LIENS
Welcome to Synergy’s blog page dedicated to the topic of lien resolution. Our team of subrogation experts share their InSights and knowledge on the latest developments and best practices in lien resolution. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complexities of lien resolution.
November 9, 2023
Introduction
In the world of personal injury law, every moment counts. The intricacies of building a solid case, negotiating with insurance companies, and advocating for your clients in court demand your undivided attention. Yet, there’s a persistent issue both during and after resolution of your case that often distracts you from your core responsibilities: healthcare liens. These liens, imposed by healthcare providers, government agencies, and private insurers, can become a legal labyrinth which negatively impacts the amount your injured clients will receive. This is precisely why collaborating with a dedicated Lien Resolution Specialist can be a game-changer for your practice.
We will explore the compelling reasons why you should outsource your lien resolution work to experts. We will delve into the complexities of different types of healthcare liens and how seasoned Specialists can positively impact your clients’ take-home recovery.
Understanding Healthcare Liens
Before probing into the reasons why you should engage experts for lien resolution, let’s take a step back and understand the nature of healthcare liens.
Healthcare liens are legal claims placed on a personal injury settlement or judgment by healthcare benefit providers. These liens aim to recover the medical expenses paid for by the health benefit program that were incurred by the injured party as a result of the accident or injury. The types of healthcare liens come in various forms including:
Medicaid Liens:
State-administered Medicaid programs that provide healthcare coverage to low-income individuals. When Medicaid beneficiaries are injured due to someone else’s negligence, state Medicaid programs may assert liens to recover the medical costs they’ve covered. Medicaid liens can have a substantial impact on personal injury settlements. However, case law, such as the Ahlborn and Gallardo decisions, have established the principle of proportional recovery. This means they should only claim a fair share of the settlement or judgment amount.
Medicare Liens:
Medicare is a federal program that provides healthcare coverage primarily for individuals aged 65+ and older or in specific other situations. When Medicare beneficiaries are injured, Medicare has an interest in being reimbursed for payments they conditionally made in third-party liability cases. Navigating Medicare liens requires an intricate understanding of federal law and the potential consequences of mistakes can be severe, including double damages or referral to the Department of Treasury for collection.
Hospital Liens:
Hospitals provide medical services to injured individuals with the expectation of receiving payment for their services. In cases where individuals lack sufficient insurance coverage or face financial difficulties, hospitals may place liens on personal injury settlements or judgments to recover unpaid medical bills. Proper itemized billing is crucial to verify the accuracy of the charges. This ensures transparency and fairness in the lien resolution process and ensures that you do not overpay hospital charges.
ERISA Liens:
Employer-sponsored health insurance plans governed by the Employee Retirement Income Security Act (ERISA) may also assert liens in personal injury cases. ERISA liens can be particularly sophisticated and difficult to resolve as they involve federal regulations as well as stringent compliance requirements. Case law has clarified the obligations of plan administrators in asserting ERISA liens, emphasizing the need for active assertion of a lien interest, clear and concise policy language and compliance with documentation requirements. Analyzing funding status and controlling documents is crucial to formulating strategies to gain leverage in negotiations.
Military and VA Liens:
Military personnel and veterans often receive medical treatment from military hospitals and VA medical facilities. When these individuals are involved in personal injury cases, the government may assert liens to recover the costs of medical care provided through military or VA healthcare systems. It’s fundamental to understand the unique jurisdiction and procedures associated with military healthcare facilities. These liens can involve complicated federal regulations. VA liens involve the Department of Veterans Affairs. It’s important to note that the laws governing VA liens can vary depending on the nature of the injury and the specific VA benefits received by the veteran.
FEHBA Liens:
The Federal Employees Health Benefits Act (FEHBA) provides health insurance coverage to federal employees and retirees. If a federal employee or retiree is injured due to the negligence of a third party, FEHBA may cover their medical expenses with the expectation that they be reimbursed from any settlement funds. FEHBA liens are governed by federal law and can be challenging to navigate. Case law that exists provides that these plans preempt state law but do not provide much other guidance.
Disability Liens:
In personal injury cases involving individuals with disability benefits, there are disability liens to consider. When these policyholders receive settlements or judgments in personal injury cases, the disability insurance company may assert liens to recover the disability benefits paid. Disability liens can present difficult legal challenges. You must navigate the terms of disability insurance policies, which can vary widely, and negotiate with insurance companies to reduce the liens and ensure clients are not unfairly burdened with repaying disability benefits that they have already received. The disability plan’s policy language and the nature of the case are important components to analyze.
Private Health Insurance Liens:
Private health insurers, such as Blue Cross Blue Shield, Aetna, or United Healthcare, provide healthcare coverage to individuals through insurance policies. In personal injury cases, these insurers may assert liens to recoup the payments made on behalf of their policyholders for medical treatment related to the injury. Understanding the terms and conditions of private health insurance policies is essential when dealing with these liens. Case law and statutory framework in each state has emphasized the need for insurers to explicitly state their subrogation rights in their policies.
Important Practice Note: It is essential to assess whether a private insurance plan is really a Medicare Advantage or Medicaid Managed Care Organization (MCO) in hiding. Those plans are not governed by state law and require your swift attention.
Navigating Complex and Evolving Laws
Healthcare lien laws are elaborate yet vague , with federal and state regulations governing different aspects of liens. These laws are subject to change, and staying up to date can be a daunting task for busy personal injury attorneys. Engaging a Lien Resolution Specialist gives trial lawyers access to the latest legal insights regarding lien resolution. Specialists keep abreast of recent case law, regulatory shifts, and evolving lien reduction strategies, enabling you to maximize your client’s recovery while focusing on what you do best.
For instance, in the complex world of Medicare or Medicaid liens, experts can calculate the appropriate proportion of the settlement that should be allocated to the lien, ensuring that clients receive their rightful share of the recovery. In hospital lien cases, experts can scrutinize itemized bills and challenge overinflated charges, leading to substantial lien reductions. Moreover, experts are skilled in identifying potential unrelated treatment or discrepancies or duplications in lien calculations on lien statements, which can result in further reductions. This attention to detail can make a significant difference in the final net amount received by the client.
Healthcare lien resolution requires a deep understanding of the specific strategies and tactics necessary for each type of lien. Lien Resolution Specialists bring this expertise to the table, tailoring their approach to the unique circumstances of each case. Each company that handles healthcare lien recovery efforts operates differently. Having an in-depth understanding of the inner workings of the recovery vendors can provide significant advantages in the negotiations.
Enhanced Client Satisfaction
When you opt to utilize an expert in lien resolution, you’re not only lightening your workload but enhancing your client satisfaction. By bringing in experts to handle lien resolution, you are demonstrating a commitment to protecting your clients’ financial interests. This can build trust and confidence, leading to greater client satisfaction. Clients are more likely to recommend attorneys who have successfully reduced their liens and ensured they received a fair portion of the settlement or judgment.
Outsourcing to Synergy is THE ANSWER
To navigate these complexities effectively and prioritize the best interests of your clients, you should engage a team of Lien Resolution experts like Synergy. By understanding the nuances of healthcare liens and the legal principles that govern them, and entrusting the resolution to experts, you are restricting the lienholders to funds only when truly entitled to reimbursement for medical expenses incurred. You are also ensuring that your client is receiving the maximum compensation they deserve. Contact Synergy to learn more.
July 13, 2023
Introduction:
When it comes to settling a personal injury case, the complexities of health insurance subrogation can significantly impact the disbursement of settlement funds. Attorneys handling these cases must navigate the intricate dynamics at play, especially when dealing with subrogation vendors who specialize in recovering funds on behalf of health insurance carriers. This article aims to shed light on the workings of health insurance subrogation, exploring the evolution of subrogation, its impact on the injured party, and the role of subrogation vendors. Lastly and most importantly, it argues in the conclusion why personal injury plaintiffs and plaintiff counsel need knowledgeable experts on their side like the recovery vendors who fight for the plan’s subrogation rights.
The Evolution of Subrogation:
Subrogation as a practice has undergone significant evolution over the years to address the rights and obligations of interested parties. Subrogation defined is when an insurance company seeks reimbursement from a responsible party for a claim they’ve already paid according to their contractual requirements. Although some of these health insurance companies have their own internal subrogation departments, many choose to outsource. To navigate the complex landscape that surrounds the various legal theories, those health insurance companies often outsource to subrogation vendors who specialize in recovering funds. They are essentially their expert partner for lien resolution. It allows the insurance carrier to do what they do best – reviewing and paying insurance claims. And it allows the subrogation vendor to do what they do best by handling the collection and battle associated with clawing funds from an injured party’s settlement and sending those funds back into the insurance company’s bank accounts, with a large cut going to the subrogation vendor for collection.
Subrogation vendors like The Rawlings Company, Optum, and Conduent typically enter into contractual agreements with health insurance companies or other entities, outlining the terms and conditions of their services. These agreements specify the scope of work, responsibilities and authority, fees for service, and other relevant details. To initiate the subrogation process, subrogation vendors gather relevant data from insurance companies claims database including all relevant information related to the submission and payment of insurance claims. They analyze this data to identify potential subrogation opportunities where the insurance company may have a right to recover funds.
The concept of subrogation has evolved over time as a legal principle to address certain situations involving the rights and obligations of parties in insurance and contract law. While it is difficult to pinpoint an exact moment when subrogation became a “thing,” its origins can be traced back to ancient legal principles and practices. Historically, subrogation emerged from the doctrine of equity, which aimed to provide fairness and justice in legal matters. In its simplest form, subrogation refers to the substitution of one person or entity in place of another with respect to certain rights or claims. This helps prevent unjust enrichment and ensures that the responsible party bears the financial responsibility for their actions or negligence. Over time, subrogation has become a well-established legal doctrine through court decisions, statutes, and contractual provisions.
The Unintended Consequences:
Unfortunately, the evolution of health insurance subrogation and the introduction and spread of expert subrogation vendors has led to unintended consequences, deviating from the principles of equity and fairness. The original purpose of subrogation, which was aimed to ensure responsible parties bear the financial responsibility of their actions, has been overshadowed by a corporate pursuit of monetary gain at the expense of the injured person. Equity is the farthest thought in the mind of most subrogation vendors. In fact, they are trained to disregard the injured person, their injury and how it may truly negatively impact their entire life.
When a health insurance company exercises its subrogation rights, it is asserting its subrogation claim to recover from the total available settlement. Consequently, the injured party’s compensation is reduced, potentially leaving them with a smaller financial recovery than they anticipated or deserve to adequately cover their future needs or compensate them for their prior trauma. Herein lies the inequity and unfairness.
The subrogation process is meant to prevent double recovery by ensuring that the responsible party bears the financial responsibility for their actions. However, in most cases, the subrogation process fails to fully account for additional costs incurred by the injured party to secure a recovery, the non-medical economic damages or the non-economic damages they have suffered. In most cases, a settlement does not allow an injured party to receive full compensation for their loss, and the subrogation claim by the health insurer further reduces their recovery since it is asserted against all damages instead of being limited to past medical expenses.
Pursuing a personal injury claim is already a time-consuming and emotionally draining process. The introduction of health insurance recovery rights adds more uncertainty regarding the amount and timing of the compensation. This can create additional financial burdens for individuals already grappling with the consequences of their injury or illness.
Vulnerable individuals, such as those with severe injuries, chronic conditions, or significant medical expenses, are disproportionately impacted by health insurance subrogation. They heavily rely on the compensation received from liable third parties to cover ongoing medical costs, rehabilitation, and other essential needs. When a portion of their recovery is usurped by the insurance company through subrogation for past medical care, it exacerbates financial hardships and impedes their ability to pay for necessary care.
In some cases, and for certain health insurance benefit programs, laws and regulations have been enacted to protect the interests of the injured party and strike a balance with insurance companies. These laws provide certain protections or limitations on health insurance subrogation, mitigating the concerns raised by the disproportionate impact on injured individuals. However, the unfortunate evolution of health insurance subrogation has allowed certain health plans, such as ERISA, FEHBA, and others, to divert more settlement dollars away from the injured person, emphasizing the need for continued subrogation reform.
Understanding Subrogation Vendors:
Focusing on subrogation vendors is essential as they have played a significant role in shaping laws that favor their corporate clients. This alignment with insurance companies not only benefits the vendors financially but also strengthens their relationship with their health insurance clients. By collecting in more situations and recovering higher amounts, they can generate larger compensation for themselves. As partners for insurance carriers, subrogation vendors enter into contractual agreements with big insurance companies that outline the terms of their services. They analyze data from insurance claims databases to identify subrogation opportunities and work to collect funds from the injured party’s settlement, receiving a significant portion of the recovery as their fee.
Negotiating with subrogation vendors can be challenging for attorneys and their clients. Here are a couple quick hitting facts about most subrogation vendors handling ERISA subrogation claims. Most are understaffed. They juggle between 700-1000 cases, leading to significant delays and often, overlooked details. And no, they aren’t reading your lengthy letter on ERISA lien law. They are swamped. Representatives are typically narrowly trained, limiting their ability to appreciate counterarguments or understand complex subrogation issues outside their training sphere. They love to twist and misinterpret their recovery rights in their favor. Contrary to their statements, simply being an ERISA self-funded plan does not mean they can’t reduce their lien. It means they don’t want to because this lien type could produce the highest recovery for them. But their rights are only as strong as the plan language dictates. Even if it’s an ERISA plan, it doesn’t necessarily mean they are entitled to recover 100% of their claimed lien. The actual recovery amount able to be collected varies based on the plan language and the case specifics.
Although it’s lost some of its pizazz because it’s now 10 years old, the US Supreme Court case of U.S. Airways v. McCutchen has been used to spread a misunderstanding of the law. Contrary to popular belief, the McCutchen case did not ultimately force the injured party to repay the plan 100% of their expenses. This is a commonly misunderstood aspect that many recovery contractors exploit. On remand, the plan got even less once plan documents were reviewed with a closer eye. Speaking of plan documents, not all plans are self-funded, contrary to what they might claim. Funding status matters. Don’t rely upon what you are told; obtain and review the relevant plan documents yourself. The Cigna v Amara case held that the Master Plan Document (MPD) is the controlling document. A subrogation vendor may claim that the plan does not have an MPD. However, often, they either don’t want to retrieve it from the self-funded group or already have it and it’s not favorable to their recovery. Instead of producing the MPD, they misdirect you to the Summary Plan Description (SPD). Because it’s what they have in house. Usually this is because the document was created by the insurance carrier whereas the Master Plan Document was created by the actual self-funded employer group, making it harder for the recovery vendor to obtain.
Believe it or not, most reduction requests never actually make it to the client or plan. This is a well-kept secret that significantly impacts the resolution process. Subrogation vendor representatives will commonly refer to their client as having the decision making power. It gives the illusion that it is the insurance company who is a Claims Administrator or the self-funded employer is calling the shots. But for many subrogation vendors, they have complete discretion in house based on their subrogation contracts with their health insurance clients. This means that they internally get to make reduction decisions without clearing through the outside party they are working on behalf of. There are internal authority processes but only in narrow situations does the representative have the file reviewed outside the subrogation vendor’s internal team.
Aside from internal processes and financial incentive of the subrogation vendor itself, another big reason why many subrogation representatives are not open to reduction is because they have a personal stake in collecting that check from the injured party’s settlement. For most subrogation vendors, employees get a bonus for each recovery check they receive whether it be based on the dollar amount of the recovery, the number of recoveries they make in a month, or the percentage of reduction they provide on all of their closed files for the month.
Conclusion:
Attorneys play a crucial role in advocating for the injured party’s rights during the subrogation process. Attorneys must be knowledgeable and strategic in their interactions with subrogation vendors to ensure their clients keep a fair and equitable portion of their settlement. Understanding how subrogation vendors operate, their financial incentives, and the importance of obtaining and reviewing relevant plan documents can assist attorneys in effectively interacting with these vendors.
All of that still might not be enough though given the unlevel playing field when fighting a subrogation vendor. That is why outsourcing to experts in the field of lien resolution, like the health insurance plans do with recovery vendors, fights fire with fire. Having a team of experts who understand the ins and outs of these recovery vendors can level the playing field making sure your client keeps every penny of their recovery that they should.
Synergy is here to be that expert for trial attorneys and their injury victim clients. With our expertise and understanding of the intricacies of subrogation, we develop strategies to maximize the available settlement funds for injured people. Our focus is on achieving equity and fairness in the subrogation process thereby ensuring health insurance companies aren’t collecting more than they are entitled to. Trust Synergy to navigate the complexities of subrogation and provide exceptional lien resolution services for you and your clients. Together, we can ensure that injured individuals receive the compensation they very much deserve. Contact us today to learn how to partner with Synergy.
May 11, 2023
By Jason D. Lazarus, J.D., LL.M., MSCC
In the complex world of personal injury law, litigating trial lawyers must prove causation, liability, and damages to ensure their clients receive the compensation they deserve. To navigate this challenging landscape, personal injury law firms often rely on specialized experts to help them with and prove their case. Personal injury lawyers routinely engage experts in other complex areas of law, such as probate, guardianship, government benefit preservation, tax, or bankruptcy. Attorneys also frequently rely on accident reconstructionist experts, economic damages experts, and Medicare experts.
Settlement is no different! Lien resolution is a prime example of a specialized area where outsourcing at settlement makes sense, both ethically and professionally. By enlisting subrogation experts, personal injury lawyers can enhance their clients’ net recovery while navigating the potential pitfalls inherent in the resolution process.
Ethics of Outsourcing Lien Resolution
Lien resolution is complicated by the varied and extensive laws governing health insurance subrogation claims. ERISA, the Medicare Secondary Payer Act, Medicaid, FEHBA, and other types of private insurance liens are specialties unto themselves. Each type of lien has its own statutory and regulatory body of law, can be subject to different state regulations, and can often coexist on the same case. A single personal injury victim may have multiple liens asserted against their recovery, which further complicates the lien resolution process.
Outsourcing lien resolution services is ethical because it allows trial lawyers to secure the best possible outcome for their clients, and ensures that all subrogation claims, reimbursement obligations, and liens are resolved in accordance with the law. The liability falls on the trial lawyer to protect their client from litigation and potential loss of health care coverage by properly addressing valid lien holders. Failure to do so could result in legal malpractice or personal liability, for example, for double the lien amount under the Medicare Secondary Payer Act’s double damages provision.
The American Bar Association (ABA) Model Rule 1.15 sets the standard for the ethical duty of trial lawyers to protect disputed funds when a lien holder claims more than they are entitled to from a settlement, judgment, or award. Many states have ethical rules or opinions which mirrors Model Rule 1.15 which can be read to impose a duty upon trial lawyers to safeguard disputed funds. Furthermore, Model Rule 1.1 requires a lawyer to have the necessary knowledge, skill, thoroughness, and preparation to undertake lien resolution. If a lawyer lacks the expertise to resolve liens, they must ensure competent representation through other means, such as retaining experts.
The ABA’s Formal Ethics Opinion 08-451 provides guidance on the ethical rules for outsourcing legal and nonlegal support services. It states that a lawyer may outsource services as long as they remain ultimately responsible for rendering competent legal services to the client under Model Rule 1.1. The lawyer must also comply with Rules 5.1 and 5.3, protect confidential information, ensure the competence and training of the provider, and obtain disclosure and informed consent from the client.
Several states have further defined the ethical requirements for outsourcing lien resolution. New York, Ohio, and Utah, for example, all permit personal injury lawyers to retain an outside lien resolution firm and charge its fee as an expense of litigation paid by the client, as long as certain conditions are met. These conditions include obtaining informed consent from the client, charging reasonable fees, ensuring a net benefit to the client on each lien negotiated, complying with state-specific bar rules and substantive law, and maintaining ultimate responsibility for the work product.
Conclusion
In conclusion, outsourcing lien resolution services is an ethical and effective solution for personal injury attorneys. By partnering with expert lien resolution providers, lawyers can ensure the best possible outcomes for their clients while adhering to the highest professional standards. By following the ethical guidelines set forth by the ABA and state bar associations, attorneys can confidently outsource lien resolution services and focus on their primary responsibility: advocating for their clients and securing just compensation for their injuries.
The benefits of outsourcing lien resolution services go beyond merely complying with ethical guidelines. By engaging experts in the field, personal injury attorneys can save valuable time and resources, allowing them to dedicate more attention to their clients and their cases. This collaboration also enables personal injury lawyers to provide a higher level of service, as they can leverage the specialized knowledge and experience of lien resolution professionals to negotiate better outcomes for their clients.
Additionally, outsourcing lien resolution services can help law firms manage risk more effectively. Given the complexity and potential consequences of mishandling liens, partnering with specialists can significantly reduce the likelihood of errors and oversights that could lead to litigation, professional liability, or damage to the firm’s reputation. This risk management benefit further supports the ethical rationale for outsourcing these services.
In summary, outsourcing lien resolution services is not only an ethical decision, but it also offers numerous advantages for personal injury attorneys and their clients. By partnering with expert providers, attorneys can focus on their core competencies, offer enhanced services, and manage risks more effectively.
April 5, 2023
Jason D. Lazarus, , J.D., LL.M., CSSC, MSCC
In today’s fast-paced legal landscape, personal injury law firms face a multitude of challenges, from tracking liens to navigating the complexities of subrogation, reimbursement, and medical debts. The pressure to provide exceptional results to their clients while maintaining a competitive edge has prompted an increasing number of firms to consider developing strategic partnerships with expert lien resolution groups. In this blog post, we explore the advantages of working with an expert lien resolution group to enhance law firm efficiency and deliver optimal results for injury victims.
Efficiency and Results: The Key to Success
Partnering with an expert lien resolution group offers several compelling benefits, most notably in terms of efficiency and results. Personal injury law firms often find themselves at a disadvantage when dealing with government benefit health plans or aggressive recovery vendors, such as Medicare, Medicaid, FEHBA, and private recovery contractor groups like Rawlings, Equian, Optum, and Conduent. These massive corporations have vast resources and a singular focus: to collect as much money as possible from personal injury recoveries.
By partnering with an expert lien resolution group, a law firm can level the playing field, gaining access to a deep team of experts capable of challenging these sophisticated recovery vendors. The benefits of outsourcing lien resolution can be summarized in three key points:
- Enhance law firm efficiency by reducing operating expenses.
- Gain access to a deep team of experts to fight massive recovery vendors.
- Achieve the best possible resolution for the injury victim in terms of lien repayment!
Unraveling the Complexities of Lien Resolution
The world of lien resolution is far from simple, with each type of lien presenting unique challenges, nuances, and legal requirements. Health insurers have long recognized these complexities, turning to lien resolution and recovery contractor vendors to secure reimbursement on behalf of their plans. Personal injury attorneys often struggle to keep up with the ever-changing legal landscape, leaving them ill-equipped to fight back against these formidable opponents.
Outsourcing lien resolution to a specialized group provides law firms with a powerful ally, one that understands the inside baseball, capable of navigating the intricacies of various lien types as well as being adept with the latest rules and strategies associated with healthcare liens. This partnership minimizes operating expenses, frees up valuable time, and allows attorneys to focus on moving cases towards settlement or trial, instead of being bogged down in the frustrating red tape of hospital/provider, government, and private health plan lien resolution.
Delivering Outstanding Results for Injury Victims
Ultimately, the goal of any personal injury law firm is to secure the best possible outcome for their clients. By partnering with a lien resolution group, law firms can ensure that their clients get the steepest reduction when resolving liens and accordingly maximizing their net recovery. In turn, this leaves clients with a positive, lasting impression at the conclusion of their case. This client satisfaction can translate into repeat business and increased referrals, boosting the law firm’s reputation within the community.
The Ethical Aspect: A Win-Win Solution
Outsourcing lien resolution not only enhances efficiency and delivers optimal results, but also aligns with the ethical responsibilities of personal injury attorneys. By partnering with a well-qualified lien resolution group, law firms can ensure they are upholding their duty to provide the best possible representation to their clients, while also remaining compliant with the myriad of legal obligations and regulations governing lien resolution.
Conclusion
The decision to outsource lien resolution offers a win-win solution for law firms and their clients. By partnering with an expert lien resolution group, personal injury law firms can enhance efficiency, reduce operating expenses, gain access to a team of specialists, and secure the best possible results for their clients. The benefits of this strategic partnership cannot be overstated, providing a competitive edge, and ensuring the long-term success of the law firm as well as the satisfaction of the injury victims they represent.
Partner with Synergy here.
March 9, 2023
Introduction
Navigating the complex world of healthcare liens can be overwhelming, especially for cases involving military personnel, Veterans, Medicaid recipients and the uninsured who need hospital care. However, understanding the intricacies of programs like the Federal Medical Care Recovery Act (FMCRA), Medicaid, and hospital lien laws is crucial to ensure that those who are injured pay back as little as possible. This article explores the FMCRA, Medicaid, and hospital liens, and highlights important laws and applicable court cases that have shaped how these programs recover. By understanding the nuances of these programs, a trial lawyer can be better prepared to decide whether to partner with lien resolution experts to get the best results.
Military
The Federal Medical Care Recovery Act (FMCRA) [1] is designed to ensure that the person or entity responsible for a Veteran’s injury pays for their medical care, rather than the taxpayers. The Act grants the United States the right to recover the reasonable value of medical care and treatment from the party responsible for the injury. This applies to TRICARE beneficiaries and covers care provided by Uniformed Services facilities, care paid for by TRICARE, or both. The funds recovered by the program are used to supplement the budget allocated by Congress, enabling each VA medical facility to provide exceptional care and services to Veterans.
The FMCRA empowers the federal government to recover the costs of medical care in cases where the United States is authorized or required to provide or pay for medical care for someone suffering from a disease or injury caused by the intentional conduct or negligence of a third party. To recover the cost, the government relies on 10 U.S.C. § 1095 and expects beneficiaries to pursue the case to protect the government’s interests. Many military branches require the attorney hired by the injured party to sign an Attorney Protection Agreement, acknowledging their responsibility to protect those interests. However, the government does not provide attorneys representing injured parties with fees or reductions for their interests, specifically for attorney fees and costs associated with effectuating the settlement. [2]
The government has a lien on any proceeds of recovery for medical and hospital care provided by Veterans’ Administration hospitals or private health care providers. The government has three ways to recover medical and hospital care costs in cases of tort liability by a third party: subrogation, intervening or joining in any action brought by the injured person, or initiating such an action in conjunction with the injured or deceased person. None of these procedures is mandatory, and the head of the department or agency furnishing care has the discretion to choose the method.
Medicaid
Medicaid is a public benefit program that provides essential healthcare coverage to individuals who meet financial eligibility criteria. The program is funded by both the federal and state governments, with administration at the state level.
In the landmark case of Ahlborn[3], the US Supreme Court limited the amount of funds that Medicaid can recover when a beneficiary receives a settlement in a third-party liability situation. Under federal law, Medicaid is only entitled to recover funds that are attributable to medical expenses, rather than the entire settlement or judgment. State statutes that mandate full reimbursement of Medicaid expenditures are unenforceable, as far as they do not exempt from recovery the non-medical portions of the settlement, such as damages for pain and suffering or lost wages.
In Wos v. E.M.A. [4], the US Supreme Court held that North Carolina’s statute, which allocated up to one-third of personal injury awards to medical expenses, was preempted by the anti-lien provision of the Medicaid Act. This decision rendered arbitrary allocations in state statutes unenforceable, and the Medicaid anti-lien rule from Ahlborn prevented North Carolina’s statue from being enforced as written.
However, the recent case of Gallardo v. Marstiller[5] potentially changes the analysis set forth in Ahlborn. The US Supreme Court ruled that Florida can seek reimbursement from settlement amounts that represent “payment for medical care,” whether past or future. This decision may have implications for certain cases, and the circumstances of each case will need to be considered to determine whether the Ahlborn analysis applies or is modified now by Gallardo’s inclusion of future care.
Hospital Liens
Hospital lien laws are established by state statutes, and their interpretation through case law varies significantly from state to state. Consequently, there is no single pivotal case or statute that forms the legal basis for a hospital lien.
The key to reducing the amount owed under a hospital lien is to focus on the actual reasonable value of the services provided. Rather than attempting to negotiate down from the full billed charges presented by the hospital, it is essential to assess the fair cost of care and negotiate accordingly. Hospital bills are often inflated, bearing little relation to what should be paid for the services provided.
Those familiar with health insurance may have noticed the vast difference between billed charges and the amount paid to a provider based on contractual agreements between facilities and insurance carriers. For example, a bill could be presented for $45,000, while a health insurance carrier may have a contract to pay only $16,000. Facilities also offer uninsured discounts. It is unfair to require an injured party who receives a settlement to pay the full amount. Moreover, if there are insufficient funds to cover the bill, it is inequitable to attach a lien to the whole settlement and then assert a debt for the remaining amount, which is often significantly more than what would have been paid by Medicare, Medicaid, or a private insurer.
So, what is the reasonable cost for services? It varies depending on the location, facility, and procedure. Obtaining this information is not easy. Hospitals that receive payments from Medicare are required to submit a Hospital Cost Report (CMS Form 2552-110), which provides detailed information about the costs incurred in each department.
Conclusion
In conclusion, even though military medical care, Medicaid and hospital liens third party liability recovery all involve the reimbursement of the cost of medical treatment, how they are handled in the legal system varies. The Federal Medical Care Recovery Act ensures that those responsible for a veteran’s injury pay for their medical care, and the funds recovered supplement the budget allocated by Congress to provide exceptional care and services to veterans. Medicaid provides essential healthcare coverage to financially eligible individuals, with a recent Supreme Court decision potentially changing how reimbursement from settlements is handled. Hospital liens, which vary by state, can be reduced by focusing on the actual reasonable value of services and negotiating accordingly. It is essential to consider the fair cost of care rather than the inflated billed charges presented by hospitals, and obtain detailed information about costs incurred in each department. Ultimately, these topics highlight the importance of ensuring that those in need of medical care receive fair and just treatment in the legal system.
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Are you tired of dealing with the headache of lien resolution on your own? Look no further than Synergy – your ultimate lien resolution partner! With hundreds of years of combined experience, our team of expert negotiators has the skills and knowledge to handle even the most complex liens, dealing with insurance carrier recovery departments and subrogation vendors like no other. By partnering with Synergy today, you’ll gain access to our unparalleled team of lien resolution specialists who will work tirelessly to maximize the reduction of liens. Don’t waste any more time struggling with troublesome and time-consuming liens. Let Synergy’s subrogation-busting team take care of it for you, so you can focus on what you do best – help other clients. Trust us, now is the time to make the smart move and partner with Synergy.
[1] 42 USC 2651-2653
[2] 5 USC 3106
[3] Arkansas Dept. of Health and Human Servs. V Ahlborn, 547 U.S. 268 (2006)
[4] Wos v E.M.A., 568 U.S. 627 (2013)
[5] 596 US ___(2022)
January 12, 2023
Dealing with medical liens is the dreaded case after the case for most personal injury attorneys. As a personal injury attorney, you’ve worked hard to prove the tortfeasor has liability for the damages incurred by your injured client and secure a recovery.
When settlement is reached and the funds are received, ERISA plans, FEHBA plans, hospitals, and providers as well as government benefit programs like Medicaid, Medicare and Military agencies are standing in wait with their greedy eyes on the prize –your client’s settlement money. What gives these plans the right to seek repayment from an injured party’s settlement?
This article focuses on ERISA, FEHBA, Medicare, and Medicare Advantage plan recovery rights. A future article will focus on Military, Hospital/Provider, and Medicaid recovery rights.
ERISA
When an injured party receives their health insurance through an employer provider health insurance, it is more often than not an ERISA plan. The primary exceptions are for government and religious employers. ERISA plans come in two forms: Self-funded and fully insured. These ERISA plans’ recovery rights are subject to different laws based on their funding status. So, when dealing with these plans, understanding and confirming the funding status is the first step to knowing whether the injured party needs to reimburse and for how much.
The seminal case for ERISA plans was the McCutchen[1] decision by the US Supreme Court. This case provides that the ERISA plan policy language is supremely important to the ERISA plan’s recovery right. Because of this, it is vital to obtain the right documents and obtain them from the right place – this starts with the Master Plan Document and a request directly to the employer group.
FEHBA
FEHBA plans are for federal employees. The seminal decision by the US Supreme Court in Nevils[2] occurred in 2017 where it was held that insurance carriers operating under FEHBA can assert subrogation and reimbursement rights despite any state laws stating otherwise. The decision primarily focused on federal preemption. Otherwise, there has not been much litigation on FEHBA plans and their right to recover. As such, subrogation vendors for these plans stand firm until challenged.
Medicare (Parts A and B)
For traditional Medicare, there isn’t a pivotal case to look to. Instead, Medicare relies upon strong statutory rights for the government to collect. The Medicare Secondary Payer Act prohibits traditional Medicare from making payment when a primary plan should make the payment.[3] This is the case when the Medicare beneficiary is injured, has medical treatment that is paid for by Medicare, and is entitled to compensation by another “plan” or entity like no-fault, Workers’ Compensation, or liability insurance. However, there is one exception to this rule where Medicare is allowed to make payment on the condition that it be paid back. The exception authorizes Medicare to make a conditional payment if the primary plan “has not made or cannot reasonably be expected to make payment with respect to such item or service promptly.”[4]
To resolve conditional payments, a beneficiary must notify Medicare through the Benefits Coordination & Recovery Center (BCRC). The BCRC begins identifying claims that Medicare has paid conditionally that are related to the case based on information reported regarding the type of incident, illness, or injury alleged. Medicare’s recovery rights run from the “date of incident” through the date of settlement/judgment/award. A beneficiary or their representative may dispute claims added to Medicare’s Conditional Payment ledger. Once the case settles, Medicare is to be notified and a Final Demand is issued.
Once a Final Demand is issued, the beneficiary may request a Waiver[5] or Compromise[6]. If the Final Demand has already been paid, the beneficiary will receive a refund from Medicare if the request is granted. To obtain a Waiver of Medicare’s interest, there must be financial hardship. An SSA-632 form must be completed which provides financial information about the beneficiary. Medicare can also grant a Waiver if Medicare’s reimbursement would be against “equity and good conscience.” Lastly, a Compromise can be requested where the beneficiary offers a reduced reimbursement to Medicare. Medicare may choose to accept the compromise based on an assessment of three factors: 1) whether the cost of collection justifies the enforced collection of the full amount of the claim; 2) an understanding on whether the beneficiary is able to pay within a reasonable time; and 3) whether the chances of successful litigation are questionable, making it desirable to seek a compromised settlement.
Medicare Advantage (Part C)
The Medicare Act permits a Medicare beneficiary to choose a private insurance carrier as their Medicare administrator versus receiving benefits from traditional Medicare. This is known as a Medicare Advantage Plan. Medicare Advantage Plans are governed by the Medicare Act and funded by CMS.[7] Medicare Advantage Plans are administered by insurance carriers like Aetna, Humana, Blue Shield, and United.
The seminal Medicare Advantage case was decided in 2012.[8] The Third Circuit found under the Medicare Act that a Medicare Advantage Plan has the same rights as traditional Medicare. Specifically, that the Advantage Plan has a private cause of action against primary payers and can collect for double damages if not reimbursed.
The ongoing issue s is that subrogation vendors representing the Medicare Advantage plans claim the same rights as Medicare but do not accept that they have the same responsibilities. Through a variety of misinterpretations and bad law, these Medicare Advantage recovery vendors often feel they have more rights than traditional Medicare. They believe they can collect as Medicare but do not have to reduce for procurement costs as is required under the Act. Medicare Advantage plans also do not have appropriate appeal systems set up and appear to be completely clueless about the fact that traditional Medicare often grants waivers and compromises including refunds post payment of the Final Demand.
Summary
Assessing the reimbursement rights of health insurance companies and medical benefit programs is a required part of representing an injury party. However, full reimbursement of their demand is not always required. There are many avenues to explore whether the Plan has right to claim what they are demanding and a variety of reasons that they may not have the right to receive as much as they are asking for from the injury victim.
Synergy is your lien resolution partner. Our team of experts have hundreds of years of combined experience in handling liens, dealing with insurance carrier recovery departments and subrogation vendors. By partnering with Synergy’s deep team of lien resolution experts today, you can put their decades of subrogation experience to work for you and your client accelerating the resolution of liens. Now is the time to leverage our subrogation-busting team to resolve troublesome and time-consuming liens.
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[1] US Airways v McCutchen, 569 U.S. 88 (2013)
[2] Coventry Health Care of Missouri v Nevils, 581 U.S. 87 (2017)
[3] 42 U.S.C. § 1395y(b)(2)(A)
[4] 42 U.S.C. § 1395y(b)(2)(B)(i)
[5] § 1870(c) of the Social Security Act (42 CFR § 405.355 and 20 CFR 404.506-512)
[6] See Federal Claims Collection Act of 1966 (31 USC § 3711) §§ 1870(c) and 1862(b) of the Social Security Act
[7] 42 U.S.C. § 1395w-21
[8] Avandia Marketing etc. adv. Humana Medical Plan, 685 F.3d 353(3rd Cir. 2012)
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