Implications of Medicare Liens
on Personal Injury Recoveries (Continued from page 9)
tent possible. Encouraging a client to ig- nore Medicare’s claim could adversely impact any later attempt to procure waiver or compromise of the claim, not to men- tion open the client up to a morass of problems when Medicare seeks satisfac- tion of its claim. Medicare has no statute of limitations on its rights as a secondary payer.22
The argument also fails to recog-
nize that Medicare interprets 42 C.F.R. 411.24 (g) as requiring that once an “en- tity” receives proceeds, it becomes liable to Medicare regardless of what it does with the proceeds. Finally, the argument fails to recognize that personal injury attorneys almost always retain a share of the client’s recovery in the form of a contingency fee after disbursing the proceeds.23
Whatever it may be called, it is clear
that Medicare’s right of recovery is potent and must be considered and addressed by attorneys representing personal injury cli- ents. It almost goes without saying that questions regarding health care benefit providers (not only Medicare) should be part of the intake process for every per- sonal injury attorney. The early identification of potential claims and liens against recovery not only provides the at- torney with an opportunity to begin planning for ways to minimize the im- pact of such claims and liens, but allows a more accurate valuation to be placed on the client’s cause of action. The debate described above notwithstanding, the first step is to begin the process of ascertain- ing the amount of Medicare’s claim against the client’s potential recovery. In Maryland this is done by writing to Car- rie Gorsuch (last names beginning with A-O) or Anna Bertine (last names begin- ning with P-Z), Maryland Medicare Recovery Division, 1946 Greenspring Drive, Timonium, Maryland, to request a statement from Medicare as to the ex- istence and amount of Medicare’s claim. The written request should contain: the beneficiary’s name; the beneficiary’s HIC number (generally the Social Security number); the date of the accident or on- set of illness involved in the liability claim; a description of the type of injury or ill- ness; and a medical authorization providing Medicare with permission to
2242 C.F.R.411.24(f). 23Bradford & Ware at 48.
10
procure copies of the client’s medical records.24
Regulations governing Medicare’s re- In instances of clients who have
other ongoing medical issues unrelated to the claim, it is a good practice to include in the letter an explanation of current medical conditions not associated with the claim and a rationale why benefits paid for such unassociated condition should be excluded from Medicare’s claim. Often in medical malpractice cases Medicare will assert a claim for recovery of benefits paid for services unrelated to the actual mal- practice. An example of this situation is when malpractice occurs during the course of a medically indicated surgery. The surgery itself was medically necessary and not the result of the malpractice. Therefore, the benefits paid for the per- formance of this surgery should not be made part of Medicare’s claim. Pointing these types of details out in the attorney’s initial letter will often avoid more diffi- cult negotiations over the issues later on. Likewise, if the attorney anticipates that a request for reduction or waiver of Medicare’s interest may be appropriate, the groundwork for the request should be established in the letter requesting an itemization of Medicare’s claim. Since the wheels of the federal bureaucracy turn slowly, the earlier the issues are made clear, the better. Medicare is supposed to provide a re- sponse to such a letter within 45 days.25 However, such response usually takes the form of a letter acknowledging the attorney’s request and stating that the re- quest is being processed. Eventually, Medicare will produce a letter containing a statement of its claim. The letter usu- ally consists of categories for Part A and Part B of Medicare. The Part A category is primarily for hospital benefits and gen- erally contains the bulk of the claim. Part B is generally for physician related ser- vices. Upon receipt of Medicare’s claim, counsel should carefully review its con- tents and inform Medicare’s intermediary immediately of any charges included in the claim which counsel feels are not caus- ally related to the client’s cause of action. It is important to keep in mind that if the client is continuing to receive Medicare benefits for her injuries, Medicare’s inter- mediary will periodically update the claim amount. The attorney should keep abreast of these updates, as an increasing claim can have obvious impact on the ability to settle the case.
24 25
Kaufman at 311. Kaufman at 312.
Trial Reporter
covery as a secondary payer allow for reduction of the claim amount for costs of procuring the judgment or settlement.26 The procedures followed by Medicare’s intermediaries include attorney’s fees and expenses in the procurement costs, al- though if deemed excessive, the claimant’s attorney’s fees and expenses can be chal- lenged.27
The expenses must be
documented in writing, and the reduc- tion for fees and expenses exists only where the liability claim is disputed.28 Attorneys should keep in mind that one cannot avoid Medicare’s claim by draft- ing the settlement documents to characterize the client’s recovery as exclu- sively for pain and suffering or by affirmatively excluding recovery for medi- cal expenses from the settlement.29 However, Medicare does recognize recov- ery allocations when such allocations arise pursuant to a judgment on the merits.30 While the statutes and regulations are unclear on the issue, Medicare has taken the position that it is permitted to recover up to the full amount of its conditional Medicare payments, minus costs and attorney’s fees, even when the beneficiary receives a discounted settlement from a third party. This has been held to be a permissible construction of the Medicare statutes and regulations.31 Medicare does consider requests for
waiver or reduction of its claim beyond the deduction for attorney fees and ex- penses. A request for waiver or reduction is most appropriate in circumstances in which the claimant’s recovery is dis- counted or if the financial condition of the claimant is such that full repayment of Medicare’s claim would impose an un- due hardship. Since Medicare requires that its claim be satisfied within 60 days of settlement, this is a process that should be started early by the claimant’s attor- ney. If the process proceeds past the time of settlement, the amount of the claim should be placed in escrow and Medicare requested to waive its right to interest on the amount.32
The process for requesting a waiver or
compromise of Medicare’s claim begins with a written request to the intermedi-
2642 C.F.R. 411.37.
27Medicare Intermediary Manual, § 3419.7 28
42 C.F.R. 411.37; Medicare Intermediary Manual, § 3418.8.
29Medicare Intermediary Manual, § 3418.7. 30Id.
31Zinman v. Shalala, 67 F.3d at 845-846. 32
Kaufman at 311. Summer 2000
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