Liens In Personal Injury Claims

Years ago, when personal injury lawyers collected money for car wreck victims, their job was complete.

Now, however, when we obtain a good recovery for our clients, there are those who try to take it away.

Now a second battle must be fought by careful attorneys so that the victim may keep as much as possible of the money collected from the careless driver's insurance company.

In the past 10 years Medicare, Medicaid and health insurance companies have become very active in their attempts to take away your personal injury recovery.

The following are the most common categories of entities who are lined up to get their hand in your pocket after you obtain a settlement for your personal injury.

A good personal injury attorney will fight the efforts of these groups to take your money away from you:

1. Medicare

Medicare is a program funded and administered by the Federal Government which provides certain health insurance benefits for disabled people and citizens receiving Social Security Retirement Benefits. Federal law provides that Medicare is a "secondary" payer. This means that if there is any insurance or benefits available to pay medical bills, those sources should be exhausted before Medicare is used.

An example of the third party recovery would be proceeds from a personal injury lawsuit paid by an insurance company which insures a negligent driver.

Medicare has an option however to pay health-care costs before the personal injury victim receives money from the negligent party.

However, when the victim of an automobile accident or some other negligent conduct receives money, the federal government has a "lien" against those proceeds for whatever benefits were paid by Medicare relating to the injuries arising out of the negligent conduct.

It is usually not possible to completely eliminate a Medicare lien. However, there are certain things a lawyer can do to help reduce the Medicare lien.

Among the things a lawyer should do are to carefully examine the Medicare payments for which reimbursement is being sought. If those Medicare payments are not related to injuries caused by the negligent conduct, Medicare should not be reimbursed.

The lawyer should ask for a reduction in the lien. Many times in hardship cases the federal government will voluntarily reduce a Medicare lien.

2. Medicaid

Medicaid is provided to certain citizens who, for financial hardship reasons, are unable to pay for their medical costs. This is a needs-based program and there are strict asset and income guidelines which must be met in order for an individual to become eligible for Medicaid.

Medicaid is also a federally-funded program, which is, however, administered by the states.

The Medicaid lien is subject to a specific limitation on the amount that can be taken from my personal injury recovery."

As in the case of Medicare charges, your lawyer should carefully check the Medicaid charges to be sure they are directly related to the injuries, which arise from the accident.

3. ERISA

If your medical bills were paid by health insurance policy or by an employee benefit plan provided by your employer, the health insurance company or your company's employee benefit plan will very likely want you to reimburse it out of any personal injury recovery you receive.

North Carolina law strictly prohibits an insurance company from placing a subrogation clause into a health insurance policy. A subrogation clause is language in an insurance policy which provides that if an insurance company pays any medical bills for you for which you are reimbursed wholly or partially by another source of funds such as a recovery from a liability insurance policy the health insurance company would be subrogated to your claim. In other words, the health insurance company would stand in your place and collect from your recovery against the negligent party an amount sufficient to fully reimburse it for whatever health insurance cost it may have paid for you. Such a clause in an insurance policy is strictly prohibited by North Carolina Law.

Unfortunately, insurance companies seek to avoid North Carolina Law by claiming that it is governed by a federal law known as the Employee Retirement Income Security Act of 1974. This law is commonly called ERISA.

ERISA Laws are very complex. This area of the law changes frequently and needs to be closely monitored by your attorney.

We always fight ERISA claims. Some lawyers "roll over" and pay their clients personal injury recoveries to any governmental agency, insurance company, doctor or hospital that makes a claim. Good lawyers do not. They work hard to maximize the clients net recovery by careful examination of the facts and the law.

If you are represented by a lawyer who is not familiar with this area of the law and has not handled an ERISA case, tell them to call me.