy’s team of experts is also available to assist in addressing Medicare Secondary Payer compliance issues in your settlements. Our Medicare team of experts can make sure your files are closed compliantly and help avoid some of the unpleasant scenarios described herein.
In Episode 8 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus talks with Bob Langdon of Langdon & Emison . They discuss how he built his firm, the importance of picking the good cases, treating the practice of law as a business, and creating a work/life balance with his family.
Learn more here.
May 11, 2021
Rasa Fumagalli JD, MSCC, CMSP-F
The interplay between the Medicare Secondary Payer Act (MSPA) and Florida’s medical malpractice statute, Fla. Stat §§ 766.207 and 766.209 was addressed in the recent case of Gordon v. Azar, 2021 U.S. Dist.LEXIS 28314, (S. D. Fla. 2021). The issue came before the Court in the context of the parties’ motions for summary judgment.
The motions stemmed from Plaintiff’s medical malpractice claim against Northwest Medical Center (Northwest) involving his leg amputation on or about March 17, 2014. Plaintiff’s injury-related medical treatment was paid for by Medicare. The Medicare Secondary Payer Recovery Contractor (MSPRC) sent a letter to Plaintiff on December 17, 2014, advising him of Medicare’s right to recover the “conditional payments” made by Medicare from any subsequent “settlement, judgment, award or other payment.” The MSPRC sent a follow-up letter to Plaintiff in January of 2015 advising that Medicare had identified $116,319.72 in conditional payments associated with his claim. The letter also requested a copy of the settlement agreement and the closing statement reflecting the actual amount of attorney’s fees and costs if the case settled.
On April 17, 2015, Northwest offered to enter into a voluntary, binding arbitration on the issue of damages. Plaintiff subsequently settled his medical malpractice claim against Northwest for $1,000,000 without filing suit. He gave the MSPRC notice of the settlement on July 2, 2015, and provided a one-page Final Settlement Detail document. It identified the settlement amount, the attorney’s fees, and procurement costs. Plaintiff also asked Medicare to waive its right to reimbursement arguing that Medicare was the primary payer for the treatment regardless of the malpractice. No other arguments were raised.
The MSPRC did not agree to the waiver request. On July 14, 2015, the MSPRC sent Plaintiff a final conditional payment demand for the sum of $75,701.81 after a reduction in procurement costs. Plaintiff unsuccessfully appealed the denial through Medicare’s administrative review process. At the reconsideration request level, Plaintiff argued for the first time that Northwest’s offer to enter into binding arbitration “extinguished” Plaintiff’s ability to seek medical damages from Northwest as a matter of law. Since the damages could not be claimed in connection with the medical malpractice, Medicare was the primary payer for the services. Plaintiff also argued that the settlement did not include any funds for past medical expenses. The Administrative Law Judge (ALJ) rejected these arguments and the Medicare Appeals Council (Appeals Council) subsequently affirmed the ALJ decision. This final decision of the Secretary of the U.S. Department of Health and Human Services was the subject of the Court’s review.
The Court advised that its review of the Secretary’s final decision was limited to whether the correct legal standards were applied by the Secretary in evaluating Plaintiff’s claim and whether the decision was supported by substantial evidence. 42 U.S.C. § 1395ff(b)(1), incorporating 42 U.S.C. §405 (g); 42 C.F.R. §405.1136(f). In examining the evidence, the Court affirmed the Appeals Council decision, denied Plaintiff’s motion for summary judgment, and granted Defendant’s motion for summary judgment.
The Court noted that Florida’s medical malpractice statutes, Fla. Stat §§ 766.207 and 766.209, allow either party to request that an arbitration panel determine the amount of damages in the claim. Regardless of whether the offer to arbitrate is accepted, collateral sources are offset from the recovery, and damages are capped. The Florida statutes define collateral sources as “any payments made to the claimant, or made on his or her behalf, by or pursuant to (a) The United States Social Security Act; any federal, state, or local income disability act; or any other public programs providing medical expenses, disability payments, or other similar benefits, except as prohibited by federal law.” Fla. Stat §§ 766.202.
The relevant federal law, in this case, is the Medicare Secondary Payer Act (MSPA) that prohibits Medicare from making payment for medical services when payment “has been made or can reasonably be expected to be made” by a “primary plan”. 42 U.S.C.§ 1395y(b)(2)(B)(i); 42 C.F.R.§411.52. If the primary payer is unable to pay the bills promptly, Medicare may make payment for the services. The payments are conditioned upon reimbursement to the appropriate Medicare Trust Fund if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service. “A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means.” 42 U.S.C.§ 1395y(b)(2).
After outlining the relevant statutes, the Court considered Plaintiff’s argument that Northwest’s offer to enter binding arbitration “extinguished” Plaintiff’s ability to seek medical damages from Northwest as a matter of law since collateral sources were offset from the recovery. In describing this argument as convoluted, the Court next considered Defendant’s argument that because conditional payments must be reimbursed to Medicare after Plaintiff receives a settlement or award, they could not be considered “collateral source payments” that Plaintiff was entitled to keep. Conditional payments are unlike private medical insurance benefits that can be retained by Plaintiff.
Since the Florida Supreme Court had not specifically addressed the relationship between the MSPA and Florida’s medical malpractice statutes, the Court looked to the cases that were cited by the defense in support of its position. The Court found the reasoning in Joerg v. State Farm Mut. Auto. Ins. Co. 176 So.3d 1247 (2015) and Pollo Operations, Inc. v. Tripp. 906 So.2d 1101 (FLA.3d DCA 2005) persuasive. These cases had recognized Medicare’s priority of reimbursement from settlements or awards and determined that conditional payments were not a “collateral source” subject to the Florida common law evidentiary collateral source rule. The instant Court also noted that Florida’s medical malpractice statute specifically excluded consideration of collateral source payments that are “prohibited by federal law.” Furthermore, the MSPA regulations provide that “Medicare benefits are secondary to benefits payable by a primary payer even if State law or the primary payer states that its benefits are secondary to Medicare benefits or otherwise limits its payments to Medicare beneficiaries.” 42 U.S.C.§411.32.
The Court next turned to Plaintiff’s argument that the $1,000,000.00 liability settlement did not include funds for medical expenses. Since Plaintiff failed to provide any evidence in support of this position, despite Medicare’s repeated requests for support for this position, the Court found the Appeals Council’s assessment was supported by substantial evidence.
Plaintiff’s argument that Northwest is not a primary plan with a demonstrated responsibility to pay for Medicare-covered services was also rejected by the Court. The parties’ settlement in and of itself established the requirement of a demonstrated responsibility under the MSPA.
In affirming the Appeals’ Council decision, the Court found the Appeals Council decision was supported by substantial evidence and applied the correct legal standards.
The Gordon decision contains numerous references to Plaintiff’s failure to provide Medicare with evidence to support the position that the settlement did not include past medical expenses as a damaged element. Had credible evidence been provided, it is possible that Medicare may have agreed to a waiver of its payments. While it is clear that Medicare’s conditional payment recovery rights are unlike those of other insurance plans, a credible apportionment of damages in a settlement may help limit issues with Medicare post-settlement. Proper framing of arguments by Medicare conditional payment experts like Synergy can increase the likelihood of getting a compromise or waiver granted by Medicare.
In Episode 7 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus speaks with Elise Sanguinetti of Arias Sanguinetti Wang & Torrijos, LLP. They discuss the challenges she has faced as a female trial lawyer, the importance of trial lawyer associations, access to the civil justice system, and the significance of empathy.
Learn more here.
In Episode 6 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus speaks with Sara Williams of Alexander Shunnarah Trial Attorneys. They discuss her experience as a Black female attorney in the South, her thoughts on the practice of law, her philosophies on educating future trial lawyers, and what she sees in the future for the practice of law.
Learn more here.
April 22, 2021
Michael D. Walrath, Esq.
Direct provider “liens” against settlement proceeds have teeth, whether hospital or physician liens, statutory or contractual. The various positions of state bar associations on these issues, and the limited law delineating them, have historically been ever shifting and evolving but two things are clear. Liens must be released prior to settlement and deep discounts are available. Learn more by downloading the white paper below.
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In Episode 5 of Trial Lawyer View, TLV host and Synergy CEO Jason D. Lazarus sits down with Rich Newsome of Newsome Melton. They discuss his involvement in high-stakes product liability litigation, creating Trial School, and what he sees as the biggest market disruption coming in personal injury law practice.
Learn more here.