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.
In our previous blog, we tackled the Medicare conditional payment resolution process. However, if your client, during treatment for their injuries, switched to a Medicare Advantage Plan (MAO-Part C), the resolution process might not be over. Here’s why: While you may have resolved conditional payments with Medicare Parts A and B (traditional Medicare), MAO plans operate independently and may have covered some or all of your client’s medical expenses.
The issue arises because MAO plans are distinct from traditional Medicare, and beneficiaries can enroll in them during specific periods. Consequently, even if you resolved Medicare conditional payments, an MAO might have stepped in later, without your knowledge. CMS will not notify you about these MAO payments, and beneficiaries often lack clarity on their coverage types so it can easily be missed.
To verify MAO plan coverage, clients can check their status on MyMedicare.gov. Additionally, the 2020 PAID Act requires CMS to report MAO enrollments for the past three years, though access to this data is limited to Non-Group Health Plan Responsible Reporting Entities (RREs). You might need to request this information from the defense or painstakingly review medical bills to uncover potential MAO liens.
Attorneys must be vigilant, conducting thorough due diligence to uncover possible MAO liens. Failure to address these could result in double damages, as MAOs do enforce their reimbursement rights aggressively. The Medicare Secondary Payer Act grants MAOs the right to sue for double the lien amount if not repaid, a risk highlighted by cases like Humana v. Western Heritage Ins. Co. Here, Humana successfully claimed double damages after Western Heritage failed to reimburse a $191,000 lien.
To prevent such pitfalls, start your investigation early upon client intake, continue throughout representation, and finalize it before disbursing settlement funds. Identify any MAO liens and seek reduction or compromise as appropriate. Understanding and managing MAO liens is crucial to safeguarding your firm against significant financial exposure for this hidden lien.
Working with specialized lien resolution companies can provide essential expertise and prevent costly mistakes when it comes to Medicare Advantage plan liens. If you want to find out more, contact us today to Partner with Synergy for lien resolution.
Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO
In personal injury law, attorneys focus on proving causation, liability, and damages. Given the complexities that arise during settlement, outsourcing certain tasks has become a common practice to enhance efficiency and client outcomes. Just as attorneys engage experts in probate, guardianship, tax matters or even medical record retrieval, lien resolution can similarly benefit from specialized assistance. This approach not only addresses the complications of lien resolution but also when done correctly complies with ethical requirements and improves client outcomes.
Why Outsource Lien Resolution?
Personal injury attorneys often face multifaceted lien issues that are governed by intricate laws and regulations, such as ERISA, the Medicare Secondary Payer Act, and various state-specific laws. For instance, a client may have multiple Medicare components—Traditional Medicare (Parts A/B) and Medicare Advantage (Part C)—each with distinct obligations and requirements. Navigating these can be overwhelming, especially when dealing with several different lien types in one case.
Ethical Considerations
Outsourcing lien resolution is both practical and ethical, provided it is managed correctly. ABA Formal Ethics Opinion 08-451 outlines that while lawyers can outsource legal and non-legal support services, they must retain ultimate responsibility for the work and maintain direct supervisory authority. This means that while lien resolution experts can handle the details, the attorney oversees their work and ensures compliance with all professional obligations.
State-Specific Guidelines
Different states have addressed the outsourcing of lien resolution. For example, New York permits lawyers to hire external lien resolution firms as long as the costs are reasonable, disclosed to the client, and result in a net benefit. Similarly, Ohio and Utah have established that outsourcing is permissible under certain conditions, including obtaining client consent and ensuring the fees are reasonable and transparent.
Key Takeaways
- Efficiency and Expertise: Outsourcing lien resolution can streamline the process, reduce operational costs, and leverage the expertise of specialists to enhance client outcomes.
- Ethical Compliance: Ensure that the outsourcing process adheres to ABA Model Rules and state-specific guidelines, including maintaining client confidentiality, securing informed consent, and ensuring costs are reasonable.
- Client Benefit: The primary goal of outsourcing should be to protect and maximize the client’s recovery. This approach helps ensure that lien resolution is handled expertly, safeguarding against potential legal and financial risks.
In conclusion, outsourcing lien resolution is a strategic decision that, when done ethically, helps a law firm run more efficiently and benefits clients by securing better outcomes. If you want to do a deep dive into ethical outsourcing of lien resolution, click HERE to download our white paper called “How to Outsource Lien Resolution Ethically”. If you are ready to outsource today and partner with Synergy, contact us TODAY.
Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO
Correctly navigating Medicare’s conditional payment resolution process is critical for personal injury attorneys, given the complex legal framework and the substantial risks involved in failure to reimburse. Under the Medicare Secondary Payer Act (MSPA), the Centers for Medicare & Medicaid Services (CMS) have broad powers to recover payments made on behalf of Medicare beneficiaries, including the right to sue trial attorneys directly. Failing to address Medicare’s reimbursement claims correctly can lead to severe financial and legal consequences for personal injury law firms.
MSPA: The Legal Framework
CMS can recover conditional payments from any entity that touches settlement dollars which are meant to reimburse medical expenses, including attorneys who handle personal injury settlements. The case of U.S. v. Harris starkly illustrates the potential pitfalls. In this case, a personal injury attorney was held liable for Medicare’s conditional payments despite settling a claim and notifying Medicare. The court ruled against the attorney, emphasizing that CMS’s rights under 42 U.S.C. § 1395y(b)(2) extend to recovering from entities that have received payments from primary plans, a personal injury law attorney.
A Labyrinth: The Medicare Resolution Process
Resolving Medicare’s conditional payments involves several steps:
- Initial Reporting: Contact the Benefits Coordination & Recovery Contractor (BCRC) before settlement to obtain a Conditional Payment Letter (CPL). This letter is preliminary and should be audited to remove unrelated care.
- Final Demand: After settlement, Medicare must be informed, and a Final Demand will then be issued. Payment must be made within 60 days to avoid interest accumulation and potential enforcement actions by the DOJ.
Mistakes to Avoid: Common Pitfalls
There are some common mistakes made by personal injury law firms when it comes to conditional payments. These mistakes can be costly, and it is best to avoid them:
- Relying on Conditional Payment Letters: Conditional Payment Letters are not final. Only a Final Demand Letter from Medicare confirms the amount due and is binding. Relying on preliminary figures can lead to significant shortfalls and legal issues, as evidenced by a 2019 case where a Maryland law firm settled a claim which was based upon reliance on incorrect figures in a Conditional Payment Letter.
- Improper Resolution Channels: Using incorrect methods to resolve conditional payments, such as state court proceedings instead of the required administrative processes, can result in severe repercussions, as seen in a Texas case where a state court ruling was sought to reduce what was owed to Medicare which wasn’t effective. Instead, the trial attorney was sued by the government for failure to properly reimburse Medicare.
Reducing What is Owed: Appeals, Compromises, and Waivers
When dealing with Medicare’s repayment formula, attorneys face a rigid calculation per the applicable regulation. The calculated repayment amount often doesn’t account for case-specific details impacting the recovery such as liability issues or policy limits. To address this fact, attorneys can:
- Appeal: Navigate through Medicare’s multi-level internal appeal process, which is lengthy, and interest accrues during the appeal. Or.
- Request Compromise/Waiver: After paying the Final Demand, attorneys can request a compromise or waiver, potentially leading to a refund. Requests can be made under:
- Section 1870(c): Financial hardship waiver.
- Section 1862(b): Best interest of the program waiver.
- Federal Claims Collection Act: General compromise request.
Conclusion
Effective resolution of Medicare conditional payments requires diligence and adherence to proper processes prescribed by Medicare. Attorneys should avoid relying on preliminary figures, ensure timely and accurate reporting, and use appropriate channels for appeals or compromise/waiver requests. Understanding and navigating Medicare’s complex requirements is crucial to safeguarding against personal liability and ensuring successful settlement outcomes.
Working with specialized lien resolution companies can provide essential expertise and prevent costly mistakes when it comes to Medicare conditional payments. If you want to find out more, contact us today to Partner with Synergy for lien resolution.
Written by: Jason D. Lazarus, J.D., LL.M., MSCC | CEO
Settling a personal injury case can be a moment of relief for both the plaintiff and their attorney. However, a significant hurdle often remains: resolving health insurance liens. These liens can significantly impact the final recovery amount for your client, making it crucial to address them effectively. This article focuses on ERISA plans and their policy documents related to liens.
Understanding Health Insurance Liens
When a plaintiff receives medical treatment for injuries related to a personal injury claim, their health insurance provider often pays the medical bills. In return, the insurer may have a lien interest in the amount of the medical expenses covered, providing a right to reimbursement from any settlement or judgment. This reimbursement claim, known as a health insurance lien, is based on the contractual and statutory rights of the insurer.
Steps to Resolving Health Insurance Liens
- Identify and Notify All Potential Lienholders: Early in the case, identify all entities that may assert a lien. This includes health insurance companies, Medicare, Medicaid, and any other potential third-party payers. Notify these entities, in writing, of the pending litigation and request detailed lien information.
- Review Plan Documents and Lien Claims: Carefully examine the insurance policy or plan documents to understand the basis and amount of the lien. Check for any errors or inaccuracies, and for relatedness in the lien claim. It’s also essential to scrutinize whether the lien is enforceable under federal or state law.
- Negotiate the Lien Amount: Engage in negotiations with the lienholder. Highlight any equitable considerations, such as the extent of the damages, the plaintiff’s overall recovery, and the attorney’s fees and costs. Insurers should compromise on the lien amount when a persuasive argument is presented.
- Utilize the Common Fund Doctrine: This doctrine can often reduce the lien amount by requiring the lienholder to share in the attorney’s fees and costs. The rationale is that the lienholder benefits from the attorney’s efforts to recover the settlement.
- Document Everything: Keep meticulous records of all communications, negotiations, and agreements related to the lien. This documentation can be crucial if disputes arise later.
ERISA Liens
Plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) often have strong reimbursement rights. These plans, provided by private employers, can preempt state laws, making them particularly powerful. It is their policy language that controls the strength of their reimbursement right. The key issues include:
- Federal vs. State Law: Self-funded ERISA plans can assert strong reimbursement rights that preempt state anti-subrogation laws, limiting the avenues for reduction or negotiation of the lien. Fully insured ERISA plans can also assert strong reimbursement rights even if those plans are indeed subject to state law. Some states allow a fully insured ERISA plan to override state law that would limit their reimbursement. Because of this, regardless of the funding status, obtaining all plan documents is crucial.
- Plan Terms Interpretation: Courts often require strict adherence to the terms of the ERISA plan documents. The McCutchen case made this abundantly clear for self-funded ERISA plans. Understanding and interpreting these terms correctly is essential.
Right to Obtain the Plan Documents
Under ERISA, plan participants have specific rights to obtain plan documents from their plan administrators. These rights are crucial for participants to understand their benefits, how the plan operates, and their entitlements. Section 104(b)(4) of ERISA, codified as 29 U.S.C. § 1024(b)(4), outlines these rights.
The Plan Documents should be obtained directly from the Plan Administrator and not the insurance carrier or the subrogation vendor.
- Written Request:
- Plan participants or beneficiaries can request copies of certain plan documents in writing from the plan administrator.
- Types of Documents:
- Summary Plan Description (SPD): Provides a comprehensive overview of the plan, including benefits, rights, and obligations of participants.
- Summary of Material Modifications (SMM): Describes changes to the plan or the SPD.
- Annual Report (Form 5500): Contains financial information, plan operations, and compliance information.
- Plan Document: The formal written document that establishes the plan and its terms.
- Trust Agreement: If applicable, the document that sets up the trust to hold plan assets.
- Collective Bargaining Agreement: If the plan is subject to one, this document outlines the agreement between the employer and the union.
- Insurance Contract: For plans funded through insurance, the contract between the plan and the insurer.
- Response Time
- Plan administrators are required to provide the requested documents within 30 days of receiving the written request.
- Civil Penalties:
- If the plan administrator fails to comply with a request for documents within 30 days, they may be liable for a penalty of up to $110 per day (adjusted periodically for inflation) from the date of the failure to provide the documents.
Contract Law Principles and Strategies
- Examine the Plan Language
- Ambiguities in the Plan Document: Carefully review the ERISA plan documents to identify any ambiguities in the reimbursement or subrogation clauses. Under the doctrine of contra proferentem, ambiguities in the contract are construed against the drafter. If the language is unclear, you may argue that it should be interpreted in favor of your client.
- Scope and Limits of Reimbursement: Ensure the plan’s reimbursement claim strictly adheres to the terms outlined in the plan document. Some plans may have specific provisions or limitations regarding the scope of their recovery rights.
- Make Whole Doctrine
- Plan Language Examination: Assess whether the plan explicitly disclaims the “make whole” doctrine. If it does not, you can argue that the plan should only be reimbursed if and when your client has been fully compensated (made whole) for all their losses, including pain and suffering, lost wages, and future medical expenses.
- Equitable Arguments: Use the make whole doctrine to negotiate a reduction in the lien amount, arguing that the plaintiff has not been fully compensated for their total losses.
- Common Fund Doctrine
- Attorney’s Fees and Costs: The common fund doctrine may require the ERISA plan to share in the attorney’s fees and costs incurred in obtaining the settlement. Argue that the plan’s recovery should be reduced proportionally to account for the legal expenses incurred in creating the settlement fund.
- Explicit Plan Language: Verify if the plan explicitly addresses the common fund doctrine. If the plan does not waive this doctrine, you can argue that it applies.
- Analyze the Plan’s Equitable Lien by Agreement
- Equitable Lien Requirements: For an equitable lien by agreement to be enforceable, the plan must identify a specific fund (the settlement) and assert a right to a portion of that fund. Ensure the lien is tied to the settlement and not your client’s general assets.
- Constructive Trust: ERISA plans often seek a constructive trust on settlement funds. Argue that the plan’s right to recovery should be limited to specific funds clearly identified in the settlement agreement.
- Proportional Allocation of Damages
- Detailed Settlement Allocation: Structure the settlement to allocate specific amounts to various categories of damages, such as medical expenses, pain and suffering, and lost wages. Argue that the ERISA lien should only apply to the portion allocated to medical expenses.
- Court Approval: Seek court approval of the settlement allocation to strengthen the argument against the ERISA lien’s applicability to non-medical portions of the settlement.
- Equitable Relief
- Equitable Defenses: Use equitable defenses such as unjust enrichment, undue hardship, or the unclean hands doctrine to argue that full reimbursement would be inequitable under the circumstances, if applicable.
- Negotiation and Settlement
- Negotiation Tactics: Engage in negotiations with the ERISA plan administrator, insurance carrier, subrogation vendor, etc., presenting all legal and equitable arguments to seek a reduction in the lien amount.
Conclusion
Combating an ERISA lien on a personal injury settlement requires a thorough understanding of both the specific plan language and applicable contract law principles. By carefully analyzing the plan documents, leveraging doctrines like make whole and common fund, and employing strategic negotiation tactics, personal injury attorneys can often reduce the impact of these liens on their clients’ recoveries. Effective use of these strategies not only maximizes the client’s net recovery but also ensures compliance with legal and ethical standards.
While a personal injury attorney may be able to resolve a lien on their own, it is more efficient and advantageous to engage Synergy for this specialized task. This allows attorneys to focus on other revenue generating cases, knowing that a team of lien experts are diligently working to achieve the best possible result for their client. Synergy’s expertise and hundreds of years of combined experience in handling ERISA liens ensure that the settlement process are preserved as much as possible, leading to optimal outcomes for the client.
Synergy is your lien resolution partner for all health insurance liens – ERISA, FEHBA, Military, Medicaid, Med Pay, Medicare, Hospital, Private and more. Partner with Synergy today to see what a difference it makes for the efficiency and profitability of your firm.
Written by: Teresa Kenyon | Vice President of Lien Resolution Services
Introduction
The landscape of healthcare billing can be complex and confusing, both for healthcare providers and patients alike. When there is third-party liability involved, such as in cases of accidents or injuries caused by someone other than the patient, the responsibility for billing insurance can become even more complex. In these situations, a hospital may explore various avenues to determine the primary source of payment for the medical services provided. One common question that often arises is whether hospitals and healthcare providers are obligated to bill insurance, particularly government programs like Medicare or Medicaid. In this post, we will explore healthcare billing, the role of insurance, and the requirements associated with billing Medicare and Medicaid generally and in third-party liability cases.
The Basics of Healthcare Billing
Healthcare billing is the process by which healthcare providers submit claims to insurance companies or government programs to receive payment for the services they render to patients. Health insurance, whether private or government-sponsored, plays a crucial role in covering medical expenses and ensuring access to healthcare services for covered individuals.
Providers are generally encouraged to bill insurance companies to facilitate the reimbursement process and reduce the financial burden on patients. However, the decision to accept insurance and the specific agreements between providers and insurers can vary.
Do Hospitals and Providers Have to Bill Insurance?
In the United States, there is no federal law mandating that hospitals or healthcare providers must bill private insurance, Medicaid, or Medicare. Providers have the flexibility to decide whether they will accept insurance and enter into agreements with specific insurance plans for the amount of those payments for specific services. While it’s customary for healthcare providers to bill insurance, including Medicare and Medicaid, some may choose not to participate in certain networks or programs. However, this decision can have implications for both the provider and the patient, as non-participating providers may charge higher fees, leaving patients responsible for a larger portion of the bill.
Typically, hospitals initiate billing by submitting claims to the primary health insurance for the medical services rendered. This is a standard practice, and hospitals typically bill the patient’s insurance as part of the normal billing process. In situations involving third-party liability, the hospital may engage in a process known as Coordination of Benefits. This involves determining the order in which multiple insurance policies will contribute to covering the patient’s medical expenses. The hospital may work with the patient’s primary insurance provider, and if applicable, the insurance provider who represents the at-fault third party.
The hospital will likely conduct an analysis balancing how they receive the largest payment for their services in the shortest period of time. While the hospital works through the billing and coordination process, the patient may still be responsible for co-pays, deductibles, or any charges not covered by insurance. Clear communication between the hospital and the patient about financial responsibilities is crucial.
Billing Medicare: An Overview
Medicare, a federally funded program, provides health coverage for individuals 65 and older and certain younger individuals who suffer from specified disabilities. Providers can participate in the Medicare program or be non-participating providers, though this is uncommon.
Participating providers agree to accept Medicare-approved amounts as full payment for covered services, and they submit claims directly to Medicare. Non-participating providers may charge more than the Medicare-approved amount and may require patients to pay the difference, known as “balance billing.”
It’s important to note that while providers are not required to participate in Medicare, they are prohibited from discriminating against Medicare beneficiaries. This means that providers cannot refuse to treat a patient solely because they are covered by Medicare.
When the payment for treatment is someone else’s apparent responsibility, the provider has an obligation to not bill Medicare. Under the Medicare Secondary Payer Act, Medicare may not pay for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.”[1] However, if responsibility for the medical expenses incurred is in dispute and other insurance will not pay promptly, the hospital, provider, physician, or other supplier may bill Medicare as the primary payer.
Billing Medicaid: An Overview
Similarly, by law, the Medicaid program is the “payer of last resort.” If another insurer or program has the responsibility to pay for medical costs incurred by a Medicaid-eligible individual, that entity is generally required to pay all or part of the cost of the claim prior to Medicaid making any payment. This is known as “third-party liability” or TPL. Third parties that may be liable to pay for services include private health insurance, Medicare, employer-sponsored health insurance, settlements from a liability insurer, workers’ compensation, long-term care insurance, and other State and Federal programs (unless specifically excluded by Federal statute).
Problems can arise when a provider decides they would rather be reimbursed from a beneficiary’s tort settlement. A provider may make this decision if it suspects it would be entitled to a higher reimbursement amount than it would receive from Medicaid. This does not always work out in the provider’s favor if the settlement amount ends up not being enough to satisfy the provider’s claim. Typically, providers have only 1 year from the date of service to submit bills to Medicaid.
Navigating the Billing Process
Patients should be proactive in understanding their insurance coverage and seeking clarification from providers about their billing practices. It is advisable to confirm whether a healthcare provider accepts the insurance, including Medicare or Medicaid, and inquire about any potential out-of-pocket costs. Being informed and seeking in-network providers can significantly alleviate the complexities of the billing process.
No Surprises Act
The No Surprises Billing Act, officially known as the No Surprises Act, is a U.S. federal law enacted as part of the Consolidated Appropriations Act, 2021. It addresses the issue of surprise medical billing, a situation where patients receive unexpectedly high medical bills, often due to receiving care from out-of-network providers, even in emergencies or situations beyond their control. The act aims to protect patients from exorbitant bills for out-of-network healthcare services, particularly in emergency situations and certain non-emergency situations.
Key provisions of the No Surprises Billing Act include:
- Patients are protected from surprise billing in emergency situations, where they have little or no control over the choice of healthcare provider, by limiting their out-of-pocket costs to in-network amounts.
- In situations where insurers and providers cannot agree on reimbursement rates for out-of-network services, the No Surprises Act establishes an Independent Dispute Resolution (IDR) process. This process involves an independent third party reviewing and resolving disputes between healthcare providers and insurers regarding reimbursement.
- The Act requires healthcare providers and insurers to provide patients with a good faith estimate of the expected costs for scheduled services, allowing patients to better understand and plan for their healthcare expenses.
- Patients are protected from balance billing for out-of-network emergency services and certain non-emergency services provided at in-network facilities.
The No Surprises Billing Act primarily focuses on protecting patients from unexpected and excessive medical bills, and it does not specifically address third-party liability situations in the traditional sense. However, its impact on third-party liability scenarios can be seen in the context of emergency care and situations where patients have limited control over the choice of healthcare providers.
In cases of emergency care, where patients may not have the opportunity to choose in-network providers, the No Surprises Act helps protect patients from balance billing and ensures that their out-of-pocket costs are limited to the amounts they would pay for in-network services. While the No Surprises Act primarily addresses disputes between insurers and providers, the IDR process could potentially be used in certain third-party liability situations where disagreements arise over reimbursement for medical services.
Conclusion
In the complex world of healthcare billing, there is no universal requirement for hospitals and providers to bill insurance, including Medicare or Medicaid. The decision to participate in insurance programs is often at the discretion of individual providers. In normal situations, patients should advocate for themselves by being informed about their insurance coverage, seeking in-network providers when possible, and clarifying billing arrangements with healthcare providers. In third-party liability situations, planning is often not possible. However, the No Surprises Billing Act should add a layer of protection, preventing unexpected billing surprises for patients whether or not available insurance is billed, or the hospital maintains a debt or asserts a lien.
[1] 42 U.S.C. §1395y(b)(2).
Teresa Kenyon, Esq. and Kevin James
Effectively minimizing or eliminating the reimbursement of any claimed medical lien is a critical part of ensuring just compensation for the injured. Personal injury lawyers encounter numerous obstacles in the process of resolving liens. While the negotiation and resolution of liens can be done independently by the attorney and their teams, collaborating with a seasoned lien resolution expert can alleviate these challenges. The obstacles a personal injury lawyer may face encompass time-consuming tasks such as identification of lienholders, navigating the intricate web of jurisdiction-specific lien laws, and negotiating for the most substantial reduction possible. Confronting these challenges may prevent attorneys from focusing on what the firm does best and distract from the primary task of representing more clients successfully.
If you decide not to outsource lien resolution functions to experts, the following noteworthy precedents will serve as valuable guides in your efforts to minimize liens. The applicability of these cases for lien resolution depends on the unique context of the case and differences from jurisdiction to jurisdiction. Nevertheless, these cases have played a substantial role in shaping lien resolution principles in their respective areas.
Medicaid – Arkansas Department of Health and Human Services v. Ahlborn (2006):
Ahlborn was a landmark case that has played a pivotal role in establishing the principle of “proportional recovery” in Medicaid lien reduction. The Supreme Court ruled that Medicaid can only recover from the portion of settlement dollars that can reasonably attributed to medical expenses. The mandate from the Court is that an allocation must be made between medical expenses and all other types of damages. The parties agreed to a pro-rata reduction prior to the Court’s ultimate holding in Ahlborn, but it is most important to note that the Court expressly refused to mandate a method of allocation, only that an allocation must be done.
Medicaid – Gallardo v Marstiller (2022)
The Court provided additional clarification regarding the previous limitations for reimbursement to Medicaid as espoused by Ahlborn by holding that the Medicaid Act permits states to seek reimbursement from settlement payments allocated for future medical care, not just past medical care.
ERISA – Cigna v Amara (2011)
This case focused on whether the employees could enforce the terms of the ERISA Plan based on misleading SPDs, even if the terms of the Plan and the SPDs did not align. The Supreme Court ruled in favor of the employees, holding that the terms of an ERISA plan could be enforced based on equitable remedies when there was a discrepancy between the plan documents and the SPDs. The Court clarified that, under ERISA, the terms of the plan documents govern, but if there is a conflict or discrepancy between the plan documents and the SPDs, the actual plan terms controlled.
ERISA – US Airways, Inc. v. McCutchen (2013):
The US Supreme Court held that while ERISA plans are contractual, and their terms are generally enforceable, equitable doctrines can sometimes be invoked to limit the extent of reimbursement sought by a plan. The Court ruled that when a plan seeks reimbursement from a participant’s recovery, the common-fund doctrine and unjust enrichment principles can be considered to ensure fairness. However, the Court also emphasized that the specific terms of the Plan and the intent of the parties, as expressed in the plan documents, should guide the analysis. The Court remanded the case to the lower courts to apply these equitable principles in determining the extent of reimbursement owed to the ERISA plan, taking into account the circumstances of the case. While used by subrogation vendors as their support for why they don’t have to reduce their self-funded ERISA lien, it is also strongly support for the injured party when the policy language is not clear and concise.
ERISA – Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan (2016):
Montanile focused on whether the ERISA health benefit plan could enforce its subrogation rights to recover funds from Montanile’s settlement after he had spent the settlement proceeds on nontraceable items. The Montanile decision clarified the limitations on health benefit plans’ ability to enforce subrogation rights in certain circumstances. It emphasized the importance of timely action by plans to assert their rights and highlighted the challenges plans may face when seeking recovery from participants who have already spent settlement funds on general expenses.
Hospital/Provider – Howell v. Hamilton Meats & Provisions, Inc. (Cal 2011):
California Supreme Court case that addressed the issue of medical cost recovery in personal injury lawsuits. In this case, the court held that a plaintiff in a personal injury case could only recover the reasonable value of medical services actually provided, as opposed to the higher billed amount. The decision clarified that the “collateral source rule” did not allow plaintiffs to recover medical expenses greater than the amount actually paid for the services, typically negotiated down by health insurers. This ruling had implications for the calculation of damages in personal injury cases, limiting the amount plaintiffs could recover for medical expenses.
Medicare – Bradley v Sebelius (11th Cir 2010)
The 11th Circuit Court of Appeals dealt a significant blow to Medicare’s reimbursement practices under the Medicare Secondary Payer Act. The ruling, stemming from a case challenging Medicare’s ability to recover from the portion of the settlement dollars intended to compensate the heirs for their damages under Florida’s Wrongful Death Act’. This holding establishes that the Medicare Secondary Payer Act does not preempt the Florida Wrongful Death Act and that Medicare was limited to the funds allocated to the survivorship claim.
Medicare Advantage – In re Avandia (3rd Cir 2012):
The first court to conclude that a Medicare Advantage Plans rights under the Secondary Payer Act are identical to those under traditional Medicare. Unfortunately, some subrogation vendors for Medicare Advantage plans have twisted this and subsequent cases to mean that they have the same right to make a recovery but then do not believe it means that they have the same liabilities or requirements for reduction or compromise as traditional Medicare.
Conclusion
In conclusion, effectively managing and minimizing medical liens in personal injury cases is a multifaceted and evolving challenge. The landscape of lien resolution is continuously shaped and redefined by significant legal precedents, such as Ahlborn, Gallardo, Amara, McCutchen, Montanile, Howell, Bradley, and the Avandia case. These rulings collectively underscore the necessity for personal injury attorneys to be acutely aware of the nuanced and jurisdiction-specific legal frameworks governing medical liens.
For attorneys, these cases serve as essential guides in navigating the complex terrain of medical lien resolution. They offer strategic insights into negotiating lien reductions, understanding the scope of lienholders’ rights, and leveraging equitable doctrines to contest excessive claims. More importantly, these rulings underscore the importance of precise and informed decision-making in the resolution process.
The evolving legal landscape, characterized by these landmark cases, reinforces the value of collaboration with experienced lien resolution professionals. While personal injury attorneys possess the legal acumen to represent their clients effectively, partnering with lien resolution experts can provide the specialized knowledge and strategic insight necessary to navigate this complex area efficiently. Such collaboration not only maximizes the potential for reducing liens but also allows attorneys to focus on their core competency—advocating for their clients—thereby enhancing the overall effectiveness and success of their legal practice.
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