Medicare liens are the bane of personal injury lawyers trying to reach a settlement every time. Settlements don’t and can’t parse out pain and suffering damages for medical bills. What goes to the wrongful death claim? What goes to the survival action? If you get a verdict at trial, this all gets resolved. But with undifferentiated settlements it is hard to determine what money would have gone where.
Usually, the bigger problem is not that Medicare won’t reasonably reduce its lien. It is the cart before the horse logistics – it is virtually impossible to settle the lien before the case resolves, leaving clients up in the air and at Medicare’s mercy as to what their actual recovery will be. It would help settle personal injury cases with Medicare liens if clients could have a more clearly ceiling as to what the lien amount might be. The 11th Circuit Court of Appeals provided a little help on this with a recent opinion.
The case was a Florida nursing home bed sore wrongful death case that settled for $52,500. (This was apparently the nursing home’s policy limit, which makes no sense to me.) Medicare had paid the medical bills so the plaintiff’s nursing home attorneys invited Medicare to participate in the settlement. Medicare did what I would not expect it to do in Maryland, claimed the entire amount. It also declined to participate in the probate hearing to divide up the settlement. So the trial judge moved along, valued the case over $2.5 million and cut Medicare’s lien to $787.50.
The 11th Circuit ruled that Medicare does not have the right to claim full reimbursement from an undifferentiated settlement. The court found that Medicare must participate in any state-authorized process to prorate its lien claim or accept the result when it refuses to participate.
Why did Medicare believe it could avoid dealing with with the state court in resolution of this issue while citing no statute, regulation or case law? Because its field manual says it can.
This is a pretty powerful decision because the courts are obligated by the decision of the Secretary of Health and Human Services unless they “are arbitrary, capricious, an abuse of discretion, not in accordance with law, or unsupported by substantial evidence in the record taken as a whole.”
This decision is hardly a panacea for personal injury lawyers dealing with Medicare liens in car accident and medical malpractice cases. They are difficult and that is not going to change in the foreseeable future. But any decision that puts some breaks on Medicare’s unfettered power to assert its liens at its own pleasure is a good thing. It is not that I don’t think that Medicare is not entitled to get reimbursed in some measure for the money it pays out, I just think there should be a different system to determine what the lien should be and under what conditions and when it will compromise its lien.
You can find the full decision in Bradley v. Selbelius here.