Vegas Personal Injury Law Blog

Auto accident clients who have never dealt with the government programs involving Medicare and Medicaid have the mistaken impression that the liens asserted by these two entities can be easily resolved. If you have ever dealt with these two government entities, you know that resolution of Medicare and Medicaid liens can be very time consuming.

Medicare is our country’s health insurance program for people 65 years of age or older. It also covers younger people who have disabilities. There are four (4) parts to Medicare:

• Part A – hospital insurance that helps pay for in-patient care;
• Part B – pays for doctor services as well as other services and supplies;
• Part C – Medicare Advantage, which works like a HMO or PPO, the individual chooses to get Parts A and B from one provider organization;
• Part D – is the prescription drug coverage plan.

Medicaid is a state run program that provides hospital and medical coverage for people with low income and minimal financial resources. Each state has its own rules about who is eligible and what is covered by Medicaid.

As far as the heirarchy of insurance liens is concerned, Medicare and Medicaid liens are the most difficult to resolve.

MEDICARE

Medicare was established in 1965 and is part of the Social Security Act. When a personal injury claimant receives accident-related Medicare benefits, Medicare has a subrogation interest on any first-party or third-party insurance recoveries. Medicare has the right of direct action under Federal Statutes. They can sue the adverse party directly. However, they usually choose to piggy-back their recovery from personal injury lawyers seeking compensation for their clients.

42 USC 1395y(b)(2)(B)(iii) creates a Medicare right of subrogation on personal injury or wrongful death settlements.

Medicare liens take priority over other liens and attach to any settlement or judgment proceeds. If you ignore these liens, Medicare can later seek a recovery, not only from the injured victim, but also from the lawyer. Unlike many liens, notice is not required on Medicare liens. The lawyer has the burden to determine if a Medicare lien exists. A Medicare lien notice may never arrive prior to the distribution of settlement proceeds without the attorney contacting Medicare.

Under Medicare statutes, if the Medicare lien exceeds the amount of recovery, Medicare recovers the entire lien, excluding the lawyer’s fees and expenses.

Medicare subrogation is often handled by CMS (Centers for Medicare and Medicaid Services) and MSPRC.

Medicare does have some authority to reduce or waive Medicare liens if it is in the best interests of the program, or if the probability of recovery, or the amount of the recovery does not warrant pursuit of the lien, or if enforcing a lien would lead to a significant financial hardship. Attorneys must find the right person to talk to at Medicare about a lien reduction or waiver.

In dealing with any Medicare lien, everyone involved needs to have patience, because getting a response from Medicare takes time and will involve multiple phone calls and letters. Virtually every time you call Medicare, someone will tell you that they need another 45-90 days to respond to your request. You will probably speak to a different person each time you call. It is frustrating to a personal injury attorney after settling an injury claim to realize that Medicare paid some of your client’s bills.

After much hard work on the part of your attorney, a resolution of a Medicare lien can be finally accomplished. Clients must consider that Medicare has a statutory lien against settlement proceeds and there is no person that can be contacted to quickly verify the amount of the lien.

All personal injury claimants want to know the final amount of their net recovery as soon as possible. Clients generally do not appreciate the amount of time and effort it takes to resolve a Medicare lien.

In the event that the Medicare payments exceed the settlement amount, the lien formula can result in a Medicare recipient receiving nothing, and may result in claimant’s lawyer and Medicare only being paid. Personal injury claimants become irate when they are subjected to this end result. Medicare does waive liens. However, the waiver application can tie up disbursement of settlement proceeds for a year or more.

Unfortunately, Medicare recipients, their lawyers and even the liability insurers who are paying the settlement, are all individually liable for reimbursing Medicare pursuant to 42 CFR 411.24(h) and (I). These federal regulations can send a chill down the spines of insurance companies paying out money on claims where Medicare liens are involved. Some insurance companies will insist on issuing a single settlement check payable to plaintiff, plaintiff’s lawyer and the United States of America. Most clients, especially in our present economic environment, need settlement funds immediately. Sometimes the attorney is forced to disburse a portion of the net settlement proceeds to the client, and hold in their Trust Account the amount of the estimated Medicare lien. A year later, the attorney can receive a final confirmation of the final Medicare.
In today’s personal injury litigation climate, fewer liability insurers are inclined to ignore unliquidated Medicare liens in return for an Indemnity Agreement offered by the plaintiff and plaintiff’s lawyer.

In litigation, Medicare can be named in a complaint as an interested party. The U.S. Attorney entering an appearance in the action on behalf of Medicare, may be better equipped to expedite settlement on a Medicare subrogation lien. Of course, this strategy has its complications because Medicare subrogation creates a federal question that may cause the case to be removed to the Federal Court.

Why does it take so long to resolve a Medicare lien?

It is not unusual for the entire Medicare lien resolution process to take as long as six (6) months to one (1) year. The first task is to establish a case with Medicare’s Tort Recovery Department and to obtain a listing of all expenditures. This list will assist the attorney in determining which charges are related to a particular injury and accident. Medicare’s Tort Recovery Department will probably first provide you with a list of all expenditures from the date of the accident.

The contractor that handles the lien recovery for Medicare, must first determine which medical expenses have been paid under Part A and Part B providers. (In certain situations, medical providers have up to 25 months to bill Medicare after providing medical services to your client.) The attorney must first review all expenses for which Medicare is claiming a right of reimbursement to make sure they occurred sometime between the date of injury and the date of the settlement. Then the attorney must determine if all expenses listed are related to the injury which is the subject of the settlement.

A claimant can gain access to your Medicare Explanation of Benefit (EOB) through mymedicare.gov.

As you can see, the resolution of a medicare lien is a time consuming process.

Can a Medicare lien be challenged?

Claimants who are Medicare beneficiaries have the right to appeal Medicare’s lien amount. Any appeal request must be made in writing on special forms. Appeal decisions on generally based on financial hardship that the re-payment would cause the claimants. In order to make final determination, a Waiver Form is sent to the beneficiary, requesting information on monthly income and expenses.

Does Medicare pay attorney’s fees and costs associated with obtaining your settlement?

Medicare will off-set its lien by a proportionate share of necessary “procurement costs” incurred in obtaining the settlement. This procurement off-set is only applicable if you recover from a liable third-party. If you receive payment from your own automobile, medical, or no-fault insured, this off-set will not apply.

What happens if you ignore the Medicare lien?

Once the final lien is agreed upon, it must be paid within 60 days. If the demand is ignored, then the matter will be referred to the U.S. Treasury Department for collection. The Treasury Department can request that your government Social Security checks will be off-set to pay back the lien. Interest will also accumulate on the Medicare lien if payment is delayed.

MEDICAID

Subrogation rights associated with Nevada Medicaid are controlled by NRS 422.293, et. seq. These rules are similar to those that apply to Medicare subrogation. Nevada Medicaid has subrogation rights against recipients to the extent of all medical costs paid involving third-party liability claims. They may intervene in any action by the recipient or his/her successors in interest to enforce such legal liability.

Upon receiving a Notice required pursuant to NRS 422.293001, the Department, shall within thirty (30) days provide written notice to the recipient or his attorney and to the third-party. This written notice must include, without limitation, the amount of the Department’s lien. NRS 422.293003 states that “no lien, created pursuant to NRS 422.293 is enforceable unless written notice is first given to the person against whom the lien is asserted or his attorney.”

Generally speaking, a Medicaid final lien amount can be obtained much more quickly then a Medicare lien. Also, one must consider that if a person is eligible for Medicare, they may also be eligible under Medicaid. Medicare will pay bills first, and then bills will be submitted to Medicaid for payment. Whenever the Medicare Medicaid combination exists, Medicaid will pay a very small portion of each bill.

CONCLUSION

The Federal law governs Medicare and the State law governs Medicaid. When a plaintiff receives a personal injury settlement, he must use a part of that settlement to pay back medical expenses paid by Medicare and Medicaid. Many plaintiffs are not aware of their obligations under Medicare and Medicaid. These laws often place the burden on the claimant’s attorney to verify whether or not Medicare or Medicaid has a lien. Personal injury attorneys spend considerable time resolving these liens so that they can avoid personal liability on the part of themselves and their clients.

Therefore, personal injury clients should be sympathetic with their attorneys’ efforts in dealing with the slow and frustrating process of resolving Medicare and Medicaid liens.

In my prior Blawgs, I mentioned that one of the purposes of auto insurance is to protect your assets. In the event that your liability limits are exhausted on your auto policy, your umbrella insurance policy takes over and provides you with additional protection. An umbrella insurance policy can also provide extra liability protection on your homeowner’s insurance policy.

Do you have enough liability coverage if one of your family members runs a stop sign and kills a pedestrian? Obviously, a judgment in a liability lawsuit can exceed your liability coverage and your net worth combined.

To qualify for an umbrella insurance policy, you must carry specified liability limits. Excess liability policies or umbrella policies, pick up where other policies leave off. Once the liability limits are exhausted on your home, auto, or other policy (RV, boat, personal water craft), a second layer of protection of at least ONE MILLION DOLLARS ($1,000,000.00) or higher is available through most insurance companies.

Umbrella policies on your auto insurance coverage can cover you, your spouse and family members living in your household with additional uninsured motorists and underinsurance for accidents which occur anywhere in the world. Excess policies also pay legal defense fees. I commented on in my earlier Blawgs.

Considering the extra security and extra protection that umbrella liability policies provide, the cost of this insurance is reasonable. Umbrella liability coverage is affordable and can be easily coordinated with your existing insurance policies. Umbrella coverage gets its name from the fact that it acts as an umbrella, on top of your auto and homeowner’s liability policies to provide extra protection.

Some examples of when umbrella coverage may come into play are:

1. A bad auto accident where you are at fault and your auto insurance is not sufficient to pay damages;
2. Bad accidents that occur on your property. A tree on your property crashes down on your neighbor’s home;
3. Your car can go out of control and crashes into an expensive home or business causing catastrophic damages;
4. Auto accidents where you have $300,000.00 in liability insurance and you get a judgment against you for $10,000,000.00 because the victim is now a quadriplegic.
5. Your dog attacks the neighbor’s child;
6. A premises accident on one of your rental properties;
7. A fire in your condo spreads to other units;
8. Umbrella coverages may also be applicable to incidents involving slander, liable, wrongful eviction and false arrest. They can pay for lawyers’ fees and associated court costs. Sometimes they can even cover intentional damage by a family member of your household;
9. They can provide additional liability coverage for accidents involving water crafts, jet skis, motorcycles, and most recreational vehicles.

Umbrella policies usually come in increments of ONE MILLION DOLLARS ($1,000,000.00), TWO MILLION DOLLARS ($2,000,000.00) and sometimes FIVE MILLION DOLLARS ($5,000,000.00), or more.

Premiums usually range around THREE HUNDRED DOLLARS ($300.00) to SIX HUNDRED DOLLARS ($600.00) per year for the first ONE MILLION DOLLARS ($1,000,000.00) worth of umbrella coverage. The cost of this insurance usually is based upon your driving history, claim history, and inquiries made against insurance policies. Umbrella liability coverage is associated with a deductible of usually ONE HUNDRED THOUSAND DOLLARS ($100,000.00) to THREE HUNDRED THOUSAND DOLLARS ($300,000.00). It does not activate until your underlying policy is exhausted.

It is not necessary that you obtain the umbrella coverage from the same insurance company supplying you with homeowner’s and automobile coverage. However, there usually is a substantial premium discount if you obtain your umbrella policy from your own company. Also, obtaining umbrella coverage from the same company as your liability carrier will generally insure a smooth transition when a liability claim turns into an excess claim.

It is important to know whether or not your umbrella coverage provides you with a ONE MILLION DOLLARS ($1,000,000.00) in additional coverage or ONE MILLION DOLLARS ($1,000,000.00) in total liability coverage. This is something you should
clarify with your insurance agent so that you know exactly how much total coverage you have.

Umbrella policies will also provide an additional layer of uninsured/underinsured motorists coverage. This coverage is extremely beneficial in the event that you are hit by an uninsured or underinsured driver and sustain disabling injuries. Remember the most likely cause of injury for most people is an auto accident.

It is important to note that the umbrella coverage probably will not add any coverage to your professional liability policy. Check to see if you can obtain excess professional liability insurance.

Also, umbrella coverage generally does not apply to intentional acts and will not pay for punitive damages. They do not coverage damages associated with your business activity. For that you need a business insurance policy.

I recommend umbrella insurance policies, especially for Nevada residents. In Nevada, we have a law referred to as “The Family Purpose Doctrine”. This law makes you liable for auto accidents involving vehicles owned by you which are being used by resident relatives. Do you have a teenager that drives your vehicle?

Do check with your insurance agent to explain the umbrella coverages that are provided by your insurance company. Have your agent explain to you any exclusions that apply to your existing umbrella policy.

Rental car coverage is a fairly inexpensive coverage which you can add to your auto insurance policy. Generally, this coverage will provide you with a finite sum of rental car coverage in the event your vehicle is involved in an accident and it needs repair or if it is a total loss. The upper limit on this coverage is generally less than $1,000.00. There is also a limit on the daily cost of the rental car. Generally speaking, most policies will pay up to $30.00 per day and will provide a maximum of $500.00 – $800.00 of coverage.

Another inexpensive coverage is towing coverage. In the event your vehicle breaks down, or if it is involved in an accident and needs towing, this coverage will pay your towing bill.

In the event you are involved in an accident, it is comforting to know you can have your vehicle towed to a repair shop, and that you can obtain a rental car without the detriment and delay involved with relying on the adverse driver’s insurance to pay for your towing and rental car expenses. Oftentimes, your carrier will arrange a direct billing with the rental car company. When they do allow for direct billing, the rental car company bills your insurance carrier directly instead of you. Most first-party and third-party carriers have this arrangement with Enterprise Rental Car.

In the event your auto insurance company pays under your collision coverage, rental car coverage, and towing coverage, they have the ability to subrogate against the at-fault party’s insurance company. They can be paid by the adverse carrier up to the limits of the adverse driver’s property damage liability limits. Many of the insurance companies have agreements under which they resolve these disputes outside of the court system.

Wage loss coverage is available on most auto policies. It will provide you with a finite sum of wage loss coverage. Each insurance company is different regarding the amount of wage loss coverage that they offer. In most cases, it can be as little as $1,000.00 or as high as $10,000.00. The premium for this coverage is reasonable. In most cases, there usually is a ten (10) day or two (2) week period that must elapse before this coverage becomes effective. Wage loss coverage pays only a portion of your wage loss, such as 2/3′s of the actual wages, and will only pay up to the limit of your coverage.

Once again, you should check your policy or consult your agent to determine the costs of these coverages and the terms and conditions associated with them.

Collision coverage pays for the repair of your automobile if you are involved in an accident. It is not fault-based. It will pay for the repair or total loss of your vehicle if you are involved in either an at-fault or a not at-fault accident.

Generally speaking, there are no coverage limits associated with collision coverage. If your insurance company insures your new Mercedes, and that vehicle is a total loss as a result of the accident, they will pay the actual cash value of your vehicle.

On collision coverage, most people believe an insurance company would pay you the Kelley Blue Book price on your vehicle. Insurance companies do not use retail value to determine the total loss value of the vehicle. They use something called “Actual Cash Value”. Actual Cash Value lies somewhere between the price that you would pay if you purchased the vehicle from a private owner and the retail value of your vehicle.

Obviously, if a vehicle is sold for retail value on a car lot, it will be more expensive than what you pay when you buy the same vehicle for from a private owner. Used car dealers usually invest at least $1,000.00 of repairs into vehicle before they place it on the lot to sell it for retail value. All insurance companies subscribe to computer services which determine the actual cash value of vehicles.

With collision coverage, one problem often arises. In the event you buy a new vehicle, and you drive it off the lot, the vehicle is worth less than what you paid for it. This is due to the depreciation in value between a new vehicle and a used vehicle. If you have a loan on your vehicle, the actual cash value of your vehicle can be less than your loan. We call this difference in value “a Gap”. If your vehicle is financed, you can purchase Gap insurance from your finance company. When a vehicle is leased, the residual payments on a lease can be greater than the actual cash value. If you are leasing a vehicle, once again, you should consider Gap insurance.

In the event you have a “classic” vehicle or a “collectors” vehicle, an insurance company will not pay you the value of that vehicle. For example, if you have a 1962 fuel-injected Corvette, which is in pristine condition, and it is worth $250,000.00, rest assured your insurance company will not pay you the value of that vehicle. If you own this type of vehicle, you should obtain “Stated Value” insurance for that vehicle. This insurance, in the event of a total loss or theft, will pay the stated value of that vehicle. There are companies that specialize in insuring classic vehicle such as Hagerty Insurance. My partner, Donald C. Kudler, Esq. had a good experience using them to insure his classic vehicles.

Comprehensive coverage will pay for the repair or replacement of your vehicle in the event your vehicle is damaged by anything other than an auto accident. For example, if a tree falls over on your vehicle, and your vehicle is damaged, this loss or total loss will be covered under your comprehensive coverage.

Collision and comprehensive coverages usually have deductibles associated with them. Your deductible can be zero, $250.00, $500.00, $1,000.00, or higher. Collision and comprehensive coverages with no deductible are more expensive than collision and comprehensive coverage with a $1,000.00 deductible. You should consider your financial status and the differences in premiums to determine which deductible is best for you