Self-Funded vs. Fully Insured: Why This Distinction Can Save Your Client Thousands

Every ERISA lien negotiation begins with the same critical question: Is this plan self-funded or fully insured?

Get this right, and you know exactly what legal framework applies. Get it wrong, and you could be leaving tens of thousands of dollars on the table, or worse, fighting battles you’ve already lost.

This distinction is the single most important factor in determining your ERISA lien strategy. Here’s why it matters and how to make the determination correctly.

Understanding the Two Funding Models

Self-Funded Plans

A self-funded plan (also called self-insured) is funded directly by contributions from the employer and employees. The employer assumes the financial risk for providing health care benefits. While employers often hire third-party administrators (TPAs) to process claims, the employer itself pays the claims from its own assets.

For lien resolution purposes, self-funded plans present the most challenging scenario:

ERISA preempts state law completely

The McCutchen decision applies, meaning plan language controls

If the plan explicitly disclaims made-whole and common fund doctrines, those defenses are unavailable

Recovery vendors like Rawlings and Conduent are aggressive because they know the law favors the plan

Fully Insured Plans

A fully insured plan is funded through purchased insurance coverage. The employer pays premiums to an insurance company, which assumes the financial risk and pays claims. The insurance company, not the employer, bears the risk of high claims.

For lien resolution, fully insured plans offer significantly more flexibility:

State law subrogation statutes may apply

Common law equitable principles remain available

Made-whole doctrine may apply regardless of plan language

State anti-subrogation laws or caps may limit recovery

Why Recovery Vendors Don’t Always Get This Right

Here’s something important to understand: recovery vendors like Rawlings, Conduent, and Trover often represent both self-funded employer plans and fully insured carriers. Their default approach is aggressive regardless of funding status.

They issue demands citing McCutchen and ERISA preemption even when the plan may be fully insured. Why? Because most attorneys don’t verify funding status. They accept the vendor’s characterization and negotiate within that framework.

We’ve seen cases where a fully insured plan was treated as self-funded throughout the entire negotiation. The attorney got what they thought was a good reduction, only to learn later that state law would have provided far better results.

How to Determine Funding Status

The only reliable way to determine funding status is by reviewing the actual plan documents. Specifically, you need:

The Summary Plan Description (SPD)

The SPD is a participant-facing document required by ERISA to communicate plan terms in understandable language. It typically contains a section describing how the plan is funded. Look for language indicating whether benefits are paid from employer assets or through an insurance contract.

The Master Plan Document (MPD)

The MPD is the governing contract that defines the plan’s structure, including funding arrangements. This document provides the definitive answer on funding status. It will specify whether the plan is funded through employer contributions (self-funded) or through an insurance policy (fully insured).

Form 5500 Annual Report

The Form 5500 is filed annually with the Department of Labor. Schedule A of this form lists insurance contracts. If there’s no Schedule A or it shows only stop-loss coverage, the plan is likely self-funded. If Schedule A shows a comprehensive health insurance policy, the plan is likely fully insured.

Getting the Documents: The 1024(b)(4) Request

Under 29 U.S.C. § 1024(b)(4), plan administrators must provide these documents upon written request by a participant or beneficiary. The request should go directly to the plan administrator, not to the recovery vendor or TPA.

Key points about the 1024(b)(4) request:

The plan administrator has 30 days to comply

Non-compliance triggers penalties of up to $110 per day

Courts have imposed substantial penalty awards (in some cases exceeding $100,000)

These penalties create independent negotiating leverage

What to Look for in the Documents

Once you have the plan documents, look for these specific indicators:

Signs of a Self-Funded Plan:

Language stating benefits are paid from employer general assets or a trust funded by the employer

Reference to stop-loss or reinsurance coverage (this protects the employer from catastrophic claims but doesn’t change self-funded status)

Plan administrator is the employer or an employer committee

No insurance contract listed on Form 5500 Schedule A

Signs of a Fully Insured Plan:

Language stating benefits are provided through an insurance policy

Insurance company named as claims fiduciary

Group insurance contract referenced in plan documents

Form 5500 Schedule A shows comprehensive health insurance policy

Strategic Implications by Funding Type

If Self-Funded:

Your strategy must focus on plan language analysis. Look for gaps in the reimbursement provisions, ambiguities that can be construed against the drafter, and any failure to explicitly disclaim equitable defenses. Use 1024(b)(4) non-compliance penalties as leverage. Consider settlement allocation strategies to limit the lien’s reach.

If Fully Insured:

Research your state’s subrogation laws immediately. Many states have anti-subrogation statutes, made-whole requirements, or caps on recovery. Common law equitable doctrines apply regardless of plan language. You have significantly more leverage than the recovery vendor’s demand letter suggests.

The Bottom Line

Never accept a recovery vendor’s characterization of funding status at face value. Always verify by obtaining and reviewing the actual plan documents.

The 15 minutes it takes to send a 1024(b)(4) request could save your client tens of thousands of dollars, and protect you from leaving money on the table in negotiations.

At Synergy, determining funding status is step one in every ERISA lien analysis we perform. We’ve seen too many cases where the answer changed everything.

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The Section 111 Penalty Era Has Started. It Is a Plaintiff Problem, Not an Insurer Problem.

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 requires liability insurers, no-fault insurers, workers’ compensation carriers, and self-insured entities to report settlements, judgments, and awards involving Medicare beneficiaries to CMS. The reporting captures the beneficiary’s identity, the settlement details, and the ICD codes that define the injury, giving CMS the data it needs to enforce the Medicare Secondary Payer Act and recover conditional payments. The original 2007 statute imposed a mandatory civil money penalty of $1,000 per day per claim for noncompliance, with no discretion given to CMS. The SMART Act of 2013 changed that mandatory penalty to a discretionary one, capped the daily amount at $1,000, and directed CMS to publish regulations setting out when and how penalties would be imposed. Those regulations became applicable on October 11, 2024, and the first audits and informal notices arrived in 2026, which is why the penalty regime that has sat dormant for nearly two decades is finally live.

The first informal notices of intent to impose civil money penalties under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act began mailing in March. CMS closed its second quarterly audit cycle on April 1. The trade press has framed all of this as an insurer compliance issue. That framing is wrong. Acting on it will cost plaintiff firms money, time, and client outcomes over the next twelve months.

I have spent almost two decades working with trial lawyers on Medicare Secondary Payer compliance. I have watched every false start CMS made on enforcement going back to 2007. This one is different. The audit process is running. The penalty exposure is significant. And the pressure falls hardest on plaintiff lawyers, even though plaintiff lawyers are not the ones being audited.

Here is what is actually happening, and what to do about it.

Where Things Stand This Week

Here is the timeline without the regulatory clutter. October 11, 2024, was the date CMS implemented the final rule for Civil Money Penalties for Section 111 reporting. Since there is a 12-month window in which to report a Total Payment Obligation to Claimant (TPOC) or Ongoing Responsibility for Medicals (ORM), a civil money penalty could not be assessed until October 11, 2025. Reports that should have been filed by then but were not, are now exposed.

CMS opened the first random audit in early 2026. The agency pulls 250 records per quarter, 1,000 per year, across both group health and non-group health plan reporting. Selection is random. The 250 records are drawn from the entire universe of accepted records, not from each Responsible Reporting Entity.

The first informal notices of intent to impose a penalty went out in March. RREs have 30 days to respond with mitigating evidence. If the response is rejected or absent, CMS issues a Notice of Proposed Determination and the formal process begins.

The tiered penalty itself runs from $250 per day per record up to $1,512 per day after the January 2026 inflation adjustment. The single-instance cap at this time is $551,880.

Workers’ compensation TPOC enforcement, including the new WCMSA reporting fields that went live April 2025, are in full scope starting in July.

That is where things stand. Now the part that has been missed.

Why This Is a Plaintiff Problem

The carrier is the entity at risk of a penalty. The plaintiff is the entity that absorbs every operational change the carrier makes to avoid the penalty. There are five specific ways this hits your practice right now.

First, settlement checks are going to sit longer. Carriers will not release funds until they are confident the reporting record is locked and clean and Medicare liens resolved. If you have built your firm’s cash flow assumptions around a 30-day disbursement window, plan for longer. The check is a downstream event of a process you do not control.

Second, ICD diagnosis code overreporting will get worse. A carrier facing $1,512 per day in penalty exposure will report a broader set of codes. That broader code set is what Medicare uses later to deny your client’s future injury-related care. The carrier’s compliance protection may become your client’s coverage problem after the case closes.

Third, release language is already getting more punitive. Hold harmless clauses, indemnity provisions, and reporting cooperation requirements are showing up in releases that did not have them six months ago. Much of this is unnecessary as a matter of law. All of it shifts risk to the plaintiff. The technical reality is that nothing in the MSP requires most of what defense counsel asks plaintiffs to sign. The practical reality is that defense counsel asks anyway, and many plaintiffs sign without pushing back.

Fourth, information demands are now formal and documented. The CMS safe harbor allows the RRE to document a refusal by the beneficiary or counsel to provide a Medicare Beneficiary Identifier or Social Security Number. That documentation is retained for at least five years. If a coverage dispute arises later, the refusal becomes evidence.

Fifth, workers’ compensation closures get harder in July. The new WCMSA reporting fields are about to be tracked for penalty purposes. Lump sum settlements that relied on informal MSA assumptions or below-threshold treatment will draw scrutiny they did not draw last year.

What to Change This Month

Most of the fixes are process work, not legal theory. They are also things every trial lawyer handling cases with Medicare beneficiaries should already be doing. The penalty era just raises the cost of not doing them.

Build Medicare beneficiary screening into intake. Pull the Medicare card, the SSDI award letter, and the MBI at the start of the case, not at the end. Do not let the carrier control the timing or the data flow. Update the Medicare beneficiary screening during the life of the case.

Negotiate ICD codes that will be reported before you sign the release. Get a closed list in writing. Push back on any code that is not directly injury related. The carrier will resist. Make them resist on the record.

Strip boilerplate Medicare compliance language from releases. Most of it cites statutes and regulations that do not say what defense counsel claims they say. A core set of provisions can address the real Medicare issues in one paragraph without onerous obligations on the plaintiff.

Open the Benefits Coordination and Recovery Center conditional payment file before settlement, not after. Final demand timing is now a settlement gating item. The conditional payment letter is preliminary and does not bind Medicare. Only the final demand binds. If you disburse on a CPL, you will pay the difference yourself.

Document everything. If your client declines an MSA, why. If the carrier asks for information, you decide not to provide, document the reason and the law you relied upon. The file should tell the story without you in the room.

The Strategic Point

The penalty era pulls every party in a Medicare case toward earlier and more careful work. The trial lawyers who treat Section 111 as an insurer compliance problem will give up leverage they did not know they had, and they will hand control of the record to the people on the other side of the table.

The trial lawyers who get ahead of it will close cases faster, protect their clients’ future Medicare access, and avoid the malpractice exposure that comes with watching someone else drive the process.

At Synergy, we have spent years helping firms rebuild their MSP intake and settlement workflows for this environment. The cost of getting the process right is small compared to the cost of getting it wrong on a single catastrophic case. The harder problem is that most firms do not yet realize the environment has changed.

The next call you should make on this is internal. Find out who in your firm owns Medicare compliance. If the answer is no one, that is the first thing to fix.

Why Synergy is the Answer to Help You Scale

Synergy exists to help firms confront the operational realities being driven by Medicare compliance pressure. By removing administrative burdens related to Medicare compliance, lien identification, verification and resolution, from your staff, we help you strengthen your practice’s capacity for high-value legal work and sustainable growth. Learn more at https://partnerwithsynergy.com/medicare-compliance/

🔗 Want more insights like this?

If you’re a personal injury lawyer ready to scale, streamline, and step into your role as CEO, let’s talk. Join the Peak Practice Community, and learn how Synergy can help you eliminate settlement bottlenecks, resolve complex liens, and maximize recoveries. Learn more here: https://partnerwithsynergy.com/peak-practice/

If you want to grow and scale your law firm more effectively, consider partnering with Synergy for lien resolution. Learn more at: https://partnerwithsynergy.com/liens/

What Every Trial Lawyer Needs to Know About ERISA Liens

If your personal injury client has employer-sponsored health insurance, you’re almost certainly dealing with ERISA. And if you’re not prepared for what that means, you could be leaving significant money on the table or, worse, exposing your firm to liability.

The Employee Retirement Income Security Act of 1974 governs nearly all employer health plans in the United States. The primary exceptions are government employer plans governed by FEHBA and state government or church plans governed by state law. For everyone else, ERISA applies.

And here’s what makes ERISA liens different from other healthcare liens: the plan’s written terms control almost everything.

The McCutchen Decision Changed the Game

In 2013, the Supreme Court’s decision in US Airways v. McCutchen fundamentally shifted the landscape of ERISA lien resolution. The Court held that in a section 502(a)(3) action based on an equitable lien by agreement, the ERISA plan’s terms govern.

What does this mean in practice? Traditional equitable defenses like “made whole” and “common fund” cannot override clear plan language. If the plan explicitly disclaims these doctrines, they don’t apply, period.

Recovery vendors know this. In its post-McCutchen memo, Rawlings stated that “general principles of unjust enrichment and equitable doctrines reflecting those principles cannot override an applicable ERISA plan contract.” They’re not wrong.

Self-Funded vs. Fully Insured: The Threshold Question

The first question you must answer with any ERISA lien is whether the plan is self-funded or fully insured.

Self-funded plans are funded by contributions from the employer and employee. ERISA preempts state law, and you’re fighting under McCutchen rules.

Fully insured plans are funded through purchased insurance coverage. These plans may be subject to state law subrogation statutes or general equitable principles under common law, giving you more room to negotiate.

How do you determine funding status? By reviewing the Summary Plan Description and the Master Plan Document. And how do you get those documents? Through a 1024(b)(4) request, a powerful tool that too many attorneys overlook.

The 1024(b)(4) Request: Your Best Leverage

Under 29 U.S.C. § 1024(b)(4), an ERISA plan administrator must provide specific documents upon written request by a participant or beneficiary. These include the Summary Plan Description, annual report, and the formal Plan Document itself.

Here’s where it gets interesting: if the plan administrator doesn’t comply within thirty days, they face penalties of up to $110 per day for each day of noncompliance. Courts have imposed these penalties.

This matters for two reasons:

You need the actual plan documents to assess the strength of their claim

Non-compliance penalties create negotiating leverage for lien reduction

Post-McCutchen Strategies That Still Work

McCutchen was a tough pill for plaintiffs, but it didn’t eliminate all avenues for lien reduction. Here’s what still works:

Examine the plan language carefully. Look for ambiguities in reimbursement or subrogation clauses. If the plan hasn’t explicitly disclaimed made whole or common fund, those doctrines may still apply.

Use 1024(b)(4) penalties as leverage. When plan administrators fail to comply with document requests, penalties accrue. This creates direct negotiating leverage.

Know Montanile. The Supreme Court held in 2016 that if a participant dissipates settlement proceeds before suit is filed, the plan cannot recover from general assets. Plans must pursue specifically traceable funds while they remain in the beneficiary’s possession.

Know Your Adversary

In most ERISA lien matters, you’re not negotiating with the plan itself. You’re dealing with recovery vendors like Rawlings, Conduent, or Trover. These are large, sophisticated companies with one goal: maximum recovery. They’re paid based on what they collect.

These vendors often issue aggressive demands designed to create urgency before you’ve reviewed the plan documents. They may claim you can’t contact the plan administrator directly. They may admit they don’t even have the governing plan documents.

Don’t be intimidated. You have rights under federal law, and properly exercised, those rights create leverage.

The Bottom Line

ERISA liens require expertise. The law is “comprehensive and reticulated,” as courts have described it. Getting it wrong means leaving money on the table for your clients or, worse, facing malpractice exposure.

The key steps:

Determine if the plan is ERISA-governed

Identify whether it’s self-funded or fully insured

Send 1024(b)(4) requests early and directly to the plan administrator

Analyze plan language for gaps in reimbursement provisions

Use every available tool to negotiate the best outcome

At Synergy, we resolve thousands of ERISA liens annually. We know the pressure points, the strategies that work, and how to protect your clients’ recoveries. If you want to go deeper on ERISA lien resolution, download our comprehensive white paper or reach out for a free case consultation.

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Inside Michael McCready’s playbook for trial lawyer operations, AI adoption, and law firm scaling.

Most personal injury firm leaders confuse two questions. Are we winning cases? Are we running a healthy business? They are not the same question. And the firms pulling ahead are the ones who stopped pretending otherwise.

In a recent episode of the Trial Lawyer View by Synergy podcast, Michael McCready founder of McCready Law laid out the truth most firm owners avoid. Verdicts do not equal firm health. Talent in the courtroom does not equal sound operations. The PI firms scaling fastest are the ones treating the business of law like a business.

McCready started McCready Law in 1999. He now runs a 160-person multi-state practice from Puerto Rico. His perspective is useful for any firm leader sitting at a growth ceiling and wondering what changed.

The Founder Is Often the Bottleneck

McCready had an honest moment years ago. He went to his team and asked if he was the problem, they said yes. This is the inflection point most founders refuse to face. You touch every case. You believe no one will deliver to your standard. And the firm stops growing because you are the constraint.

His answer: Trust your team. If you do not trust them, hire different people. Then focus your time on what moves the needle most for the firm. For McCready, the highest-leverage work shifted from trying cases to building leaders.

Process Produces Profit and Better Outcomes Together

Every PI case has repeatable elements. Plaintiff depositions. Discovery responses. Settlement check follow-ups. If your team handles these ten different ways, you have ten different outcomes.

McCready’s view is sharp. On a contingency model, every hour saved drops to the bottom line. If a workflow takes ten hours and you reduce it to eight, you have improved profitability without changing a single case strategy.

The bonus is consistency for clients. They receive the same high level of client experience regardless of which paralegal or attorney in the firm is handling their file. Process is not bureaucracy. Process is what produces an optimal client experience at scale.

Intake Is the Single Best Place to Start

For firms under 50 people, McCready’s recommendation is specific. Put one person in charge of intake. Even a paralegal whose only job is owning the intake process will deliver more value than another 80 hours of trial prep. Most firms still treat intake as a receptionist task. The firms scaling fastest treat intake as the most important seat in the building.

The Competitive Shift Is Already Here

Private equity, ABS structures in Arizona, and MSO models are entering the PI space. Many trial lawyers see this as a threat to professional independence. McCready sees the opposite. These models bring business discipline to firms long resistant to it. An MSO lets a 15-lawyer firm access HR, technology, and operations support previously available only to firms the size of large firms. The result is better representation for clients, not worse, as long as lawyers hold the line on their ethical duty. Ignore the shift, and you will be competing against firms with the cost structure and tech stack of a 200-lawyer practice while still operating like a solo shop.

AI Is the Next Operational Lever

McCready Law is what he calls an AI-first firm. Every position uses AI. They review user statistics each week. If a team member is not using the tools, the firm finds out why and addresses it. If they refuse to adopt, they are coached out.

A few specifics from the conversation. The firm built a custom internal LLM trained on McCready’s writing, speaking, and firm values. Team members get answers in his voice with the firm’s bias toward diversity, accessibility, and creativity built in. The HR handbook lives inside an LLM, so anyone types a question and receives the answer.

McCready’s line on AI is the one to keep. AI will not replace lawyers. Lawyers who use AI will replace lawyers who do not. Entry-level associate work is the most exposed. Senior judgment is the most protected.

The 90-Day Move for Firm Leaders

If you lead a firm and you know operations are holding you back, McCready’s advice is simple. Stop reinventing the wheel. The best practices exist. Bring in a consultant. Join a mastermind. Start tracking the metrics you have been guessing at. The cost of starting late is not zero. The firms three years into a serious tech and operations build are pulling ahead at a pace most others will struggle to close.

What This Means for Your Firm

The pattern across every section of this conversation is the same one. Trial talent gets you to the courtroom door. Operational rigor decides whether your firm survives the next decade.

If you are weighing your next operational move, the full Michael McCready episode of Trial Lawyer View is worth the listen. He covers his progression from solo founder to managing partner of a 160-person practice, his read on private equity and MSOs, the specifics of his AI implementation, and his framework for protecting human judgment while systematizing the routine work around it.

🎧 Listen to the full podcast conversation on Trial Lawyer View here: https://triallawyerview.com/podcast/michael-p-mccready/

🔗 Want more insights like this?

If you want to grow and scale your law firm more effectively, consider partnering with Synergy for lien resolution. Learn more at: https://partnerwithsynergy.com/liens/

Medicaid Lien Resolution Fundamentals: What Every Trial Lawyer Needs to Know

If your client is on Medicaid and settles a personal injury case, you will almost always face a Medicaid lien. How you handle that lien directly affects your client’s net recovery, your professional liability, and your firm’s reputation. Yet many firms treat Medicaid lien resolution as an afterthought, and this is a costly mistake.

This post breaks down the federal framework, the three U.S. Supreme Court decisions controlling the analysis, and the practical steps you need to take to protect your clients.

How Medicaid Liens Work

Every state participating in the joint federal-state Medicaid program is required under Title XIX of the Social Security Act to have “third party liability” provisions. These provisions empower the state to seek reimbursement from liable third parties for injury-related medical costs paid on behalf of a Medicaid recipient.

Here is how this works in practice. When your client receives Medicaid-funded medical treatment for injuries caused by a third party, the state Medicaid agency acquires the right to recover those payments from any settlement, judgment, or award. Federal law at 42 U.S.C. 1396a(a)(25)(H) says the state is “considered to have acquired the rights of such individual to payment by any other party for such health care items or services.”

Your client, as a condition of Medicaid eligibility, has already assigned to the state the right to recover medical care payments from third parties. This assignment happens automatically. You do not need to consent, and your client has no ability to opt out.

The Federal Anti-Lien Statute: A Critical Limit

Federal law gives states recovery rights, but also imposes limits. The federal anti-lien statute at 42 U.S.C. 1396p(a)(1) prohibits any lien against a Medicaid recipient’s property prior to death on account of medical assistance paid. The federal anti-recovery statute at 1396p(b)(1) bars any adjustment or recovery of correctly paid medical assistance.

These two provisions create a tension with the third-party liability recovery statutes. The U.S. Supreme Court has addressed this tension three times over the past two decades, and each decision shapes how you resolve Medicaid liens today.

Ahlborn (2006): States Cannot Touch Non-Medical Damages

The first major decision came in Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006). Heidi Ahlborn was 19 years old when a car accident left her with a catastrophic brain injury. Medicaid paid $215,645.30 for her care. Her total damages were valued at approximately $3 million, but the case settled for roughly one-sixth of that amount.

Arkansas claimed the full $215,645.30 from the settlement. Ahlborn argued the state was entitled to recover only the portion of the settlement attributable to medical expenses.

The Supreme Court sided with Ahlborn unanimously. The Court held federal law authorizing state recovery from tort settlements is limited to the medical expense portion of a recovery. States are prohibited from forcing an assignment of, or placing a lien on, non-medical damages like pain and suffering, lost wages, or any other category beyond medical care.

For your practice, this means the state’s Medicaid lien does not attach to the entire settlement. The lien attaches only to the portion representing medical expenses.

The Pro-Rata Reduction Method

The Ahlborn decision gave rise to what is now called the “pro-rata” method for reducing Medicaid liens. The math works like this. If your client’s total damages are valued at $1 million and the case settles for $250,000, the settlement represents 25% of the total claim value. You apply that same 25% to the Medicaid lien to determine the state’s recovery.

The California Supreme Court confirmed this approach in Bolanos v. Superior Court, 87 Cal. Rptr. 3d 744 (2008). The court noted the U.S. Supreme Court’s approval of this formula in Ahlborn produced a “reliable result.”

This is one of the most effective tools you have for reducing a Medicaid lien. The key is building a strong total damages valuation. The higher the provable total damages relative to the settlement amount, the greater the reduction in the lien.

Wos (2013): No Arbitrary Allocation Formulas

After Ahlborn, some states revised their statutes and tried to set fixed percentages for recovery. North Carolina passed a law requiring up to one-third of any recovery be paid to Medicaid. No individualized allocation. No opportunity for the beneficiary to challenge the allocation.

The Supreme Court struck this down in Wos v. E.M.A., 133 S. Ct. 1391 (2013), in a 6-3 decision. The Court held North Carolina’s one-third formula was incompatible with federal law, which bars a state from demanding any portion of a beneficiary’s tort recovery except the share attributable to medical expenses.

The Court made two things clear. First, states are barred from using arbitrary, one-size-fits-all allocation formulas. Second, states must provide some procedure for beneficiaries to challenge the default allocation.

The Wos decision also reinforced: when a judicial finding, court decree, or stipulation allocates a settlement between medical and non-medical damages, the allocation controls. The anti-lien provision protects the non-medical portion.

Gallardo (2022): Future Medical Damages Are Now Fair Game

The most recent Supreme Court decision expanded the state’s recovery reach. In Gallardo v. Marstiller, 596 U.S. ___ (2022), the Court ruled 7-2: Florida Medicaid was permitted to recover its lien from all medical damages in a settlement, both past and future.

Before Gallardo, many practitioners read Ahlborn as limiting state recovery to past medical expenses only. The Gallardo decision changed this reading. The Court held the Medicaid Act’s assignment provisions require beneficiaries to assign rights to payment for medical care from third parties, and “medical care” includes future medical costs, not only those already paid by Medicaid.

This matters for your cases. When you do an Ahlborn pro-rata analysis after Gallardo, the denominator now includes both past and future medical damages. In cases with large life care plans, the lien reduction you expected before Gallardo will be smaller, or will disappear entirely.

Justice Sotomayor’s dissent raised the real-world consequence: injured clients will have fewer dollars available to fund special needs trusts protecting their eligibility for benefits Medicaid does not cover. The concern is valid, making your damages valuation work more important than ever.

What This Means for Your Practice

You need to apply the principles from all three decisions, Ahlborn, Wos, and Gallardo, to your state’s specific third-party liability recovery provisions. Every state’s statute is different, and the procedural requirements for challenging or allocating liens vary.

Here are the steps worth focusing on:

Build a strong total damages valuation early. The pro-rata reduction is only as effective as your ability to prove the full value of your client’s claim. Document all categories of damages thoroughly, including non-economic damages. This valuation is your primary tool for reducing the lien.
Know your state’s allocation procedures. After Wos, states must offer some mechanism for beneficiaries to challenge a default allocation. Some states have formal administrative processes. Others require court involvement. Learn the specific requirements in your jurisdiction before settlement.
Account for future medical damages. After Gallardo, the state’s recovery interest reaches into future medical expenses as part of the settlement. When building your damages model, give proper weight and documentation to non-economic damages. The higher the supportable value of non-economic damages relative to total damages, the better the pro-rata reduction.
Identify the Medicaid lien early. Contact the state Medicaid agency at the start of the case. Request periodic updates on Medicaid payments throughout the litigation. Liens discovered after settlement create leverage problems and delay disbursement.
Audit the lien carefully. Verify every charge on the Medicaid lien. Confirm each item relates to the injury at issue. Challenge charges that are unrelated or unsupported. This verification step alone often reduces the lien amount before you even get to the pro-rata analysis.

Why This Matters to Your Clients

Medicaid lien resolution directly controls how much of the settlement your client takes home. A poorly resolved lien eats into the recovery your client worked years to obtain. A well-resolved lien protects their financial interests and preserves funds for future care needs.

Clients who see too much of their settlement go to lien repayment leave frustrated and dissatisfied. That dissatisfaction affects your reputation and referral pipeline. Getting this right is good lawyering and good business.

The legal framework for Medicaid liens is complex, but the core principles are straightforward. States are limited to recovering from the medical expense portion of a settlement. The pro-rata method is your primary tool for reduction. And after Gallardo, future medical damages are part of the equation.

Synergy’s team resolves Medicaid liens across all 50 states, applying the Ahlborn, Wos, and Gallardo frameworks to protect client recoveries. If your firm handles personal injury cases involving Medicaid beneficiaries, getting expert support on lien resolution is one of the highest-value investments you will make.

Learn more at www.PartnerWithSynergy.com

Written by: Teresa Kenyon | Vice President of Lien Resolution at Synergy & Kevin James | Lien Resolution Strategy Coach at Synergy

Dustin Ruge – 80% of Legal Work Is Repetitive. AI Is Coming for All of It.

Dustin Ruge has spent over 17 years inside the legal industry. He co-founded Law Leaders and built Legal Navigator, one of the most advanced AI intake automation tools in the PI space. On a recent episode of Trial Lawyer View with host Jason Lazarus, Ruge made the case that we are living through the single largest disruption the legal profession has ever faced.

His reasoning is simple. About 80% of what goes into legal work is repetitive. If it is repetitive, it is automatable. And if it can be automated, someone is already building the tool to do it. The firms that understand this will grow. The ones that do not will fall behind. There is no middle ground.

The Real Cost of Doing Things the Old Way

Here is what “business as usual” looks like in the PI industry right now. Client acquisition costs have nearly doubled since COVID. Ruge’s team surveyed 1,200 small to mid-size law firms during regular business hours. They found that 35% did not answer their phones. Their estimated case value lost to unanswered calls: $109 billion.

Among the firms that did answer, the national conversion rate from contact to signed case sits at roughly 7%. That is one-third of the average across almost every other industry in the country. Another $200 billion in inefficiency.

The firms stuck on legacy processes are hemorrhaging value at every stage. Not because they lack leads, but because their systems fail to convert the leads they already have. Technology is the only path to closing that gap.

Why “Buying AI” Is Not a Strategy

There is a temptation to treat AI like a shortcut. Buy the tool, plug it in, see results. Ruge warns against this. Buying AI without a strategy, he says, is like hiring staff without a job description.

Every firm runs on three things: people, time, and money. If AI does not improve at least one of those, it adds complexity without adding value.

Before evaluating any tool, you need answers to two questions:

– What specific outcome are you trying to achieve, and by when?

– Where are your biggest inefficiencies measured in time, revenue, and productivity?

Once you have those answers, AI falls into one of three deployment categories:

1. Add. You gain a capability you do not currently have. A solo attorney without a full-time receptionist brings in an AI intake agent and now has 24/7 coverage.

2. Replace. A function is underperforming or a role is opening up. AI fills the gap with more consistency and lower cost.

3. Augment. Your existing process works but slows down at volume. A workers’ comp firm asking the same 17 intake questions 50 to 100 times a day hands that repetition to AI and frees up staff for higher-value work.

This framework, add, replace, or augment, gives firm leaders clarity on what they are buying, why they are buying it, and how to measure whether it works.

Intake and Case Generation Are Being Rebuilt from the Ground Up

The market is shifting from lead generation to case generation. The distinction matters. Leads are contacts. Cases are signed clients. And the distance between those two points is where most firms lose money.

Ruge built Legal Navigator to solve this problem. The system handles inbound calls, pre-qualifies leads, enriches case data, schedules appointments, and routes qualified cases to attorneys before a human touches anything. It also runs outbound sequences. When a form-based lead comes in, the system contacts the prospect across multiple channels within seconds.

Speed to lead is the critical metric. Every minute a submitted form sits without action, the value of that potential case drops. Prospects shop around. Ruge’s system eliminates that delay.

The result: firms are increasing their return on advertising spend without spending a single additional dollar. They are extracting more signed cases from the same lead flow by being faster and more consistent at the point of intake.

Ruge predicts that the entire front office of a PI firm will be fully automated within the next few years. From the first call through case qualification to agreement signing, every step will run on decision-based workflows, not individual staff judgment.

That is a structural change. Firms that adapt to it will scale faster. Firms that resist it will watch their cost per case climb until the economics break.

The Legal Tech Ecosystem Needs Collaboration, Not Silos

The pace of innovation in legal tech is moving too fast for any single vendor to own the entire workflow. Ruge is direct about this: betting on one vendor to do everything is a mistake.

Most legal tech tools today operate in silos. They do not communicate with each other. When a new tool appears, it takes months, sometimes over half a year, for the company to build integrations into existing case management systems. That delay costs firms time and competitive position.

This is why Ruge’s team built LawLink, an API-driven integration layer designed to connect the fragmented legal tech market into one operating ecosystem. A new technology company calls LawLink and gets connected to the legal ecosystem in days, not months. The engineering cost and redundancy of building individual integrations disappears.

For firms, the benefit is direct. You get access to the latest tools faster. You do not wait six months for a promising new product to sync with your case management system. The firms that adopt new technology first gain a measurable competitive edge. An integration layer that collapses time-to-deployment changes the game entirely.

Ruge sees the future of legal tech as collaborative, not proprietary. The winners will be the platforms that connect the ecosystem, not the ones that try to wall it off.

ABS and MSO Models Are Rewriting the Rules of Ownership

Two structural changes are reshaping how PI firms are owned, operated, and valued.

Alternative Business Structures (ABS) allow non-attorney investors to own parts of a law firm. Arizona led the full implementation. Washington, D.C. and Puerto Rico have adopted elements of it. The effect: outside capital is flowing into what was historically a closed financial system.

Management Service Organizations (MSOs) separate the business of law from the practice of law. The concept is borrowed from healthcare, where Dental Service Organizations (DSOs) already handle operations while dentists focus on clinical work. Under an MSO model, the business side, staffing, technology, marketing, compliance, runs independently from the legal practice itself.

Both models are attracting investors who think in terms of scalability and systems. They are not buying your reputation or your open cases. They are looking for repeatable processes that function independently of any single person.

Ruge introduces the concept of “technology debt.” It is the gap between where your systems are today and where they need to be for an investor or acquirer to see value. The diagnostic question is straightforward: does your firm run without you? If the answer is no, you have technology debt. And that debt directly suppresses your exit valuation.

Firms that build with this mindset from the start, investing in automation, documented workflows, and system-driven operations, will sell at multiples that reward scale. Firms that operate out of the founder’s head will sell for a fraction of what they could have been worth.

The time to address technology debt is five to ten years before you want to exit. Not the months before.

Bottom Line: The Mindset Change That Separates Winners from Everyone Else

Attorneys are trained to practice law. Law school teaches nothing about running a business. That gap has always existed. What has changed is the penalty for ignoring it.

Ruge’s advice to firm leaders: stop operating and start architecting. The winners in the next three to five years will not be the best litigators. They will be the best business architects, the ones who design systems, deploy technology with intention, and build firms that function without their daily involvement.

He references Michael Gerber’s E-Myth framework. Systems run businesses. People run systems. You need to spend as much time working on the business as you do in it.

Strategy comes before software. Always. If you have not identified your problems, set measurable goals, and designed for scale, plugging in an AI tool will not fix anything. It will add cost and confusion on top of an already broken process.

The firms that will thrive in this new environment share a few traits. They treat technology as a core operating function, not an experiment. They measure AI against their existing processes, not against an imaginary standard of perfection. They build systems that are scalable, repeatable, and independent of any single person.

Ruge’s closing point on the show captures the moment plainly: “If you are not ready for change, change is ready for you.”

The disruption is here. The economics of running a PI firm are shifting underneath every practice in the country. The firms that recognize this and act on it will grow. The ones that wait will find the market has moved on without them.

🎧 Listen to the full podcast conversation on Trial Lawyer View here: https://triallawyerview.com/podcast/dustin-ruge/

🔗 Want more insights like this?

If you’re a personal injury lawyer ready to scale, streamline, and step into your role as CEO, let’s talk. Join the Peak Practice Community, and learn how synergy. can help you eliminate settlement bottlenecks, resolve complex liens, and maximize recoveries. Learn more here: https://partnerwithsynergy.com/peak-practice/

If you want to grow and scale your law firm more effectively, consider partnering with Synergy for lien resolution. Learn more at: https://partnerwithsynergy.com/liens/

The 5 Discovery Requests That Force Insurers to Reveal Their AI Valuation Models

In a previous post, I wrote about how insurance carriers are using AI to value your clients’ personal injury claims. Knowing the threat exists is one thing. Having the tools to fight back is another. So this is the tactical follow-up. These are five specific discovery requests you should be including in every case where you suspect an algorithm played a role in how the carrier valued your client’s claim. I’ve been discussing these approaches on Trial Lawyer View, and the feedback from lawyers who have used them has been encouraging.

A federal court in Minnesota recently validated this entire approach. In The Estate of Gene B. Lokken v. UnitedHealth Group, Inc., No. 23-CV-3514 (D. Minn.), the court granted a motion to compel discovery into an insurer’s use of an AI program to evaluate claims. The court found the plaintiffs were entitled to documents showing how the program works, its development goals, and whether the AI was designed to replace physician decision-making. That ruling changes the calculus for every PI lawyer in the country.

Let me walk you through the five requests and why each one matters.

1. The Algorithm Itself: Request the Claims Valuation Software and Its Logic

Your first request should target the software or AI tool the carrier used to evaluate your client’s claim. Request all documents, manuals, training materials, and technical specifications related to any software, algorithm, or artificial intelligence system used to evaluate, value, or make recommendations on bodily injury claims, including Colossus, ClaimIQ, Guidewire, or any proprietary system.

Why this matters: Over 70% of major carriers use Colossus or similar claim valuation software. These programs convert your client’s medical records into numerical “severity points” and spit out a settlement range. The adjuster’s hands are often tied to whatever number the algorithm produces. You need to know what system was used, how the system assigns value, and what rules govern the output.

Carriers will resist this request. They will claim the software is proprietary and constitutes a trade secret. Push back hard. The Lokken court rejected similar objections and ordered production of documents related to AI development goals and function. You are not asking for their source code. You are asking how decisions about your client’s case were made. That is squarely within the scope of discovery.

2. The Inputs: Request All Data Entered Into the System for Your Client’s Claim

Request production of all data, codes, classifications, severity ratings, value drivers, and inputs entered into any claims valuation software in connection with the evaluation of claimant’s bodily injury claim, including all screen captures, printouts, reports, and output generated by the system.

Why this matters: The output of these systems is only as good as what goes in. Adjusters enter ICD-10 diagnostic codes, treatment types, and duration data. They also enter subjective assessments about things like “duties under duress,” which is Colossus terminology for how your client’s daily life has been affected. If the adjuster fails to input a symptom or undervalues a diagnosis, the algorithm produces a lower number. That lower number becomes the carrier’s settlement authority.

This request exposes whether the adjuster accurately represented your client’s injuries to the system. If the adjuster left out key information, you now have evidence of bad faith.

3. The Adjuster’s Authority: Request Documents Showing the Relationship Between AI Output and Settlement Authority

Request all documents, policies, procedures, memoranda, and training materials that describe the relationship between the output of any claims valuation software and the settlement authority granted to the adjuster handling claimant’s claim, including any policies regarding whether and to what extent the adjuster is permitted to deviate from the software’s recommended range.

Why this matters: The insurance industry tells anyone who will listen that Colossus and similar tools are advisory. They say the software output is a starting point, and adjusters have discretion to go higher when the facts warrant. In practice, that is rarely true. A former Farmers Insurance employee who became a consultant for plaintiffs’ lawyers has estimated that carriers save 15% to 30% on injury claim payouts by using these systems. Those savings only happen when adjusters follow the algorithm.

If you obtain internal policies showing that the adjuster had little or no authority to exceed the software’s range, you have a strong bad faith argument. You are proving that the carrier did not individually evaluate your client’s claim on its merits. Instead, the carrier delegated that evaluation to a machine and locked the adjuster into whatever the machine produced.

4. The Calibration Data: Request How the Carrier Tuned the Algorithm’s Settlement Values

Request all documents related to the calibration, configuration, updating, or modification of any claims valuation software used by carrier, including all decisions to adjust severity point values, dollar-per-point multipliers, or settlement ranges for the jurisdiction and time period applicable to claimant’s claim.

Why this matters: These systems are not static. Carriers periodically adjust the dollar values assigned to each severity point. They calibrate based on local settlement data, jury verdicts, and their own loss experience.

Here is the concern. If a carrier calibrates the algorithm to reflect below-market values, every claim processed through that system gets undervalued. This is not an accident. This is a business decision to systematically suppress claim values across an entire book of business. Your discovery request forces the carrier to show you the numbers behind the numbers. If the calibration data shows that the carrier set its multipliers below the range of recent jury verdicts in your jurisdiction, you have evidence that the system was designed to produce lowball results.

5. The Oversight Record: Request All Policies and Audits Governing AI Use in Claims

Request all documents related to carrier’s policies, procedures, audits, or oversight of the use of artificial intelligence or claims valuation software in the evaluation of bodily injury claims, including any internal or government investigations into the accuracy, fairness, or bias of such systems, and any employee training materials related to the use of AI in the claims process.

Why this matters: The Lokken court specifically allowed discovery into both the insurer’s oversight of AI and government investigations into the insurer’s use of AI. This is important because insurers have a duty to fairly evaluate every claim on its individual merits. If a carrier adopted AI and failed to audit the system for accuracy or bias, that failure is evidence that the carrier did not act in good faith.

There is also a growing body of regulatory interest in this area. Several state insurance departments have begun examining whether AI-driven claims processes comply with consumer protection laws. If the carrier has been the subject of a regulatory inquiry, you want those documents. They tell you what the regulator was concerned about, and they give you a roadmap for your own bad faith case.

Putting These Requests to Work

Start including these five categories in your standard discovery template for every PI case against a major carrier. Do not wait until you suspect AI involvement. Assume the algorithm is there. More than 70% of major carriers use some form of claims valuation software. The question is not whether a computer played a role. The question is how much of a role the computer played.

When the carrier objects, and they will, cite the Lokken decision. Point to the court’s finding that plaintiffs are entitled to know how the AI works, what its development goals were, and whether the system was designed to replace human decision-making. Frame your argument around the carrier’s obligation to evaluate each claim on its individual merits. If the carrier outsourced that obligation to a machine, you have a right to know.

Deposition strategy matters here too. When you depose the adjuster, ask whether they used any software to evaluate the claim. Ask what data they entered. Ask whether they had authority to exceed the software’s range. Ask whether they did exceed the range. These questions build the record you need to make your bad faith case.

The Bigger Picture for Your Practice

This is not about being anti-technology. AI is going to play an increasing role in claims handling, and that is not going to change. The issue is transparency and accountability. When a carrier uses a machine to value your client’s pain and suffering, your client has a right to know. And you, as their lawyer, have an obligation to find out.

I have spent over two decades working on the resolution side of catastrophic personal injury cases. I have seen how carriers evaluate claims from the inside. What I know is this: the carriers who are investing in AI are not doing so to be more fair. They are doing so to be more profitable.

The carriers are not going to stop using AI. But they should expect that you are going to start asking questions about how they use it.

Why Synergy is the Answer to Help You Scale

Synergy exists to help firms confront the operational realities being driven by technology and scaling pressure. By removing administrative burdens related to lien identification, verification and resolution, from your staff, we help you strengthen your practice’s capacity for high-value legal work and sustainable growth.

🔗 Want more insights like this?

If you want to grow and scale your law firm more effectively, consider partnering with Synergy for lien resolution. Learn more at: https://partnerwithsynergy.com/liens/

CMS Is Testing AI on Medicare Claims. Here Is Why That Should Concern Every Personal Injury Firm Who Settles Cases for Medicare Beneficiaries.

For over two decades, the Medicare Secondary Payer Act has been the source of more confusion, frustration, and regulatory concern than just about any other issue personal injury firms face at settlement. As an industry commentator and someone with a professional Medicare certification, I have lived through every twist and turn of it. The Advanced Notices of Proposed Rulemaking that went nowhere. The mandatory insurer reporting under MMSEA Section 111 that kicked in back in 2010. The Stallcup memo in 2011 that created a firestorm and then faded. Multiple attempts at formal rulemaking, all withdrawn without explanation.

Through all of that, one thing stayed constant. Medicare’s enforcement of its future interest protections remained, to be blunt, limited. The government simply did not have the bandwidth to chase down every settlement involving a Medicare beneficiary and connect the dots between injury-related treatment paid for after a case resolved and the settlement itself. Not across fifty states. Not across hundreds of millions of settlements spanning decades. Not with a patchwork quilt of inconsistent damages laws, caps, and reporting requirements.

That reality shaped how I have counseled clients for years. At the close of every case involving a Medicare beneficiary, or someone who may become one within thirty months, I sit down and walk them through what happens next. I explain how Medicare might deny their future injury-related treatment. I explain that if Medicare pays for care connected to the settlement, it could deny future care.

I have also been honest with clients about the practical likelihood of Medicare actually catching up to them. With limited staff and resources to sift through mountains of medical and billing records to connect the dots, the statistical odds of enforcement were, historically, low. Not zero. But low. I always told clients to be prepared. Just not panicked.

That calculus may be about to change. And change fast.

CMS Is Now Deploying AI on Medicare Claims

In January 2026, the Centers for Medicare and Medicaid Services launched a pilot program called the Wasteful and Inappropriate Service Reduction Model, or WISeR. It is running in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. The program runs through 2031.

Here is what WISeR does. It uses artificial intelligence and machine learning to evaluate prior authorization requests for certain Medicare services. Doctors in those six states now have to get AI-backed approval before providing specific types of care under traditional fee-for-service Medicare. This is a first. Prior authorization has never been a standard feature of original Medicare. It has been common in Medicare Advantage, but not in the traditional program.

The stated goal is to reduce waste and cut down on low-value services. CMS says the program targets treatments with limited clinical benefit, things like certain skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for osteoarthritis. Six private technology companies are participating as model contractors. They include Cohere Health, Genzeon Corporation, Humata Health, Innovaccer, Virtix Health, and Zyter.

The program is already drawing fire. The Electronic Frontier Foundation filed a FOIA lawsuit against CMS in late March 2026, alleging the agency has refused to turn over basic records about how the AI works, what data trained the models, and what safeguards exist against bias. Early results out of Texas are not encouraging. Only 62% of prior authorization requests were initially approved by the AI. That number rose to 84% once a human reviewed them. Nationwide, 92% of prior authorization requests in Medicare Advantage are fully or partially approved. The gap is significant.

Perhaps most concerning is the financial incentive structure. The vendor companies participating in WISeR are compensated, in part, based on the savings they generate from denied or averted claims. According to the EFF, vendors can receive up to 20% of the expenditures associated with care they deny. That is a structure that rewards saying no.

Why This Matters for Personal Injury Firms

Now let me explain why I think WISeR, or something very much like it, should be on the radar of every personal injury firm in the country.

WISeR itself is focused on prior authorization. It is not, today, a tool for tracking settlements or pursuing reimbursement of conditional payments. But what it represents is far more important than its current scope. It represents CMS embracing AI as a tool to monitor, evaluate, and act on Medicare claims data at scale. That is the real headline here.

Think about what has historically protected clients from aggressive Medicare enforcement after settlement. It was not the law. The law has always been clear. Under the MSP, Medicare’s position as secondary payer means that if a settlement includes damages for future medical care, the burden to pay for future care should not be shifted to Medicare. CMS has been consistent on that point for years, even as the regulatory landscape around set-asides has remained undefined.

What protected clients was the practical reality of enforcement. Medicare could not hire enough people to comb through the massive universe of medical records, billing data, settlement reports, and treatment histories to figure out which beneficiaries received injury-related care after settling a case and failed to reimburse Medicare or failed to set aside funds appropriately. The data existed. The ability to process it did not.

AI changes that equation.

The Safari Into the Black Hole

Imagine for a moment that CMS applies the same kind of AI capability it is testing with WISeR to its MSP enforcement. Instead of using AI to gatekeep prior authorizations, picture it sifting through the MMSEA Section 111 mandatory insurer reporting data, cross-referencing it with post-settlement medical claims, identifying patterns of injury-related treatment paid for by Medicare after a case was resolved, and flagging those cases for recovery action.

This is not science fiction. The data is already there. Since 2010, every settlement involving a Medicare beneficiary of $750 or more has been reported to Medicare. Medicare already has the settlement data. It already has the claims data. What it has never had, until now, is a tool sophisticated enough to connect the two at scale.

If CMS deploys AI to launch that safari into the black hole of past and present records, the results could be dramatic. We are talking about the potential to identify reimbursement opportunities in settlements completed years ago. And when the federal government smells easy money, it gets motivated. History tells us that much.

The MSP’s private cause of action for double damages makes this even more urgent. We have already seen Medicare Advantage plans use the double damages provision aggressively. MSP entities have built an entire business model around data mining and demanding payment under the MSP. A 2026 industry forecast predicted increased activity from these entities, not less. Now imagine the federal government itself armed with AI to do the same thing, but with the full weight of the Department of Treasury behind it, including the ability to offset tax refunds and Social Security payments.

What This Means for Your Practice Right Now

I want to be clear. I am not predicting that CMS will announce an AI-powered MSP enforcement program tomorrow. But I am telling you that the building blocks are now in place. CMS has shown it is willing to hand AI tools to private vendors and incentivize them financially. It has shown it is willing to apply those tools to Medicare claims processing. The step from prior authorization review to settlement recovery analysis is not a large one technically. It is a matter of will and budget, and the federal government has both when it comes to protecting the Medicare Trust Fund.

So what should you be doing right now?

First, take MSP compliance seriously at every stage of the case. This is not new advice. But the risk of cutting corners is growing. Identify Medicare beneficiaries and those approaching eligibility early. Do it at intake and do it again before disbursement. Document everything.

Second, educate your clients thoroughly at settlement. Every client who is on Medicare or will be within thirty months needs to understand what happens with their future medical treatment. They need to know that Medicare can deny care. They need to understand the risks of not setting aside funds appropriately. And they need that explanation documented in the file.

Third, do not assume that low enforcement odds from the past will hold in the future. The landscape is shifting. CMS is investing in technology. Private recovery entities are becoming more aggressive. The combination of mandatory insurer reporting data, AI, and financial incentives to recover funds creates a very different risk profile than what we have seen over the last two decades.

Fourth, watch the WISeR program closely. The EFF lawsuit may force some transparency about how the AI models work, what data they use, and what safeguards are in place. That information will be valuable for understanding what CMS is capable of and where it is heading.

Fifth, consider how AI could be used offensively on behalf of your clients. If insurers and CMS are deploying AI, plaintiff firms need to understand these tools too. You should be thinking about how to use discovery to expose algorithmic decision-making in claims handling. Several carriers are already facing lawsuits for using AI to improperly deny claims in Medicare Advantage. The same types of challenges may become relevant in the MSP context.

The Bigger Picture

The Medicare Secondary Payer Act has always been, as the Eleventh Circuit put it, “notoriously complex.” For most of the last twenty-plus years, that complexity was matched by enforcement that was inconsistent, underfunded, and slow. Personal injury firms could afford to treat MSP compliance as something between an annoyance and a genuine risk, depending on the size of the case and the client’s Medicare status.

Those days are ending. The government is getting smarter. Literally. AI gives CMS the potential to do what it has always had the legal authority to do but lacked the practical capacity to accomplish, which is to systematically identify and pursue reimbursement on settlements where Medicare’s interests were not adequately protected.

For personal injury firms, this is not a reason to panic. It is a reason to prepare. Build your compliance processes now. Educate your clients. Work with qualified MSP compliance professionals. And keep your eyes open, because the rules of engagement in this space are about to change in ways we have not seen since MMSEA was passed in 2007.

The quiet period is over. Medicare just got smarter. Your practice needs to be smarter too.

Scale Your Practice with Synergy

Synergy exists to help firms confront the operational realities being driven by technology and scaling pressure. By removing administrative burdens related to Medicare compliance, lien identification, verification and resolution, from legal teams, we help personal injury firms strengthen their practice’s capacity for high-value legal work and sustainable growth.

🔗 Want more insights like this?

If you want to grow and scale your law firm more effectively, consider partnering with Synergy for lien resolution. Learn more at: https://partnerwithsynergy.com/liens/

Medicare Final Demand Isn’t the End of the Line

When a Medicare Final Demand arrives in the mail or your inbox, the clock starts ticking. Under the Medicare Secondary Payer recovery process, payment must be made within 60 days of the Final Demand letter to avoid interest on the outstanding balance. For many personal injury firms, that deadline creates urgency. If payment is not made within that window, the debt becomes delinquent and interest begins accruing. 150 days after the Final Demand is issued, continued non-payment can trigger additional collection efforts, including referral of the debt to the U.S. Department of the Treasury for collection actions.

Once the Final Demand is issued, attorneys have two potential paths:

The Appeals Route

The traditional route is the Medicare administrative appeals process. Appeals move through multiple administrative levels before federal court review is even available, which can take months or years. Meanwhile, interest can continue to accrue on unpaid balances if the demand is not satisfied. For many cases, this path is impractical.

The Post-Payment Relief Route

The alternative strategy is to pay the Final Demand and then pursue post-payment relief through waiver or compromise requests. These requests focus less on technical billing disputes and more on equitable considerations, such as hardship, collectability, or fairness in the recovery process.

For many attorneys, the Final Demand feels like the end of the Medicare process. It shouldn’t be. In reality, it can be the beginning of an opportunity to improve the client’s financial outcome through the compromise/waiver process.

The Overlooked Strategy

A key point many attorneys miss is this:

A Final Demand does not necessarily mean Medicare’s recovery amount is final. You can still request a Medicare compromise or waiver after the Final Demand is paid.

In fact, many practitioners intentionally pay the Final Demand within the 60-day window first to stop interest exposure and protect the firm and client from enforcement risk. Once payment is made, a compromise or waiver request can be submitted.

Here’s the strategy:

Step 1: Pay the Final Demand within 60 days to stop interest and eliminate enforcement risk.
Step 2: Submit a post-payment compromise or waiver request.
Step 3: If approved, Medicare refunds part of what you paid.

The Result: A Possible Refund to Your Client!

Three Legal Paths to Reduce Medicare’s Claim

Once the Final Demand has been paid, there are three primary legal avenues to request a reduction of Medicare’s recovery amount. Not all cases will meet the criteria but nonetheless should be considered as a possibility.

Financial Hardship Waiver

Authority: Section 1870(c) of the Social Security Act

These requests are typically reviewed through Medicare’s recovery contractor, BCRC and apply when repayment would create financial hardship for the beneficiary.

Best Interest of the Program Waiver

Authority: Section 1862(b) of the Social Security Act

CMS may waive repayment when doing so is determined to be in the best interest of the Medicare program. These decisions are discretionary and are often based on broader policy or fairness considerations.

Federal Claims Collection Act Compromise

Under the Federal Claims Collection Act, the federal government has authority to compromise claims for less than the full amount owed when collection of the full debt may be difficult or inefficient.

Compromise requests often focus on:

Collectability of the debt

Litigation risk

The cost of pursuing full recovery

In many cases, multiple reduction paths can be pursued simultaneously, increasing the chances that Medicare will reduce the claim. If approved, Medicare will issue a refund of part or all of the amount previously paid.

Why You Should Be Using This Strategy

For the injured party, Medicare reimbursement can feel confusing and frustrating. After waiting months or years for their settlement, they often see a significant portion of the recovery earmarked for lien repayment. This is especially so for cases where there are liability issues; high medical expenses; or significant Medicare payments.

Medicare’s repayment formula can dramatically reduce the client’s net recovery. Post-payment waiver and compromise requests provide a second chance to improve the outcome. For the injured party, that refund can make the difference between a disappointing result and a settlement that actually helps them move forward.

Where This Fits in Modern Lien Resolution

Healthcare lien resolution is becoming more technical and more aggressive. Medicare, in particular, operates under the Medicare Secondary Payer (MSP) statute, which gives the government strong enforcement tools and significant resources to pursue repayment when another party is responsible for medical costs. Because of this, firms must balance two priorities:

Strict Medicare compliance

Maximizing the client’s net recovery

Post-payment waiver and compromise requests accomplish both. They allow your firm to:

Stop interest and enforcement risk

Maintain compliance with MSP obligations

Pursue additional reductions after payment

Adding this step to your lien resolution workflow is a simple change with potentially significant impact.

Bottom Line

You do not have to choose between Medicare compliance and maximizing your client’s recovery. The strategy is straightforward:

Pay the Final Demand within 60 days.

Assess the likelihood of a successful result and if so, submit waiver and compromise requests after payment.

Seek a refund that increases the client’s net settlement.

For personal injury firms handling Medicare liens, this post-payment strategy can protect your practice, strengthen client relationships, and deliver better outcomes. If you are not considering this approach yet, you may be leaving meaningful value on the table for both your clients and your firm.

Synergy’s team of experts assists with these strategies every day. In the last 12 months, we have a 73% success rate with compromise/waiver requests and an average refund of over $26k. If you aren’t achieving this kind of success rate, partner with Synergy for Medicare compliance and let us secure a compromise/waiver for your client.

Written by: Teresa Kenyon | Vice President of Lien Resolution at Synergy & Jasmine Patel | Medicare Lien Resolution Specialist