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LIEN ON ME TOO: Reducing Medicaid Liens to Facilitate Settlement

Reducing Medicaid Liens to Facilitate Settlement.

Although statistics vary, nearly 95% of all lawsuits are settled before trial.  There are myriad reasons for this, but at the end of the day, the amount of money to be paid or received almost always drives a case to settlement.  Plaintiffs make a decision that the amount they will receive is worth ending the legal process.  Defendants make a decision that the amount to be paid is worth eliminating the risk of going to trial.

But even when there is a fair offer on the table, there can be an unpredictable obstacle to settlement—a lien asserted by the Government.  A lien asserted by the Government can take money out of a Plaintiff’s pocket and cost a Defendant more to settle a case.  Is this another example of unreasonable government intrusion?  Is it permissible?  Can you as a litigant, lawyer or insurer proactively take steps to get your case settled when the Government makes it harder for you to resolve a case?  The answer is yes—especially when dealing with Medicaid.

Medicaid, the ever expanding program to provide health insurance to our nation’s poor and disabled, often pays medical bills that are the subject of major personal injury and medical malpractice lawsuits.  In some high exposure cases, Goodell, DeVries attorneys have dealt with circumstances where Medicaid has paid in excess of $800,000 in medical bills.  When the parties then sit down to discuss a possible settlement, Medicaid asserts its statutory right to reimbursement, also known as a lien, on the settlement funds.  Attorneys, litigants and insurers all have varying degrees of responsibility to reimburse Medicaid out of the settlement funds.  When large sums of money are at stake, the process becomes complicated, time consuming, and can hinder the settlement of cases.  Indeed, Goodell, DeVries attorneys are aware of many cases where Medicaid tries to obtain reimbursement for an unfair amount of bills paid.  Yet Medicaid is not entitled to such sums.

The Supreme Court of the United States has ruled that Medicaid should only be reimbursed for a fair portion of bills paid, not all monies paid.  Arkansas Dept. of Health and Human Servs. v. Ahlborn, 547 U.S. 268 (2006); and Wos v. E.M.A., 133 S. Ct. 1391 (2014).  After these cases, states have routinely been thwarted in their efforts to take unreasonable sums from a settlement by striking down anti-lien provisions in Medicaid statutes.  Federal and State courts have consistently required an allocation of funds based on the facts of a case, allowing Medicaid to only be reimbursed for a percentage of bills paid based on a percentage of overall recovery and damages sought.  This amount is almost always much less than Medicaid initially seeks to recover.  In our experience, we have seen cases in which Medicaid has ultimately accepted approximately 20% of the amount initially claimed.  In real dollars, this can mean a case can resolve for tens or even hundreds of thousands less.

How does this help you as a defendant, insurer or health care provider?  The answer is obvious.  When a case can resolve for less, with the same amount of money ultimately being paid to the plaintiff, it is more likely to resolve.  Goodell, DeVries lawyers are intimately familiar with this process and are up-to-date with this developing trend.  Goodell, DeVries lawyers can work with Plaintiffs and mediators to reduce or eliminate claims of reimbursement by Medicaid, making it faster, cheaper and easier to resolve claims.  And claims resolution is best for everyone.