Wednesday, July 8, 2009

Medicare Lien in Wrongful Death Case

Posted by Mary Skinner

Several questions concerning a prospective case: Older couple, both on Medicare (although husband was still working) was in a head-on collision, other driver at fault. UIM available of $100K for each. Wife died of injuries 11 days post-accident, the medical bills were greater than $250,000. Some paid by No-Fault PIP, most by Medicare and Medicare Supp (BC/BS). Husband survived, but has permanent injuries, although is back to work. Don't know yet his medical expense, but assume it is at or close to $100K to date, most of which would have been paid by Medicare or BC/BS Medigap, and will probably have some future medical bills. We have state limits of $250,000 for non-economic loss in wrongful death and same limit for non-economic damages in personal injury case.

Several questions:

1) What is the likelihood of getting Medicare to waive or compromise its lien sufficiently so as to make pursuing this worthwhile both for husband (on his own claim and the wrongful death and survivorship claims of his wife) and me as his attorney? I have no burning desire to work solely for Medicare, and not get paid for it.

2) I am assuming it will be relatively easy to get policy limits offers on both parties from the UIM carrier. If we file a "friendly" lawsuit and have the court approve a settlement that itemizes damages (our state does have itemized verdicts in PI cases) and the itemization is in good faith and plausible (i.e. proportionally reducing medical, lost earnings, non-economic, and funeral expense), will that be recognized by Medicare and does it limit their lien just to the past medical expense, leaving non-economic, lost wages, and funeral expense insulated from Medicare's claim?

3) Is the Medicare Supp (BC/BS) subject to the same lien rules (generally our state bans subrogation by medical insurers unless subject to ERISA)?

4) What can GFRG do for me and my prospective clients, how much is the cost, and at what stage do you need to get involved? I don't want to reach a settlement or tentative settlement with the liability and UIM carriers, only to find out that I should have done something else first.

5) What are the implications for a contingent fee agreement? I understand I cannot get a fee on the amount that is paid back to Medicare. Since getting the policy limits on both cases should not be too difficult, and probably won't even require filing suit, a typical 1/3 or 35% contingent fee as to the full $200,000 would likely be excessive. However, since the amount reimbursed to Medicare could be a substantial portion of the entire recovery, the amount subject to the contingent fee percentage will probably be much less than $200,000, and if we ended up netting, say $30,000, I wouldn't be real thrilled with a 20% fee on that.

Thanks for your help,
Kansas Attorney

1) Given the facts of the case there is a very good likelihood that Medicare would compromise or waive their interest. There are also other administrative remedies that could further limit Medicare's recovery.

2) Medicare will honor a court allocation if it is based on the merits of the case. With that said, Medicare can only recover on the portion that is allocated to past medicals.

3) No, the Medicare Supplemental Insurance does not have the same recovery rights as Medicare; you are under no statutory obligation to put them on notice. However, if the Medicare Supp puts you on notice then you would have to negotiate with them. With that said, since Medicare has a priority right of recovery, they must be reimbursed first. So if the court allocates xx to past medicals to Medicare then the Supp wouldn’t get anything even if they did put you on notice.

4) Our fee for addressing Medicare’s interest (date of injury to date of settlement) is $1800.00 per case. Considering the fact that this is one settlement for 2 claimants we would compromise our fee to $1500.00 per claimant. Our fee is a client expense and therefore is also used in calculation of the procurement offset.

5) You can get fees on the full amount of the $200,000.00 settlement, not on the net. Medicare always assumes that the fee and expenses are paid prior to reimbursement.

Please feel free to contact me should you have any other questions. I’d be happy to assist.

Mary Skinner