Happiness is in the air when you settle the cases. High fives, smiles and good will are everywhere, but then your trusty paralegal reminds you that there is a HUGE Medicare lien. This puts a major damper on your celebration party.
Your mind is racing with thoughts about challenging the Medicare lien, but it might be too late. Medicare has a SUPER lien and can threaten double and treble damages for non-payment. If you claimed medical expenses in your lawsuit, Medicare likely has a legitimate right to recover on its lien and you have no one to blame but yourself.
How to Eliminate a Medicare Lien
There are many ways to reduce Medicare liens, but there is only one way to eliminate the lien: Do not claim medical expenses in the lawsuit. You must have your client’s consent, but once your client agrees with this strategy, you should specifically state in all pleadings that your client is not seeking reimbursement of medical expenses.
Medicare always assumes that if there is a personal injury recovery, medical expenses are a part thereof and Medicare is entitled to repayment. Medicare is simply not willing to consider that a recovery did not assert or make a claim for reimbursement of medical expenses. However, in a lawsuit where there is no claim for medical recovery expenses, no medical reimbursement is authorized.
Step #1: Waive Medical Expenses in the Pleadings
All pleadings and correspondence should clear and consistent from the beginning that no medical expenses are being sought.
Your bill of particulars or responses to interrogatories should state: “No claim for reimbursement of medical expense is made in the lawsuit.”
Step #2: Notify Medicare that You are Not Seeking Medical Expenses
As a further safeguard, advise in writing that the government providers and any private agencies with whom they contract to recovery from personal injury claims, that you will not be recovering monies from them. Make sure that every collection agency and entity who might assert jurisdiction over the Medicare recovery claim is on notice that you and your client are not making claims for their medical expenditures.
Point out that Medicare has an independent right of subrogation. Do this repeatedly whenever you receive a conditional payment letter from the Centers for Medicare and Medicaid Services (“CMS”). Make sure that CMS is aware that you do not represent Medicare and will not recover medical expenses in the lawsuit.
Copy CMS on all pleadings. You may even offer CMS an opportunity to intervene. Remind CMS that Medicare’s statute of limitations is three years from the date of payment of the service. 42 U.S.C. section 1395y(b)(2)(B)(vi).
Whenever you receive a letter from the Centers for Medicare and Medicaid Services (“CMS”) respond by clearly stating your position that your client is not seeking medical expenses in the lawsuit.
VIA CERTIFIED MAIL & FACSIMILE (405-869-3309)
P.O. Box 138832
Oklahoma City, Oklahoma 73113
Name of Beneficiary:
We represent Mr. Jones.
In the present action, the plaintiffs’ claims have absolutely nothing to do with the recovery of medical expenses. The plaintiffs’ verified bill of particulars and amended verified bill of particulars clearly indicate that the plaintiffs did not seek medical expenses in the lawsuit. We are enclosing copies of the plaintiffs’ verified bill of particulars and amended verified bill of particulars. Therefore, Medicare does not have a right of reimbursement with respect to the settlement proceeds.
Our position that Medicare has no right of reimbursement against the proceeds of the settlement is supported by federal law. Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010); Denekas v. Shalala, 943 F.Supp. 1073 (S.D. Iowa 1996)(Medicare is precluded from recovering from payments made to plaintiffs where the plaintiffs did not claim any medical expenses). Under existing law, Medicare is not authorized to recover any settlement proceeds received by the plaintiffs because the plaintiffs’ claims did not seek medical expenses. Bradley & Denekas, supra.
We are providing you with documents in order to confirm that Medicare does not claim a right of reimbursement against the proceeds of the plaintiff’s settlement. If you disagree and intend to claim a right of reimbursement, kindly provide us with written confirmation within ten (10) business days of your receipt of this letter.
Very truly yours,
Step #3: Serve a Motion for an Allocation Order
When your case settles, you should be prepared to seek a judicial apportionment/allocation of the settlement. Typically, this will involve filing a motion requesting equitable determination of the rights of your client. In connection with this motion, formal service must be made upon the Department of Health and Human Services and an evidentiary hearing should be requested to determine the allocation of damages.
Once a settlement has been apportioned pursuant to a court order, Medicare cannot ignore the court order, pursuant to the United States Court of Appeals decision in Bradley.
Your Secret Weapon Against Medicare Liens
Although Medicare’s intransigence probably cannot be avoided, Congress provided a tool to hold Medicare accountable for such obstinacy—the Equal Access to Justice Act (EAJA). 28 U.S.C. section 2412(d)(1)(A).
The EAJA provides for a discretionary award for attorneys’ fees against the government under federal common law if it can be proven that the government’s conduct was oppressive, vexatious, recalcitrant or in bad faith or the award is mandatory upon a showing that the government’s position is not “substantially justified”.