TRICARE Statutory Obligation For Attorney Fees

Question
My client is a 72 year old retiree who suffered serious injuries in a car accident. In addition to Medicare, she has TRICARE through the Air Force. The Medicare lien has been resolved reasonably. I am now trying to resolve the TRICARE lien, but the Air Force, unlike Medicare, will not compromise the lien to account for one-third of the attorneys' lien. The Air Force states that "5 U.S.C. sec. 1306 prohibits the payment of counsel fees by the United States."

Would you please provide any legal authority to support a one-third reduction of the TRICARE medical lien for attorneys' fees? In Vermont, it is standard practice for this reduction of an insurance lien. The insurer must pay its proportionate share of procurement costs (attorneys' fees and expenses). Thank you.

Answer
TRICARE derives the authority to assert a subrogation claim under the Federal Medical Care Recovery Act (FMCRA), 42 U.S.C. §§ 2651-2653, which authorizes recovery of the reasonable value of medical care furnished or paid for by the United States under circumstances creating tort liability for such medical care in a third party. 32 C.F.R. § 199.12(b). Unfortunately there is no statutory reference under the FMCRA which requires the government to reduce its reimbursement claim based upon attorneys’ fees and costs associated with the settlement.

It has been our experience that while TRICARE does not have a statutory obligation to reduce for procurement costs they will consider such a reduction in the context of hardships (financial/physical). The issue is that each TRICARE office usually has its own guidelines and procedures for reduction consideration. While this can make the process unpredictable, we have found that submitting information and addressing hardships is an effective means of gaining reduction rather than pushing the single concept of procurement costs.

However it also worth noting that in a case where the injured party pursued the tort claim and the government passively waited for reimbursement, at least one court has required an equitable reduction in the government’s claim. Mosey v. U.S., D.Nev.1998, 3 F.Supp.2d 1113. While this case involved a VA patient rather than a TRICARE beneficiary, it dealt with the same regulatory scheme under which the government seeks recovery, the FMCRA. The Court held that a balance of equities test should be applied in such circumstances. While this case and VT law may not be controlling they may be persuasive especially in the context of any hardships your client may have endured. I am also not aware of any law which prohibits the US from taking such a reduction.

Please let me know if you have any follow up questions and thank you for the question.

Michael Russell