Does a MVA effect SSDI Payments?

Question
If a plaintiff is receiving Social Security Disability payments as a result of being disabled in a motor vehicle accident, and receives a settlement from the driver of the other vehicle to end the plaintiff's lawsuit, does the SSA have a lien on the lawsuit settlement?

Answer
Section 224 of the Social Security Act (42 U.S.C. 424a) requires that if an individual receives SSDI payments and workers compensation payments during a given month, his/her SSDI payments are reduced by a certain dollar value for that month based on a formula that takes into account work history and other factors for reduction. This statute, however, excludes by its operation and meaning third party settlements because the reduction is intended to avoid double payments to a Social Security Disability Insurance (under Section 223 of the Social Security Act) beneficiary where that person receives periodic payments in the form of SSDI and from a workers’ compensation or similar program. (See excerpt below).

In interpreting these rules, the Program Operation Manual System (POMS) directs SSDI case workers to exclude any third party settlements from these SSDI offset rules.

As a result, liability cases which have no workers’ compensation component to them are not off settable – so there is no SSDI offset for a liability case.

That is not, however, the same as saying there can be no SSDI reduction in a liability case. For example, 42 U.S.C. 1395y(b)(2) (aka The Medicare Secondary Payer Act) provides that Medicare beneficiaries are required to reimburse Medicare for injury-related medical expenses paid by Medicare on a conditional basis for which recovery has been made as part of a third party settlement. In that instance, where the beneficiary and his/her attorney fails to properly resolve Medicare’s statutory claims, SSDI benefits can be reduced as part of a Taxpayer Recovery Offset Program (TROP) initiative.

Overall, SSDI does not have a lien which attaches to liability settlements. As can be seen from a review of the statutes and regulations, SSDI offsets occur in workers’ compensation. cases because of the intent to avoid a payment for lost wages from SSDI, and a duplicate payment for lost wages from workers’ compensation. The same cannot be said of liability cases, in which a different paradigm and rationale for recovery exist. At the same time, any case involving a Medicare beneficiary must be handled with care, as following the MSP Act, plaintiffs’ attorneys have an affirmative duty to verify and resolve Medicare’s conditional payment reimbursement obligations arising from date of injury to date of settlement. Where those obligations are not met, the same fate might await a client’s SSDI payments, albeit for different reasons that SSDI offset.

Please let me know if you have any follow up questions. Thanks.
Michael D. Russell