Attorneys who handle personal injury cases are not only confronted with the facts in the underlying third-party action—but also with the responsibility to investigate and resolve liens (the term “lien” in this article covers not only subrogation interests but also statutory and contractual claims for reimbursement) associated with treatment provided for the injuries alleged by the plaintiff.

Regardless of the medical insurer, an injured party or their counsel must resolve all liens for care related to the injuries claimed in a case. In recent years, attorneys defending personal injury actions have increased their efforts to investigate medical liens, to avoid releasing settlement funds without first confirming that related medical liens have been satisfied.

Unfortunately, there is no “one size fits all” procedure for investigating and resolving medical liens. In fact, Medicare, Medicaid and private insurers each have unique procedures for obtaining and resolving liens associated with personal injury actions.

In reality, once the alleged lien amounts are obtained by a plaintiff's attorney, the real work has only just begun. Too often, plaintiffs attorneys simply accept the lien amounts claimed by the insurer or contractor working on behalf of the insurer or lien holder, and pay the lien (following reduction by the appropriate procurement rate). The procurement rate, typically utilized by the insurer and/or contractor working on behalf of the insurer, includes attorneys fees, costs of litigation, and the overall gross amount of the settlement or verdict.

By simply accepting the lien amount claimed by the insurers—even after applying the appropriate procurement rate—the plaintiffs and their attorneys may be overpaying the lien holders, thereby reducing the client's net recovery.

If the goal of a plaintiff's attorney is to maximize the recovery for his or her client, why wouldn't the attorney investigate, negotiate, reduce and resolve every single lien in an effort to maximize each client's recovery? The truth is, lien investigation and resolution is a complex and time-consuming process, with a different procedure for each type of lien and lien holder. Further complicating the process, a plaintiff may often have three or more liens associated with one claim. Lien investigation, negotiation and resolution can become a case within a case, sometimes requiring even more of the attorney's attention than the personal injury action.

As a personal injury practitioner, it is essential to familiarize yourself with the types of liens, and the proper procedures to obtain, investigate, negotiate, reduce, resolve and satisfy each type of lien.

Advice for Lien Resolution

Attorneys must do their due diligence at the time of case sign-up to identify all health insurance plans utilized by an injured party at the time of the incident that caused the injuries. In addition, it is important to identify all health insurance plans utilized after the incident, and for as long as the injured person is being treated for the injuries alleged in the third-party action.

Once you have decided to move forward and investigate a potential case, it is good practice to order billing statements from all medical providers that provided care related to the injuries alleged. This will assist you in confirming the insurance payors for all your client's treatment. It is not unusual to find additional insurance payors, which may hold liens against your case, identified on billing statements.

Once you determine the insurance and carriers involved, it is important to promptly inform each insurance carrier that may have paid for treatment related to the injuries claimed in the plaintiff's underlying case. It is imperative that you accurately report only the injuries that you intend to claim are a result of the incident. This will allow each potential lien holder to identify all related treatment. This process of reporting a client's claim to each insurance company is the first pitfall for many practitioners, as they wait until the case is ready to settle to begin the process. For example, with Medicare and Medicaid, it can take months before they get back to you with their lien. This can cause significant delays in resolving your client's case, as it is incumbent to have all claimed lien amounts available prior to settling your client's claim.

In addition, if you wait until the case is ready to settle before requesting the liens, you may not give yourself enough time to properly investigate the relatedness and legitimacy of the amounts claimed by the lienholders. The last thing you want to tell your client is that you finally have the lien you've been waiting for but many of the charges are unrelated to their case and will need to be disputed.

Medicare

As with any other lien, it is essential to contact Medicare regarding its potential lien well in advance of any settlement negotiations. Once Medicare receives the required authorizations and case information, you will receive a “conditional payment” amount. The conditional payment itemizes monies paid by Medicare for care related to the plaintiff's injuries which must be paid back on the condition that a settlement, verdict, judgment or payment is achieved. While a sizable conditional payment amount may increase the value of your client's claim for settlement purposes, in reality, a large conditional payment can stand in the way of fruitful settlement discussions—as a defendant's settlement offer may leave the plaintiff with minimal funds once attorney fees, costs and the Medicare lien are paid. As such, upon receipt of the conditional payment, it is important to review the lien—line by line—to determine if the charges claimed are actually related to the injuries alleged in your client's case. Oftentimes, charges which are unrelated to a plaintiff's claims are included on Medicare's conditional payment. Of course, you can request that Medicare remove these charges and issue a new conditional payment amount—leading to another delay in your case.

Be aware that Medicare is often unwilling to remove charges that you assert are unrelated to your third-party action. In that event, Medicare does allow for an administrative appeals process. This process can take quite some time (sometimes more than a year), but is often the difference in recovering significant funds for your client. Medicare's administrative appeals process is underutilized and frankly, misunderstood by many attorneys who handle personal injury cases. However, if an attorney's overall goal is to achieve the maximum recovery for his or her client, Medicare's administrative appeals process should be utilized more often.

Medicaid

The Department of Human Services (DHS/Medicaid) (formerly the Department of Public Welfare), has the statutory authority to assert a lien against a third-party recovery if the injured party is a Medicaid medical assistance recipient. However, there is a means to reduce a DHS lien held against your client's third-party action. As with Medicare, the first step in reducing a Medicaid lien is determining whether all charges claimed on the lien are related to the injuries alleged in your case. Once you determine which charges are related, the plaintiff can ask DHS for a waiver or compromise of the claimed lien amount. If DHS is unwilling to waive its lien, or alternatively, if the compromise offered by DHS is undesirable, you have the option to file a petition in accordance with Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006). An Ahlborn petition affords the petitioner (the plaintiff in the third-party action) an opportunity to argue that Medicaid's right to recover is limited to only the portion of the settlement designated as payments for past medical care. This is also an underutilized mechanism that can significantly increase an injured party's net recovery.

Private Health Plan

Before determining what type of lien resolution might be available with a private health care lien, it is essential to determine whether the insurance is a standard plan through a health insurance provider, or a partially or fully self-funded ERISA plan. Once this determination is made, it is important to obtain the complete insurance plan literature to analyze the contractual right of subrogation under the applicable plan. If an ERISA plan is involved, be sure to obtain both the Plan and Summary Plan documents.

While subrogation in the realm of private health plans is largely contractual in nature, there may be means for negotiating with a private lien holder. This is especially the case when the net recovery from the third-party action is significantly reduced by a sizable private lien. In those scenarios, it is best to communicate with the private lien holder as early as possible in the litigation to determine if, and to what extent, a compromise can be reached.

Final Thoughts

Lien investigation and lien resolution are inherently complex; and as a result, many practitioners are inclined to simply accept the amount proposed by the lien holder. However, by doing so, the attorney for an injured person is failing—in some instances—to achieve the best result for his client. Taking time to thoroughly review all liens and identifying any and all potential means to reduce each lien, guarantees maximum recovery for your client.

Scott M. Simon and Robert F. Daley are attorneys at Pittsburgh-based law firm, The Lien Lawyers. Simon and Daley focus their practice on health care liability, as well as lien resolution for clients. Contact them at [email protected] and [email protected].