Medicare and Medical Liens: A Guide for New York Personal Injury Claims
June 27, 2024 by Cornelius Redmond, Esq.
In this article, we discuss Medicare and medical liens in personal injury cases, and the requirement to reimburse Medicare following a personal injury settlement.
Medicare Lien: A Medicare lien is more challenging to resolve than a Medicaid lien, as Medicare is not required to negotiate and can demand full repayment for all accident-related treatments. Often, Medicare may claim payments for unrelated treatments, so it’s crucial for your lawyer to verify that all claimed medical bills are indeed related to the accident.
How Medicare Liens Work in Personal Injury Cases
If you are injured in an accident and Medicare pays for some of your treatment, you will be obligated to reimburse Medicare for these payments if you bring a personal injury claim and get financial compensation for the accident.
What Law Governs Medicare Reimbursement in Personal Injury Cases?
Medicare reimbursement in personal injury cases is governed by two federal statutes: 42 U.S.C. § 1395y(b)(2) and § 1862(b)(2)(A) of the Social Security Act. These laws stipulate that Medicare cannot pay for medical expenses for a tort victim if payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.”
Additionally, these statutes grant Medicare clear subrogation rights. If Medicare does make payments, it is entitled to reimbursement. The law states: “The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment concerning such item or service under a primary plan.” (42 U.S.C. § 1395y(b)(2)(B)(iv)).
The Nature of the Medicare Medical Lien
To enforce its right to reimbursement, a “Medicare lien” attaches to any judgment or settlement proceeds awarded as compensation for an accident. This means that if you receive a settlement, Medicare must be repaid before any other distributions are made.
While it is possible to negotiate a reduction in the lien amount, repaying Medicare after a settlement is not optional. The only way to potentially eliminate a Medicare lien is through negotiation to zero, which is rare but can happen.
How Do Medicare Liens Work?
The Medicare Secondary Payer (MSP) statute, section 1862(b) of the Social Security Act (42 U.S.C. § 1395y(b)), underpins Medicare’s right to reimbursement. The MSP statute ensures that Medicare does not cover medical bills that should be paid by another party. It grants Medicare the right to claim reimbursement from any judgment or settlement proceeds that include compensation for medical bills paid by Medicare.
If a Medicare beneficiary receives a personal injury settlement, they are required to reimburse Medicare for any payments made on their behalf. The law gives Medicare an automatic priority lien against any settlement proceeds in personal injury cases.
All parties involved in the settlement or payment, including attorneys, are responsible for compliance. Any settlement or payment must be reported to Medicare within 60 days, and the valid lien amount must be paid.
Medicare Actively Enforces These Liens
If a Medicare lien is not properly repaid after a settlement, the Medicare lien statute empowers Medicare to pursue repayment from nearly everyone involved in the case, including the defendant, the plaintiff, and the plaintiff’s counsel.
If Medicare initiates a lawsuit to collect its lien, it may be entitled to a civil penalty of up to twice the amount owed. Additionally, Medicare can fine the “Responsible Reporting Entity” (typically the insurer) up to $1,000 for each day of non-compliance with Medicare’s reporting requirements. This rigorous enforcement leaves insurance companies highly concerned about compliance.
How to Handle a Medicare Lien
To avoid severe penalties, attorneys should follow these steps:
- Verify Medicare Beneficiary Status: Upon being hired, attorneys should determine if the client is a Medicare beneficiary.
- Report the Case: Contact the Benefits Coordination & Recovery Center (BCRC) and report the case.
- Conditional Payment Letter: After notification, BCRC will determine the conditional payments made for injuries and treatment related to the case and issue a conditional payment letter with detailed claim information to the beneficiary.
Keep in mind that the initial letter will not provide a final conditional payment amount, as Medicare can adjust the amount while the beneficiary’s claim is pending. Although this can be a frustrating process, it is the standard procedure.
Attorneys will receive a formal recovery demand letter only after a final settlement, judgment, award, or other payment is reported to Medicare. This final demand letter will specify:
- The timeframe for repayment
- Conditional payments made by Medicare
- The total demand amount
- Information on applicable waiver and administrative appeal rights
The Consequences of Non-Compliance
Once the final demand letter is issued, interest begins to accrue from that date but is only assessed if the debt is not repaid or resolved. Interest is due for each full 30-day period the debt remains unpaid, with any payments applied first to the interest and then to the principal.
Failing to respond to the demand letter within the specified timeframe can lead to the referral of the debt to the Department of Justice for legal action or to the Department of the Treasury for further collection actions. Once the lien is paid, Medicare will issue a “zero letter” confirming that the lien has been satisfied. Settlement proceeds should not be disbursed until any Medicare lien is fully paid.
No Medicare Liens in Wrongful Death Cases
Medicare cannot assert a lien on a wrongful death claim in New York. This is because Medicare stipulates that it will only make a claim in wrongful death cases where the statute provides for payment of medical damages.
In New York, wrongful death claims are pursued for the pain, suffering, and loss of economic support suffered by the beneficiaries due to the loss of their loved one. These claims are for the beneficiaries’ losses, not for medical expenses incurred by the decedent, thus Medicare has no claim on these proceeds.
In other states, the rules can vary. The critical factor is whether the wrongful death claim allows for the recovery of medical bills. Medicare’s ability to enforce its right of reimbursement against a wrongful death settlement or verdict depends on whether the state’s law permits the recovery of medical expenses in wrongful death actions.
Survival Action Claims Are Subject to Medicare Liens
In contrast, there is a Medicare lien on survival action claims in New York. If the estate of a Medicare beneficiary receives money in a settlement or verdict for medical bills paid by Medicare, this claim falls under survival action. Attorney fees can be deducted from the lien amount, which is a crucial reduction, but further negotiation is advisable.
Is it mandatory to repay the lien on a survival action? Yes. Medicare is very stringent about enforcing its rights. Under the “received payment” provision in the law, Medicare can compel anyone involved—doctors, lawyers, insurance companies—to repay the lien.
The law provides Medicare with a “super lien” for reimbursement. This means that Medicare, Medicaid, and Medicare Part C plans have priority lien rights. They must be reimbursed first from the plaintiff’s settlement before any other healthcare providers or the victim, regardless of any other claims or state laws.
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If you need legal assistance, reach out to our New York personal injury lawyers at Redmond Law Firm for a free consultation. You don’t pay unless we win your case.
