Taking Advantage of the WCMSA Re-Review Process

B. Josh Pettingill

We frequently receive inquiries regarding workers compensation MSAs (WCMSAs) and whether it is possible to get CMS (Centers for Medicare and Medicaid Services) to re-review an MSA once an amount has already been approved. The good news is that it is possible. However, you only get one opportunity and certain criteria must be met to qualify. It is vital for claimant/applicant attorneys to audit their files to see which cases may be eligible.

For years, CMS only allowed a re-review of an WCMSA in two limited circumstances: 1) blatant errors and mistakes with the report or 2) omission of pertinent documentation from the submission. In many instances, the claimant’s medical condition may have improved considerably since the approval letter was issued. Accordingly, it was becoming cost prohibitive then for the carrier to resolve the claim if they must overfund an MSA that does not match the injured worker’s current medical condition.

However, CMS changed their position recently. There are situations where CMS will actually take the time to re-review the WCMSA. Per the Workers Compensation MSA Reference Guide, the following guidelines for the case must be met to be eligible for an amended review[1]:

CMS has issued a conditional approval/approved amount at least 12 but no more than 48 months prior.
The case has not yet settled as of the date of the request for re-review.
Projected care has changed so much that the submitter’s new proposed amount would result in a 10% or $10,000 change (whichever is greater) in CMS’ previously approved amount.

Takeaway – an Amended WCSMSA Review is Possible in Certain Circumstances

If you have a case that was approved even a day beyond four years ago or less than a year ago, then you are stuck with the original approved MSA amount. As of this writing, there is still no formal appeal process for WCMSAs. But, at least you now have the option for an amended review in certain circumstances. Do not let an overinflated, CMS approved WCMSA be a barrier to resolving a workers’ compensation case. Whether it is the first time for CMS approval or an amended review, Synergy’s team of experts can help to ensure a timely settlement while maximizing the recovery.

In our next post, we will discuss Evidence Based MSAs, the implications of getting one and not submitting to CMS for review/approval. To learn more about Synergy’s Workers’ Compensation Medicare Set-Asides, visit our website.

[1] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/Downloads/WCMSA-Reference-Guide-Version-2_9.pdf

Medicare Compliance: A second law firm sued by DOJ for failing to be Medicare compliant

Jason D. Lazarus, J.D., LL.M., CSSC, MSCC

On March 18, 2019, the United States Attorney for the District of Maryland announced that the law firm of Meyers, Rodbell & Rosenbaum, P.A., has agreed to pay the United States $250,000 to settle claims that it did not reimburse Medicare for payments made on behalf of a firm client. As part of the settlement, the firm “also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.”

This is the second such settlement in the last year. In June 2018, a similar settlement was announced by the U.S. Department of Justice Attorney’s Office for the Eastern District of Pennsylvania. To read more about this prior settlement, click HERE. Both of these settlements should remind attorneys of “their obligation to reimburse Medicare for conditional payments after receiving [a] settlement or judgment proceeds for their clients [as well as] not to disburse settlement proceeds until receipt of a final demand from Medicare to pay the outstanding debt.”

In today’s complicated regulatory landscape, a comprehensive plan for Medicare compliance has become vitally important to personal injury practices. Lawyers assisting Medicare beneficiaries are personally exposed to damages and malpractice risks daily when they handle or resolve cases for Medicare beneficiaries. The list of things to be concerned about is growing daily. The list includes things such as:

Not knowing what medical information/ICD codes are being reported by defendant insurers complying with Mandatory Insurer Reporting law (MIR) created by MMSEA.
Agreeing to onerous “Medicare Compliance” language—that may be inapplicable or inaccurate –which binds the personal injury victim.
Failing to report and resolve conditional payment obligations leading to personal liability.
Not using processes to obtain money back from Medicare using the compromise and waiver process.
Failure to identify a lien, such as those asserted by Medicare Part C lien holders thereby exposing the personal injury lawyer and the firm to double damages.
Inadequate education of clients about Medicare compliance when it comes to ‘futures’ and the risks of denial of future injury-related care.

What do you do? The answer is to develop a process to identify those who are Medicare beneficiaries in your practice and make sure that a process is put into place to deal with the myriad of issues that can arise. Given the liability a law firm faces for failing to be compliant, outsourcing this function to experts like those at Synergy helps mitigate the firm’s risk. Synergy’s Total Medicare Compliance program allows a law firm to address issues like Medicare Conditional Payment obligations, Medicare Advantage liens as well as Medicare Set Aside concerns by turning to us.

All lawyers assisting those on Medicare must be in the know when it comes to dealing with Medicare conditional payments as well as Part C/MAO liens. Medicare beneficiaries must understand the risk of losing their Medicare coverage should they decide to set-aside nothing from their personal injury settlement for future Medicare covered expenses related to the injury. Ultimately, it is about educating the client to make sure they can make an informed decision relative to these issues. Beyond education of the client, the most critical issue becomes how to properly document your file about what was done and why. This part is where the experts come into play. For most practitioners, it is nearly impossible to know all the nuances and issues that arise with the Medicare Secondary Payer Act. From identifying liens, resolving conditional payments, deciding to set money aside, the creation of the allocation to the release language and the funding/administration of a set aside, there are issues that can be daunting for even the most well-informed personal injury practitioner. Without proper consultation and guidance, mistakes can lead to unhappy clients or worse yet a legal malpractice claim.

For more information about our Medicare Compliance services, click here.

Understanding the Mechanics of Subrogation

How subrogation and reimbursement claims impact the injury victim’s settlement.

When an individual suffers an injury and seeks medical attention, typically that care is paid for by an insurance carrier. Those bills might be paid by Medicare, Medicaid, TRICARE, or a plan provided through their employer. This is true even if the injury suffered was caused by a third party. The surety of payment for medical services is why individuals are willing to pay high premiums for insurance coverage or to comply with cumbersome federal/state regulations to retain benefits.

However, most purchasers or beneficiaries of these plans and polices are unaware that there are circumstances wherein they will be required to repay these plans thousands or even millions of dollars. The little known and often misunderstood legal principles behind this obligation are subrogation and reimbursement.

Having spent more than 20 years in the health insurance subrogation/reimbursement industry, I have learned that a case example is the best way to explain how subrogation/reimbursement claims impact the individual injury victim.

A Typical Injury Case Example

In the typical case, an individual is injured in a motor vehicle accident. The individual then retains an attorney to assert a claim against the allegedly negligent driver. During the course of pursuing that claim, the attorney is advised that his client’s health insurance carrier paid $20,000 to various medical providers for injuries suffered in the accident. This notice advises the attorney that they are required to repay this amount upon settlement of the motor vehicle case. It is the position of the various insurance providers, government agencies, and courts that it was the at-fault party who should have paid the medical bills, not the injury victim’s own insurance carrier. Therefore, $20,000 from the settlement funds obtained by the injury victim’s attorney to compensate them for their injuries goes back to the insurance company. In many situations, primarily with Medicare, the facts and numbers can mean that the injury victim receives no portion of the settlement, and all of it goes back to the insurance carrier.

Subrogation and Reimbursement Explained

The terms subrogation and reimbursement are used interchangeably both within the industry and often by the courts. Despite this conflation, the two are different legal concepts and hold different perils for the injury victim attempting to obtain compensation for their injuries. Subrogation means to substitute one person for another. Often subrogation is analogized to “standing in someone else’s shoes.” Within our context it means that the health insurance carrier can “stand in the shoes” of the injury victim–essentially becoming the injury victim for the limited purpose of asserting a claim against the at-fault party for the amount of medical benefits they have provided. The insurance carrier asserts a claim independent of the claim being asserted by the actual injury victim. Reimbursement, on the other hand, is when the insurance carrier claims that their insured recovered money from the at-fault party for expenses which the insurance carrier, and not the injury victim, paid. The concept of reimbursement guards against an individual receiving a “windfall” by recovering money for an expense that was paid by another.

To add to this already confusing analysis is that each type of health insurance coverage has different recovery rights. These rights may be governed by state law, federal law or a combination of both.

Repayment considerations with the Medicare Secondary Payer Act

Medicare and Medicare Advantage beneficiaries will face the Medicare Secondary Payer Act when they are attempting to resolve a repayment demand being asserted against any settlement or award they obtain. Under this Act, Medicare is identified as a “payor of last resort” and creates what is often referred to as a “super lien.” The amount due back is calculated per federal regulation and is dependent on the size of the settlement relative to the amount of benefits provided as follows:

C.F.R. 411.37(c)
- Medicare payments are less than the judgment or settlement.
  - Add (Attorney’s Fees) and (Costs) = Procurement Costs
  - (Procurement Costs) / (Gross Settlement Amount) = Ratio
  - Multiply (Lien Amount) by (Ratio) = Reduction Amount
  - (Lien Amount) – (Reduction Amount) = Medicare Demand
C.F.R. 411.37(d)
- Medicare payments are equal to or exceed the judgment or settlement.
  - Add (Attorney’s Fees) and (Costs) = Procurement Costs
(Settlement Amount) – (Procurement Costs) = Medicare Demand

This “super lien” must be repaid within sixty (60) days of their post-settlement demand. Failure to repay the amount demanded could result in garnishment of Social Security benefits, interest being added to the amount owed, or even a doubling of the amount due, and a direct lawsuit against the injury victim and/or their attorney. There are alternative ways to resolve a conditional payment amount that involves a compromise or waiver request.

Repayment Demands and Medicaid

Another federal government health insurance program that will assert a repayment demand against its beneficiaries is Medicaid. The Medicaid program is funded by the federal government but administered by each state. Part of the requirement for the states to receive Medicaid funds is to assert repayment demands in cases where another party has become responsible for items or services that Medicaid has already provided. The repayment formulas, process, and requirements vary greatly from state to state. Though all of them have statutory rights to repayment under both federal law and state law. Additionally, most states provide for both civil and criminal penalties for individuals, or their attorneys, who fail to repay Medicaid.

Repayment Demands and Medicaid

Federal employees, both civilian and military, also face a daunting challenge when attempting to resolve their personal injury actions. Many civilian federal employees received their health insurance via the Federal Employee Health Benefits Act (FEHBA). These plans are quasi-government plans that are administered by private insurance carriers but overseen by the Office of Personnel Management. (OPM). Recently FEHBA plans achieved a significant victory before the United States Supreme Court in case called Nevils. In this case, the FEHBA plans were able to obtain a ruling which allows them to circumvent state law and enforce the terms of their plan as written. Since this is as relatively new change in interpretation there have been no cases yet limiting the rights of these plans. Fortunately, these plans are all available for review online at the Office of Personal Management website

Repayment demands from Veteran Affairs and TRICARE

Members of the military and their families must confront repayment demands from both Veterans Affairs (VA) and TRICARE. Both forms of insurance require the beneficiary to notify them of the potential for a third party to be responsible for the items or services they have provided. What is especially unique about military repayment demands is their request that the injury victim’s attorney represent the United States government free of charge. While there is no requirement that an attorney agree to this representation, the government can make resolving their interest more cumbersome in the event they refuse to sign the form. This is another example of the kind of leverage the government and insurance providers use on the trial attorney in an effort to obtain repayment.

Repayment demands and ERISA

Though tens of millions of Americans receive their insurance coverage via a government-sponsored plan, most are covered by an employer-sponsored health plan. These plans are established under the Employee Retirement Income Security Act (ERISA). An ERISA plan’s rights to repayment from an injury victim’s settlement or award is greatly dependent on how the ERISA plan is funded. Large employers with substantial assets often have a “self-funded” ERISA plan. This means that claims are paid by the company itself (or a fund it establishes) rather than by an insurance company. The law gives these “self-funded” ERISA plans extremely strong recovery rights. These same rights do not exist if the employer has a “fully insured” plan wherein an insurance carrier pays claims.

It is the “self-funded” ERISA plans which most often exercise subrogation and reimbursement rights as separate causes of action. An ERISA plan may have the right to initiate a law suit in the name of one of its plan members without even informing the individual. The “self-funded” ERISA recovery industry returned over $1,000,000,000.00 to ERISA plans in 2014 alone. This is $1 billion in settlement proceeds taken from injury victims each year. The rationale the United States Supreme Court gave when they last opined on ERISA was that the employee “bargained” for the subrogation/reimbursement rights that were contained in their contract for insurance.

Repayment demands and Hospitals/Providers

In addition to the repayment of insurance providers, there are situations where a hospital or provider may assert a repayment demand themselves. Often these repayment demands from providers is due to a lack of insurance, or a choice on the part of the provider not to bill insurance. Addressing these types of repayment demands may involve not only state statutes, but perhaps even county ordinances.

Identifying and resolving healthcare repayment obligations is a challenging part of any modern-day personal injury claim. Failure to properly address these claims could result in the loss of benefits, the accrual of interest, or even the imposition of civil or criminal penalties against both the injury victim and their attorney.

Watch a video overview of our lien resolution services or visit the home page for a complete listing of our settlement services.

Is Your Law Firm Partnering With the Right Consultant for Lien Resolution Services?

There are a myriad of benefits when law firms outsource lien resolution services. Law firms that partner with a reliable, third-party consultant that specializes in resolving liens can enjoy the following benefits:

Reduced Operating Costs: Time is money and law firms improve their bottom line by outsourcing time-consuming tasks to experienced professionals.
Effective Results: By partnering with a knowledgeable professional who understands the comprehensive lien laws, you ensure compliance and obtain effective results.
Solution-Oriented: When you accelerate lien resolution, your clients are pleased with their experience working with your law firm resulting in more quality leads.

In this brief article, the professional consultants at Synergy Settlement Services will discuss how law firms can perform their due diligence when hiring a consultant. We will also discuss a few basic qualifications every lien resolution consultant should possess.

Are You Hiring an Experienced Professional?

Naturally, when law firms hire a consultant to perform any legal tasks, especially a specialized task like lien resolution, they are partnering with this company because they require a knowledgeable and experienced professional that will be a solution provider to their needs. So the first matter of business is to ensure that this company’s expertise is in resolving liens and that this has been a principal aspect of their business for quite some time.

Are They Knowledgeable in All Aspects of Lien Resolution?

If you are relying on a third party to resolve your liens, ensure they aren’t outsourcing your services to another third party. Along with getting a better understanding of their business model, make certain that this specialized service provider has a good rapport with national healthcare agencies and has experience resolving issues related to Medicare, Medicaid, and unreasonable hospital liens as well as a firm understanding of comprehensive federal statutes like ERISA liens. Make certain they have a system in place that ensures compliance regarding all these issues.

Can They Manage a Large Capacity of Cases?

Along with learning about their experience and lien resolution process, the company you hire needs to have the bandwidth to manage a large capacity of cases for your law firm. It’s important to learn more about how many consultants will be working on your lien resolution and about other specialized services that the company can provide you with. You can always task them with resolving liens for your firm and then broaden the scope of specialized settlement services they can assist you with over time.

For over a decade, Synergy Settlement Services has worked to successfully resolve liens for the clients of numerous law firms. If you are interested in eliminating the burden related to lien resolution services, please speak with our knowledgeable and experienced team of professionals today.

For more information about how you can benefit from lien resolution services or to schedule a consultation, please submit our contact request form.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Should You Hire a Structured Broker or a Settlement Planner?

Securing the best future for the client is always a priority for an attorney in a personal injury case. Depending on the amount, it may be in the client’s best interest to have a structured settlement annuity instead of a lump sum payment. A structured annuity often works in your client’s favor because it is difficult for clients to budget their own expenses over time when other expenses come up. Working with a structured settlement broker (structured broker) or settlement planner can help you provide the best service and settlement for your client and their future needs.

Both structured brokers and settlement planners are experienced professionals with skills that can help you give your client a smoother experience during a potentially difficult time in their life.

Structured Broker

A structured broker has experience arranging structured settlements for clients. Before your client’s settlement agreement is finalized, the decision to structure must be made. The structured settlement broker will secure the settlement through a third party, often an insurance company that purchases the structured settlement annuity. The broker can also walk you through the tax implications and best options for your client.

Something to be aware of is that the claimants may hire their own structured broker who will not have your client’s best interests in mind. It’s best to work with someone you choose so your client isn’t stuck with the defense’s choice.

Settlement Planner

Settlement planners can help early on in the case so attorneys can focus on building a case and supporting their clients. They will take into account the treatment plan, outstanding liens, bankruptcy concerns, and potential assistance from government programs, before making a recommendation for a settlement strategy that will best fit the client. As an additional advocate for your client, a settlement planner can maximize the settlement.

It may be that a structured settlement is not the best option for the client, in that case, the settlement planner can make a recommendation like a special needs trust or a pooled trust. The settlement planner will clearly detail their options, saving you time and allowing you to focus on other important tasks for the settlement.

Experience Counts

Choosing the right structured broker or settlement planner can save you time and give your client the best experience possible. Most trial attorneys aren’t experienced in arranging structured settlement annuities, having an experienced settlement professional involved in the case can reduce liability.

A structured settlement broker or settlement planner can arrange structured settlement annuities for large sums or smaller settlements. Synergy Settlement Services has worked on a number of cases of greatly varying values, some of which have been around $15,000.

For more information about setting up a structured annuity or to schedule a consultation, please submit our contact request form.

Types of Annuity Payments

When your client is awarded a settlement, an annuity can be utilized to parse out payments and ensure that funds are being distributed sensibly. After working tirelessly to build your client’s case so that they receive a fair settlement, you want to guarantee that their settlement retains its value for years to come. An annuity, which is typically a contract between a plaintiff and an insurer, disseminates payments in regular intervals to provide a stream of income for years to come.

There are many types of annuities including fixed, fixed index, variable and indexed, but fixed and fixed index are the most commonly used types of annuities for structured settlements. Understanding the differences between these types of annuities is integral to maximizing your client’s settlement. A settlement planner can partner with an attorney to help their client benefit from a tax-free annuity.

The Two Phases Annuitization

An annuity is a product of financial institutions that have the resources to manage payouts and improve the value of a settlement. A structured settlement through an annuity can offer a much greater value than a lump-sum payment. Plaintiffs who work with a settlement planner will invest funds into an annuity with the intention of receiving payments later on.

There are two phases of an annuity, the accumulation phase and the annuitization phase. During the accumulation phase, the annuity is funded and prepared for future payouts. Once your client begins to receive payments, the contract has officially entered the annuitization phase.

Common Types of Annuity Payments for Structured Settlements

As we mentioned above, the purpose of an annuity is to exchange a lump sum payment (or settlement) for a series of disbursements that help the plaintiff maximize the value of their settlement. Annuities can be used to help cover specific financial needs including principal protection, lifetime income, legacy planning, or the cost of long-term health care.

For personal injury plaintiffs, a tax-free annuity can be acquired under 104(a) of the IRS codes, which establishes that all personal injuries cases are exempt from federal and state income taxes.

Annuity payments can begin immediately following the receival of the settlement or at a specified date in the future. Some types of annuity payments include:

Fixed Annuity: provides the settlement recipient with regular, secure payments every month. A settlement planner can help determine the level of funding needed on a monthly basis to cover the recipient’s bills and living expenses.

Fixed Index Annuity: unlike a fixed annuity, a fixed index annuity readjusts according to market conditions. Typically, this type of annuity is utilized by recipients hoping to turn their annuity into an investment. Recipients can take advantage of a healthy market, and since this type of annuity is still “fixed” there’s no downside if the market takes a dive.

When you work with a settlement planner from Synergy Settlement Services, your personal injury client can take advantage of a tax-free settlement by receiving payments through a tax-free annuity.

For more information about how you can benefit from a tax-free settlement or to schedule a consultation, please submit our contact request form.

How to Tell if Your Client Needs a Liability MSA (LMSA)

In a personal injury case, Medicare set aside (MSA) arrangements can be confusing for both the plaintiff and the plaintiff’s attorney. Most personal injury attorneys don’t have the experience to coordinate MSA arrangements for their clients. A lack of experience and knowledge can lead to liability for the trial attorney involved in the case.

The Centers for Medicare and Medicaid Services (CMS) has not set any guidelines, regulations, or statutes defining the requirement for liability set-asides. However, Medicare is a secondary payer, as mandated by Federal law, and if any other insurer is available, Medicare will not pay the bills for a personal injury. Once the insurer becomes unavailable, Medicare will start to pay for medical costs. The CMS reviews LMSAs on a case-by-case basis, depending on the claim, the region’s bandwidth, and its leadership.

Does Your Client Need an MSA?

Considerations for a liability MSA need to begin as soon as the personal injury case starts. However, it’s difficult to decipher CMS communications regarding LMSAs. There are harsh consequences for clients whose attorneys do not make the right decisions for their needs. It could even lead to those clients not being able to access Medicare benefits later.

Even though there are no straightforward guidelines for liability MSAs there are some fundamental questions you can ask yourself to see if an MSA may be in your client’s best interest:

Is your client eligible for Medicare benefits?
Will your client need care in the future related to the accident?
Does the case cover future medical payments?

If you can answer “yes” to all these questions, it’s time to consider an MSA for your client.

It’s important to document the case, especially when an MSA may be involved, including obtaining copies of your client’s insurance cards. Being upfront with your client about the reality of setting up an MSA can help manage their expectations of what will happen with the settlement after the trial.

Consulting with a knowledgeable settlement planner can take a noticeable weight off your shoulders. They are used to wading through the communications and updates of CMS and keeping clients’ best interests in view.

For more information about how to set up a Medicare set aside or to schedule a consultation, please submit our contact request form.

Lien Existence & Ethics, Redefined

Some of the most frustrating and murky issues facing attorneys representing injured clients stem from alleged “liens” against settlement proceeds. The Florida Bar’s position on these issues, and the limited laws delineating them, have been ever-shifting and evolving.

Ethical Obligation to Protect Liens

One constant in this otherwise uncertain area, is this: Attorneys representing injured Plaintiffs in personal injury actions have an ethical responsibility to use all reasonable efforts to resolve disputes between clients and known third-party lienholders.

Injury attorneys cannot unilaterally arbitrate such disputes. If a dispute cannot be resolved through negotiation, “the lawyer should consider the possibility of depositing the property or funds in dispute into the registry of the applicable court so that the matter may be adjudicated.” Comment to Rule 5-1.2, Rules Regulating the Florida Bar. The Ethics Committee has stated that an injury attorney should “endeavor to assist his client and the physician in effecting a compromise.” Opinion 67-36, Professional Ethics of the Florida Bar. If such efforts fail, “the lawyer should institute an interpleader action in a court of competent jurisdiction naming his client and the physician as defendants.” Id., emphasis added.

In 2004, issues involving “Letters of Protection” were specifically addressed in Opinion 02-4. The Ethics Committee again reiterated its position that a lawyer “cannot take it upon himself or herself to decide who is entitled to what.” Id. The Committee also reiterated that a lawyer holding disputed funds “should institute an interpleader action.” Id. (citing Opinion 67-36 and Rule 5-1.2). However, an interpleader action is not “the only alternative.” Opinion 02-4. Other options include, but are not limited to, seeking declaratory relief under Fla. Stat. § 86.021 and/or Fla. Stat. § 501.211(1), Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA).

A Wild Ride, from Pintaluga to Staff Opinion 38866

The Florida Bar Ethics Counsel should clarify, once and for all and by written ethics opinion, the Bar’s final position on an attorney’s ethical responsibilities regarding the protection of third-party interests in settlement proceeds. Thus far they have not done so, despite their position seeming to swing radically in recent years.

While advice from the Ethics Hotline is helpful, it is not in writing and cannot be relied upon to definitively protect you. Similarly, even written staff opinions are “advisory” and as such, “are intended to provide guidance to the inquiring attorney and are not binding; the advisory opinion process is not designed to be a substitute for a judge’s decision or the decision of a grievance committee.” Staff Opinion 38866. Only a published ethics opinion can settle the issues surrounding lien rights and the ethical responsibilities flowing therefrom. That said, reports of advice from the Ethics Hotline and staff opinions have been the only guidance on lien issues, since Opinion 67-36 and Opinion 02-4, and form the only basis from which we may attempt to guess the Bar’s position.

For roughly five years (from sometime after August 2013 until August 2018) the Bar’s position on the protection of injury-related medical bills appears to have swung wildly. Starting sometime in 2013, the Bar incorrectly interpreted the Supreme Court’s Consent Judgment in Florida Bar v. Pintaluga (Case No. SC13-1021) to mean all known accident-related medical bills must be protected in trust, whether the provider holds a lien or not. This position was unfounded in law, nor in fact, for several reasons.[1] Most importantly, Pintaluga was not factually square with that issue. In Pintaluga, there was a lien, created by a letter of protection (LOP) signed by the client (the only issue was whether the lien was valid if not also signed by the attorney). Not surprisingly, the lien was held to be valid because it was signed by the client and the attorney was aware of it. Further, the Bar’s entirely novel position that all injury-related bills must be protected regardless of whether liens existed, flew directly in the face of the well-settled Ethics Opinions discussed above, and the robust body of case law delineating hospitals’ rights when they do, and do not, have liens (including the two Supreme Court opinions discussed below).

In August of 2018, Staff Opinion 38866 corrected this misplaced position and clarified that “[i]f the providers have valid legal claims to the funds held in trust” the funds must be protected, but “if third parties do not have valid claims to the funds, the lawyer should disburse the funds to the rightful owner.” The key words being “to the funds.” The converse, just having a legal claim AGAINST THE PLAINTIFF (i.e., being a mere creditor, having a mere “debt”) does not satisfy this definition, and never has. Third parties must evince legal claims TO THE SETTLEMENT PROCEEDS. Stated differently, there must be a “lien” for an attorney to withhold money in trust against the client’s wishes. Simply put, you must protect “liens” but not “debts.” The litmus test is evidence of some statutory, ordinal or contractual lien. Without it, “the lawyer should disburse the funds to the rightful owner”–i.e., to the plaintiff (upon demand). Arguably, an attorney not only “may” disburse upon demand, she or he “must” release funds to the client absent a lien.

Hospital Liens

Hospital liens have been the subject of much litigation, some of it very recent. Unlike forty other states (and the District of Columbia),[2] Florida has no statewide lien statute. Instead, some Florida counties have liens, while others do not. This distinction has also been in flux between 2009 and 2018. Most Florida hospital lien laws cover all hospitals in the county, while a minority restrict the lien to “public hospitals” or “charitable hospitals.”

Hospital lien laws which were created by special act are unconstitutional under Article III, § 11 of the Florida Constitution. Of the approximately 22 counties which have hospital lien laws, 13 were created by a special act, and 6 more were created by a combination of a special act and a county ordinance. Because the Florida Constitution states “[t]here shall be no special law or general law of local application pertaining to…creation, enforcement, extension or impairment of liens based on private contracts,” hospital lien laws have been challenged as unconstitutional special acts in three cases.[3]

The 1^st DCA in Mercury v. Shands found “that chapter 88-539 is a special law which creates a lien based on a private contract between Shands and its patient, in violation of article III, section 11(a)(9), of the Florida Constitution.” The Supreme Court reversed the 1^st DCA as to Alachua County, but in doing so articulated a bright line test: liens in counties with county ordinances are constitutional, while liens promulgated ONLY by special act, are not. Accordingly, counties which have enacted lien laws by county ordinance are not be affected by Mercury v. Shands. In 2017, Lee Memorial resisted the Shands decision, arguing its contracts are “public” (not “private”) and as such, the constitutional test articulated in Shands did not apply.

The Second DCA disagreed, upholding the trial court’s determination that Lee’s liens are unconstitutional. Lee Memorial Health Systems appealed to the Supreme Court, which affirmed the Second DCA, stating:

We agree with the trial court and the Second District that the LMHS Lien Law violates article III, section 11(a)(9) as a special law pertaining to the creation, enforcement, extension or impairment of liens based on private contracts.

However, be careful in “non-lien” counties. Many hospitals, including but not limited to Sarasota Memorial Hospital, are creating liens by contract, at admission. This relatively new but inevitable practice of adding “lien language” to admission contracts has the possible effect of creating liens anywhere, regardless of whether a county has a valid lien ordinance.

Conclusion

Attorneys must protect liens by withholding monies in trust, over the wishes of their clients. Liens can be created by statute (though Florida does not have a lien statute), by county ordinance (in the following eight Florida counties which have them), or by contract (usually, an LOP or similar document signed by a patient and/or attorney, or more recently a hospital admission contract). If no lien exists, lawyers arguably not only “may” but “must” release settlement proceeds upon their client’s demand. The Florida counties with valid hospital liens by county ordinance are:

Alachua
Bay
Brevard
Broward
Duval
Hillsborough
Miami Dade
Orange

Unless and until county ordinances are passed in other counties, or a statewide lien statute is passed, injury-related hospitals bills in all other Florida counties are not secured by liens.

[1] This position was evinced only by reports of advice from the Ethics Hotline, instructing attorneys to withhold ALL injury-related bills which were included in a demand package. The position was not, to my knowledge, reduced to writing in a staff opinion or otherwise.

[2] See Ala. Code § 35-11-370; Alaska Stat. § 34.35.450; Ariz. Rev. Stat. Ann. § 33-931; Ark. Code Ann. § 18-46-101; Cal. Civ. Code § 3045.1; Colo. Rev. Stat. Ann. § 38-27-101; Conn. Gen. Stat. Ann. § 49-73; Del. Code Ann. tit. 25, § 4301; D.C. Code § 40-201; Ga. Code Ann. § 44-14-470; Haw. Rev. Stat. § 507-4; Idaho Code Ann. § 45-701; 770 Ill. Comp. Stat. Ann. 23/1; Ind. Code Ann. § 32-33-4-1; Iowa Code Ann. § 582; Kan. Stat. Ann. § 65-406; La. Rev. Stat. Ann. § 9:4751; Me. Rev. Stat. tit. 10, § 3411; Md. Code Ann., Com. Law § 16-601; Mass. Gen. Laws Ann. Ch. 111, § 70a; Minn. Stat. § 514.68; Mo. Ann. Stat. § 430.230; Neb. Rev. Stat. Ann. §§52-401 & 52-402; Nev. Rev. Stat. Ann. § 108.590; N.H. Rev. Stat. Ann. § 448-A:1; N.J. Stat. Ann § 2a:44-35; N.M. Stat. Ann. § 48-8-1; N.Y. Lien Law § 189; N.C. Gen. Stat. Ann. § 44-49; N.D. Cent. Code Ann. § 35-18-01; Okla. Stat. Ann. tit. 42 §§43 & 44; Or. Rev. Stat. Ann. § 87.555; R.I. Gen. Laws Ann.§§9-3-4 to 9-3-8; S.D. Codified Laws § 44-12-1; Tenn. Code Ann. § 29-22-101; Tex. Prop. Code Ann. § 55.001; Utah Code Ann. § 38-7-1; Vt. Stat. Ann. tit. 18, § 2253; Va. Code Ann. § 8.01-66.2; Wash. Rev. Code Ann. § 60.44.010; Wis. Stat. Ann. § 779.80

[3] Palm Springs General Hospital, Inc. Of Hialeah v. State Farm Mutual Automobile Insurance Company, 218 So 2d 793 (Fla. 3d DCA 1969), affirmed, State farm Mutual Automobile Insurance Company v. Palm Springs General Hospital, Inc. Of Hialeah, 232 So. 2d 737 (Fla. 1970); Hospital Board of Directors of Lee County v. McCray, 456 So 2d 936 (Fla. 2d DCA 1984); Mercury Insurance Company of Florida v. Shands Teaching Hospital & Clinics, 21 So. 3d 38 (Fla. 1^st DCA 2009).

The Third Thursday webinar Hospital Liens – Cost Transparency, Friend or Foe?, which aired in February is now available here.

Creating the Best Structured Settlement Plan For Your Client Part 2

In this two-part article, we are discussing the benefits of hiring a settlement planner. When a personal injury plaintiff is awarded a large settlement, they likely are not qualified to manage the funds they received in the settlement. There are many complex nuances in managing a settlement trust and its best to leave the financial planning to a financial expert with experience devising structured settlements. A settlement planner can help maximize a settlement and help your client reach their fiscal goals.

Settlement Planning Offers Long-Term Protection

With a settlement planner overseeing your client’s assets, the plaintiff will be ensured that they have long-term financial protection. One of the greatest benefits of a structured settlement is that the settlement planner can implement a plan for the recipient that suits their financial needs in the present and in the future. The financial expert is able to accomplish this through structured annuities.

Structured Annuities

When the defendant owes the plaintiff compensation after a settlement, the defendant purchases an annuity from an assignment company. This company is then obligated to provide funds to the plaintiff. This process of payment is called an annuity. There are many ways a structured annuity can be paid. The following payment methods are the most common in settlement cases.

Lump Sum Payment: As we discussed in the first section, there are many negative examples of plaintiffs that elected to take a lump sum payment and ended up spending that money unwisely; however, there are some benefits. Typically, a lump sum payment is a good option for a cash-strapped person that is delinquent on bills that are accruing interest. Whether it’s a mortgage, credit card debt, or car payments, a lump sum payment can help the plaintiff immediately pay off these overdue bills.

Deferred Lump Sum Payment: Settlement planning can incorporate significant future expenses into the plan. This way the capital will be saved away for when that important date arrives. For example, a plaintiff can allocate that a large portion of their settlement is made available when their children turn 18 for college tuition or when they are entering the retirement years.

Steadily Increased and Decreased Payments: One of the most common payment strategies is to slowly increase the payment over time. These structured annuities are very beneficial to help adjust for inflation by increasing over time. Adversely, a settlement recipient can also allocate their payments to decrease over the years as well. This may be ideal for a younger person that wants to pay off student loans and expects to earn more money in the future.

For more information or to schedule a consultation, please contact us today.