Who Gets the Benefit of Your Work? by Ron M. Landsman
The halcyon days of personal injury
litigation – if they ever did exist – are long gone. No longer the grateful client singing your praises after a stunning jury verdict as you walk off into the sunset. Awareness may have come in a big way with the widely misunderstood Grillo settlement,1
but important tasks must be
resolved before you even get to whether to structure a settlement or to bring in a special needs trust expert. Those two questions are only two parts of a much larger set of problems, and there are important factual questions to resolve long before those questions must be addressed Health insurance companies increas-
ingly look more like bonding companies – conduits for shifting liability rather than mechanisms for sharing risk. Now when an injured person recovers compensation for damages he or she has suffered at the hands of a negligent or malevolent party, many who have had to or who might pay the injured person’s medical bills line up to take a piece of the action. This is true for government programs like Medicare2
and Medicaid3 1 In Grillo v. Pettiette, 96th Dist.Ct., Tarrant
Cty., TX, No. 96-145090-92, trial lawyers who settled a personal injury case for all cash were sued by their former client for failing to obtain a structured settlement, which would have provided tax savings and might also have preserved public benefits. The case was settled confidential- ity, so that no one outside the principals really knows what liability rules if any were involved, but the case has been flogged by structured settlement agents to push their product. For a thoughtful review of that and related issues, see Henry Strong, “The Real Lessons of Grillo,” JOURNAL OF THE VIRGINIA TRIAL LAWYERS ASSOCIATION, Summer 2004, p. 36.
2
Title XVIII of the Social Security Act of 1935, as amended, 42 U.S.C. § 1395 et seq.
54
and for private insurers under ERISA.4
To
satisfy their clients, personal injury at- torneys not only have to win the battle of the lawsuit, but also the war of distribu- tion; no standing outside the courthouse door with a banner that reads, “Mission Accomplished.” Knowing these risks at the outset, and taking them into account, the personal injury attorney will be able to deliver not just a legal victory, but a life victory that the client will value all the more.
of what it has paid out by claims against your client’s probate estate. While this is somewhat removed from the trial attorney’s primary focus, it is not at all removed from client’s concerns about their welfare and that of their families after they are gone, and how a case is settled may affect the client’s ability to attend to that. I will first review the law behind
the different claims that may be made against your client’s recovery or against
Subrogation, liens, set-aside arrangements, ERISA and estate recovery – what you have to worry about besides special needs trusts and structured settlements – and the change in the focus of litigation.
The free-riders who want to get the
benefit of your work at your client’s expense (and satisfaction with you) mostly attack through subrogation claims, either when litigation is pend- ing or resolved. Medicare, Medicaid and ERISA insurers focus on what they have already paid out for your client’s care at the time of settlement or judgment; by statute or contract they claim the right to be reimbursed for the costs they paid because of defendants’ negligence. At the same time, Medicare may also focus on the future and seek funds to be set aside to pay the cost of care that Medi- care itself would otherwise have to pay in the future. A second line of attack is at your cli- ent’s death. Medicaid can recover much
3
Title XIX of the Social Security Act of 1935, as amended, 42 U.S.C. § 1396 et seq.
4
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.
Trial Reporter
his or her estates, and conclude with a discussion of what you must do first to facilitate an effective response to these demands.
Medicaid, Medicare and Erisa Subrogation Liens
Everybody wants to get into the act. Medicaid. If a third party caused
injury that gave rise to the need for care that Medicaid5
paid for, the State
Medicaid program is subrogated to the Medicaid beneficiary’s right to recover from the third party the cost of that care. Congress has long required State
5
Medicaid is a Federal-State joint venture; Congress establishes minimum program requirements and provides half (or more) of the funding for State medical welfare programs for the elderly and disabled poor. Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498 (1990). States must comply or run the risk of termiantion of Federal funding.
Summer 2007
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