Liens are commonly used in personal injury actions. Liens allow claims to continue while the entity asserting the lien can expect to get a piece of the settlement or judgment. The most common type of lien is a medical lien. Many are from physician’s offices or from hospitals. There are also medical liens from government providers like Medicare and Medicaid. These programs provide medical services for those who meet the low asset or income requirements. In the past Medicaid providers did not have the ability to assert strong liens against a claim. The result is that Medicaid providers would lose out when other entities asserted superior claims against a judgment or settlement.
Recently the Obama administration enacted new legislation that allowed Medicaid liens to take a superior claim on a settlement or judgment. This means that Medicaid can assert a lien against an entire claim or settlement not just the portion that medical providers can take. The new provisions will take effect in October 2014. Many states have specific rules on how much medical providers can take and a lot of state laws will be affected by this new pronouncement so it is best to consult with local counsel on this issue. In Illinois, the Health Care Services Lien Act does not entirely apply this new change.
It is important for attorneys to be aware of ensuring that Medicaid will be paid before the settlement is disbursed. Penalties can accrue for all those legally liable for the claim, including attorneys. Figuring out how much is owed to Medicaid can be complicated and it is best to take your time to figure out how much is owed. Note that Medicaid cannot keep any overpayment of a claim. Medicaid can only attach to any amount related to the medical claims. In personal injury actions, there can be a wide range of damages (money) for the injured person including lost wages and pain and suffering. It is good practice for attorneys in settlement agreements to agree to the breakdown of medical/non-medical damages for easier allocation of payments. Medicaid liens will also be reduced by the amount of medical expenses recovered from the injured party. This is important because some state laws allowed for Medicaid to be fully compensated regardless of the amount a plaintiff recovers. Although Medicaid can be asserted against the entire medical claim, if a judgment is proportionally reduced, the Medicaid reimbursement amount will also be proportionately reduced.
This article is for general informational purposes only and is not to be construed as legal advice. Do not rely on the above information as all cases are different and different laws apply to different cases. Consult an attorney in your area for further guidance. If you were injured in an accident call one of our attorneys at David K. Kremin & Associates, and we will give you a free consultation. We never charge unless we collect for you. Please call 1(800) ASK-A-LAWYER or 1(800)275-2529,firstname.lastname@example.org, www.1800askalawyer.com.