Like locks on a gate, liens prevent final settlement of personal injury cases until they are addressed. Government liens, private liens, statutory liens and others lock down settlement until dealt with.
Medicare & Medicaid Liens
Medicare & Medicaid, by statute, have liens on injury cases where accident related bills have been paid. Acceptance of these benefits is conditioned on an agreement that the government entity will be paid back if they pay medical bills where someone else, a “third party” caused the need for treatment.
A bureaucratic process handles release of these liens. Medicare only releases liens through the Benefit Coordination and Recovery Center. BCRC replaced the Medicare Secondary Payer Recovery Center in February, 2014.
Regardless of the name of the agency, getting through the process can take months or longer. Even though you’re giving the government money, and common sense suggests swift resolution, that’s not how it works. There used to be regional Medicare resolution offices. But, the entire USA is now handled by one central office creating massive delay.
Medicaid liens are handled state-by-state. In the two states in which my office is licensed, at least, the lien resolution process is nowhere near as prolonged as the federal systems. Humans often answer the phone, read their mail and respond relatively quickly on the state liens.
By law, the client and lawyer must properly resolve these liens. Failing to do so can endanger future benefits or cause criminal liability.
Health Insurance Liens
Health insurance liens are hard to understand. Some think that because such companies use words like “community” or “health care” in their names, they have friendly intentions, not out to collect money. The way health insurance companies see it, they’re there to assist with health needs and to pay bills in the event of one of those feared diseases we don’t want to think about. When a third party causes an injury, if the health plan has to pay medical expenses, this falls in a different category.
Fine print in health plans require these companies to be paid back. As with government liens, a condition of getting the health benefits is that patients agree to cooperate in paying back the money if there is an injury by a third party. This language creates the lien on the case. Failure to pay the lien causes termination of benefits.
Other liens include state statutes granting recovery to specific entities such as hospitals. But, we need to be certain that those claiming these liens fall within the targeted group, and are not some other provider attempting to jump under the umbrella.
Some health providers have new patients sign a form at the outset, obligating the patient to pay the provider directly any charges not covered by insurance. These are not really liens, but a contractual right of recovery.
Many liens can be negotiated. Some are more negotiable than others. ERISA health insurance plans rarely negotiate, but it’s not impossible. Medicare and Medicaid want their money back, but there is often some flexibility.
Lien resolution presents one of the more frustrating issues in a personal injury case. The process of obtaining an itemization, reviewing and contesting unrelated items, submitting settlement details, negotiating a final number and obtaining a release or discharge of the lien is time consuming.
But, lien resolution is the key that unlocks the hold on settlement, allowing the correct and legal release of settlement funds.