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EmailIn days past, settlement of a claim was a straightforward affair. The claimant signed a release of all claims and the defendant paid the agreed upon amount.
Over time, the settlement process became more complicated. Claimants would sign agreements with medical providers that deferred payment for the treatment rendered, so long as the claimant would pay the provider out of the settlement proceeds. But normally, the complications created by these liens were problems to be dealt with by the claimants, their attorneys and the providers. Normally, the defendant didn’t have to trouble themselves with these matters except to put proper protecting language in the release.
Unfortunately with the invention of “Super Liens” it is no longer so simple for the defendants or their attorneys. We use the term “Super Lien” to describe encumbrances against the settlement proceeds that must be recognized and honored, not just by the claimant and his attorney, but also by the defendants. There may be some who will say that technically, these rights against the settlement are not liens at all. And perhaps they are correct. However, the effect of failing to protect these rights can have serious consequences. For example, should any parties, their insurance companies or their attorneys fail to protect these “Super Liens”, they can be called to account and satisfy the lien, even if they did not know that such an encumbrance existed.
In most instances, these “Super Liens” are created by statutes and they often protect governmental and institutional interest. For example, the most commonly encountered “Super Liens” are held by Medicare, Medicaid, Worker’s Compensation, Hospitals (in Nevada must be recorded) and properly qualified ERISA plans.
Failure by the defendant, the insurer or the attorney to protect these liens (either by , proof of lien satisfaction, putting the lien holder as a payee on the settlement check or obtaining a written waiver by the lienholder) can result in the defendant paying additional funds to satisfy the lien. If the claimant fails to satisfy the lien and the defendant is called to step in and make good, the defendant can in fact turn to the claimant seeking reimbursement of the money the defendant paid to the claimant to settle the action. However, it is often found that the funds have been dissipated, and the claimant is insolvent. As an example, if the liability insurance company fails to protect Medicare when it settles with the Plaintiff, it can be called on to pay Medicare again, and if Medicare is forced to sue to collect its rights, Medicare can collect a third time.
And now the landscape gets even more complicated for defendants and their insurance companies and attorneys. With the increasing cost of medical care, and the increasing numbers of people enrolling in the system, Medicare is always looking for some other source of funding to pay for the medical treatment provided to Medicare recipients. Until recently, Medicare has relied on the claimants attorneys to self-report and settle up with them at the conclusion of the case. However, under Medicare laws that went into effect on July 1, 2009, any liability insurance (including self-insurance), no-fault insurance or worker’s compensation carrier that settles or pays a claim or judgment with a Medicare must report this payment to Medicare. This “simple” program is described in a brief 180 page handbook that is available for download at https://www.cms.gov.
We join the numerous other voices that counsel insurance companies and their attorneys to verify which claimants are Medicare recipients, identify how much Medicare has paid for the medical treatment provided, to protect Medicare’s interests in making settlements with those claimants and now to report those settlements to Medicare under the new program.
If you have any questions on this or other topics, please feel free to contact us and we will do our best to give a timely and correct response.
About Michael Mills
