How to Deal with Medicare Liens in Personal Injury Cases
Each attorney on either side of a personal injury case is interested in settling their client’s case so that the client can receive compensation for their injuries. If the plaintiff gets only a small portion of the settlement offered, then the plaintiff is not likely to accept the offer.
Federal Government LiensCongress has enacted several statutes and regulations that provide medical care benefits to those who might not otherwise be able to obtain them. In providing these benefits, Congress has also empowered various governmental agencies to pursue recoupment of these benefits through liens and subrogation rights when the need for medical benefits is caused by a third party who is legally liable to the medical care recipient. Some of the most commonly encountered recoupment efforts of the federal government are found in the context of personal injury claims regarding repayment of Medicare and Medicaid benefits.
MedicareThe Medicare program was established in 1965 and provides primary hospital insurance benefits. Part B provides supplementary medical insurance for physician’s fees and other services outside a hospital setting. The Act was created to provide the same type of health care as could be provided by a comprehensive insurance plan by a private entity. The specific purpose was to provide a coordinated and comprehensive approach to federal health insurance and medical care for the aged and disabled. When a person receives medical benefits under either Part A or Part B, the federal government is subrogated to any right a Medicare recipient has to payment for such item or service under a group health plan, workers’ compensation law, plan of the United States or a state, an automobile policy, a liability policy or plan (including a self-insured plan), or under no-fault insurance.
Reduction and Waiver of a Medicare LienAlthough Medicare’s recovery is protected by statute, in several instances a reduction or waiver of this recovery may be obtained. A reduction of the Medicare lien may be obtained by claiming attorneys’ fees and expenses related to the recovery of the funds to be received by the recipient. If the Medicare lien is less than the amount of the settlement or judgment obtained, the reduction for attorneys’ fees and expenses is equal to the ratio of the attorneys’ fees and expenses to the total recovery. In the event that Medicare’s interest equals or exceeds the amount of the settlement or judgment, Medicare will recover the full amount of the Medicare lien less the attorneys’ fees and expenses incurred. Federal regulations govern the implementation of lien reductions. The amount tendered by the Medicare recipient to compromise the Medicare lien must bear a reasonable relationship to the amount that could be recovered by an enforced collection proceeding after considering the exemptions available to the debtor and the amount of time that collection will require.
Although Medicare generally will not reduce or waive its lien beyond attorneys’ fees and costs as discussed above, the federal government has authority to reduce or waive its Medicare lien if it is in the best interests of the program. The lien may also be waived or reduced if either “the probability of recovery, or the amount of recovery do not warrant pursuit of the lien. To this end, requests for waiver and reductions are evaluated to determine if the waiver or reduction is in the best interests of the program. If a Medicare lien does not exceed $100,000.00, excluding interest, penalties, and administrative costs, Medicare officials may exercise compromise authority within parameters discussed below. If the Medicare lien exceeds $100,000.00, the Department of Justice will decide if the lien will be reduced or waived. The recommendation on whether to compromise a claim is generally based on the inability of the recipient to pay the full amount within a reasonable time and the inability of the government to collect within a reasonable time if the recipient refuses to pay. In evaluating a recipient’s inability to pay, Medicare considers the recipient’s age and health, present and potential income, inheritance prospects, whether he or she has concealed or improperly transferred assets, and whether assets or income are available that could be realized by enforced collection proceedings.