Medical Lien repayment and accident settlements
An explicit lien, is when an injured party signs a paper promising to pay for medical care at the end of the injury case. Frequently, chiropractors as well as physical therapists treat on such a basis, because it’s seldom possible for an injured person to pay cash on the barrelhead. Most people understand and do not take offense at having to pay back explicit liens.
Other medical liens are hidden. These liens can commonly be asserted by HMO’S or PPO’S like Kaiser or Blue Cross. Here the client does not typically sign a lien and is unaware of the lien.
What happened is that the master organization that purchased the Health Insurance for the injured party (Typically an employer) agrees with the HMO or PPO on the terms and conditions of the health insurance coverage. The employee typically pays a monthly premium for coverage for themselves and their family and may have a per visit Surcharge. Most people think that’s the extent of their obligation. Buried in the fine print of most of these Master contracts between Employer and HMO/PPO, however is fine print that says that if an employee is in an accident and requires medical services as a result, the employee must pay back the health plan the reasonable value of the services rendered.
The master contract is then adopted by the employee as a condition of coverage. Sounds sneaky and it is.
However, these clauses have been repeatedly upheld by the courts as Health Insurance Nationwide is governed by a Federal law entitled ERISA and Congress explicitly granted health plans to get their money back out of a recovery.
Despite ERISA, however, an experienced attorney may know means to avoid or mitigate the full payback. Sometimes, depending on the plan language, an attorney may find a loophole that gives him or her bargaining room to try to negotiate with the ERISA master plan administrator. In many cases, the lien can be reduced.
Sometimes, the attorney must approach the ERISA administrator before filing suit and make a deal on the amount of repayment, explaining that the injured party may not even want to proceed with a lawsuit if he or she winds up paying all the proceeds back to the health plan as well as the injured party’s lawyer. This is sometimes the best thing for an experienced attorney to do in cases with catastrophic injuries and huge medical bills.
Unfortunately, many many attorney’s do not understand the ins and outs of complicated ERISA law. This is one reason why, in any severe or catastrophic injury case, the injured party should ask about the attorney’s experience in dealing with ERISA law and other lien paybacks.
Why didn’t the attorney explain the above to the client at the beginning of the case?Sadly, many attorney’s are less than honest and are afraid a client may not proceed with a case if they find out they must pay back medical liens as well as their attorney’s fees and costs. These attorney’s seem to feel that somehow they can “Hide” this bad news until the end of the case. It’s a very sad situation but it happens more than it should.
Instead, the attorney should tell their client the complete truth about potential lien repayment, and that they will do their very best to either avoid the lien repayment or, at least, mitigate it.
Many times, having an attorney negotiate down an ERISA lien can result in six figure savings to the client. This is extremely beneficial to the client if the attorney knows how to do it.