When a personal injury case involves a Medicare beneficiary, the resolution of medical liens becomes significantly more complex. Unlike standard medical liens asserted by private healthcare providers or insurance carriers, Medicare liens are governed by a strict federal statutory framework. The consequences of failing to properly resolve a Medicare lien can be severe, affecting not just the plaintiff and their attorney but also the defendant and their insurer.
Medicare's Right to Reimbursement and the Risks of Nonpayment
Medicare has a statutory right of reimbursement for any medical expenses it has paid related to an injury for which a third party is responsible. This means that if a Medicare beneficiary receives compensation in a personal injury settlement, Medicare must be repaid before the beneficiary or their attorney can distribute the funds. Under the Medicare Secondary Payer Act, failure to reimburse Medicare can result in double damages plus interest, and these penalties extend beyond the plaintiff. The plaintiff’s attorney is directly liable if the lien is not satisfied, and in some cases, the defendant or their insurer can also be held responsible for nonpayment.
The Medicare Lien Resolution Process
The process of resolving a Medicare lien begins early in the case. When an attorney recognizes that their client is a Medicare beneficiary, they must notify the Centers for Medicare & Medicaid Services (CMS) and request a conditional payment statement. This document outlines all medical expenses that Medicare believes are related to the injury. Often, this list includes charges that may not be injury-related, requiring a careful review and potential dispute process. The attorney must work with the Benefits Coordination & Recovery Center (BCRC) to ensure that only valid expenses are included in the final lien amount.
The Impact of Medicare Liens on Personal Injury Settlements
Once the case settles, Medicare must be notified again, and a final demand letter is issued. Importantly, Medicare is required to reduce its lien, generally based on the proportionate share of attorney’s fees and costs. This means that if a plaintiff’s attorney takes a contingency fee, Medicare cannot claim the full amount of its lien but must reduce it in accordance with the attorney’s fee percentage. This reduction acknowledges that the plaintiff had to incur legal expenses to recover compensation.
Despite this built-in reduction, Medicare liens can still significantly impact the plaintiff’s net recovery. Attorneys handling these cases must ensure they follow all procedural steps carefully, as failing to reimburse Medicare properly can expose them to personal liability. Moreover, a defendant or insurer who ignores Medicare’s rights may find themselves subject to legal action from the federal government, as Medicare can seek repayment from any party that distributed funds without satisfying the lien.
Ensuring Compliance and Avoiding Legal Consequences
Because of these strict penalties and the complexity of the process, attorneys must be extremely diligent in handling Medicare liens from the outset of a case through final resolution. Ensuring Medicare liens are properly satisfied is critical to prevent financial penalties and to avoid surprises down the road after your case settles.
CONTACT PHILLIPS & ASSOCIATES TODAY
If you or a loved one has been injured in an auto accident, contact Phillips & Associates at (818) 348-9515 for a free consultation today. You will immediately be put in touch with John Phillips or Patrick DiFilippo, who can help determine whether you have a case and advise you on the best course of action moving forward.
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