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Complying with the Medicare Secondary Payer Act When a Client has Public Benefits

August 11, 2022

Evelynn Passino, J.D.

For clients with public benefits, closing out their case is not as simple as issuing a check for their net recovery. If the client has Medicare or will be eligible soon, then steps must be taken to comply with the Medicare Secondary Payer (MSP) Act. If the client has means-tested benefits, such as Medicaid or Supplemental Security Income (SSI), then additional steps may be necessary to ensure their recovery and eligibility for those benefits is protected.

Means-Tested Benefits

In cases where the client has means-tested benefits, their settlement recovery may be a countable resource, which means that receipt of those funds may cause them to be ineligible for their benefits. It is important to understand that not all public benefits programs operate the same way. For example, SSI, while it is a federal program, has state-specific nuances because some states supplement SSI benefits. Programs such as Medicaid, Section 8 benefits offered by the US Department of Housing and Urban Development (HUD), and the Supplemental Nutrition Assistance Program (SNAP) are administered on a state or local level, creating variations in how these programs work. Each program has its own eligibility requirements, which can include both categorical qualifications (such as being disabled, over 65, etc.) and financial qualifications. The financial qualifications may place limitations on income, assets, or both. Generally, means-tested benefits programs will exclude certain assets from being counted, such as a home, vehicle, and personal effects. Cash is almost always a countable resource and having too much of it available will cause the client to lose his or her benefits.

It is critical to know which benefits the client has so that educated decisions can be made about how to handle the recovery. Getting copies of the client’s benefit cards and award letters is recommended. If the client no longer has their award letters, which outline what benefit the client qualified for, these can usually be requested from the office administering the benefit. Some programs, such as the Social Security Administration, offer these online.[1]

Preserving Means-Tested Benefits

If a client is in danger of having more resources than they are allowed under their government program, then there are actions they can take to protect their benefits. One option is to use the money to purchase exempt resources, like a home or vehicle, or use the money to improve those resources, such as adding accessibility features to their car or adding a wheelchair ramp to their home. They may also want to pay down debts; however, they should be careful about this where there is not a clean paper trail, such as money loaned between family members. Paying back a person in those circumstances could appear (to the government) like a gift, which will be counted as a transfer for less than fair market value and may trigger transfer penalties resulting in ineligibility.

If the client is disabled, then another option is to deposit the money in a special needs trust (SNT). An SNT, when created and administered in compliance with 42 U.S.C. § 1396p(d)(4)(a-c), is typically not a countable resource, although programs differ as to how they can be used and what they can pay for. An SNT can be funded with either first-party money (such as a personal injury recovery) or third-party money (such as inheritance or other gift). An SNT can be created for an individual and managed on their behalf by a trustee of their choosing (called a standalone trust), or a person can join a pooled trust, which is an existing trust administered by a non-profit association. Generally, pooled trusts are faster to set up and lower in cost due to them being administered by a non-profit. Standalone trusts, however, can be customized, and the client has more control in choosing their trustee. In either case, if the client is receiving Medicaid, then Medicaid has a right to be paid back from the balance of the trust when the beneficiary dies (this is known as “Medicaid payback”).

Lastly, the client always has the option to forgo their benefits but should exercise caution in doing so because some benefits are difficult to re-qualify for if the client changes their mind later. They should also be careful if intending to preserve some benefits and not others. For example, some clients are willing to lose their SSI benefits after a settlement because they expect to have cash from the recovery available but want to continue receiving Medicaid benefits. In most states, a person qualifies for Medicaid automatically once they qualify for SSI, and this is how many on Medicaid access this benefit; however, the reverse is also true, that if a person loses eligibility for SSI then they also lose Medicaid. If they lose SSI-related Medicaid, there may be another Medicaid program they can qualify for, but they should confirm this before taking action that will jeopardize their SSI benefits.


The MSP Act (42 U.S.C. § 1395 y(6)(b)) works to preserve the Medicare trust fund by ensuring that Medicare does not pay injury-related claims when another person or entity is liable. The Centers for Medicare and Medicaid Services (CMS) does this by seeking reimbursement on injury-related claims that accrued prior to settlement and asserting that Medicare’s interests be considered for claims which can be expected in the future.

Conditional Payments

CMS is notified of an accident through Mandatory Insurer Reporting (MIR), which is required by Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. This reporting is done by liability insurers, no-fault insurers, workers’ compensation plans and insurers, and self-insured organizations. This puts CMS on-notice so they can begin tracking injury-related claims which they will seek reimbursement for at settlement. If a conditional payment is not repaid, CMS can take action against any of the entities responsible for payment, including the plaintiff’s law firm, and can seek double damages. 42 U.S.C. § 1395y(b)(2)(B)(iii); 42 U.S.C. § 1395y(b)(3).

Future Interests

MIR includes notification to CMS when the case settles, giving Medicare notice of the injuries and ICD-10 codes applicable to the case. Medicare’s preferred method for considering its future interests is through the creation of a Medicare Set-Aside (MSA). An MSA begins with an allocation, which is a report summarizing the expected injury-related care and prescriptions that would otherwise be covered by Medicare for the remainder of the Medicare beneficiary’s life. The allocation projects the cost of such care at the usual and customary prices where the injury victim lives. In worker’s compensation cases, there is a voluntary process for CMS to review the allocation in cases where certain thresholds are met. For someone who is a Medicare beneficiary at the time of settlement, this review may occur if the settlement exceeds $25,000. If the client has a reasonable expectation of being eligible for Medicare within 30 months (such as those who have applied for Social Security Disability Insurance), then CMS will only review the MSA if the settlement amount is more than $250,000. There is currently no review process for liability and no-fault cases.[2] CMS’ expectation is that the injury victim will set aside the amount of money in the MSA allocation and use this money to pay for Medicare-covered, injury-related services and prescriptions until exhaustion. CMS will resume normal coverage when the account has been properly exhausted, even if additional injury-related care is needed after that time.

It is important to note that the MSP Act does not explicitly require that an MSA be created or how much it is to be funded.[3] CMS has provided some guidance about when an MSA is not necessary, such as when the settlement, judgment, or award does not fund future medical costs or when the injury victim’s treating physician certifies that no further injury-related treatment is needed.[4]

Medicare’s enforcement mechanism regarding future medicals is to deny claims that are injury-related if they determine the Medicare beneficiary did not consider Medicare’s interest at the time of settlement. This provides additional room to argue how much is appropriate for an MSA or if an MSA is even advisable. What makes sense for a particular client will depend on their risk tolerance. If a client is risk-averse, they will probably want to fully fund a set-aside and administer it correctly to reduce the risk that Medicare will ever deny a claim. On the other end of the spectrum, some clients choose not to fund an MSA because they are adamant about not getting further injury-related treatment or they prefer to “roll the dice” and keep billing Medicare for injury-related care until Medicare denies it. For clients who are in the middle, they may want to fund an MSA, but not in full. One option is to reduce the MSA based on the value of damages suffered relative to the settlement amount obtained.


If a client decides to fund an MSA, then they need to decide how to fund it. MSAs can be funded by lump sum or by structured settlement annuity. The annuity is often preferred because it allows the MSA to be fully funded with less money out-of-pocket. It can also create a scenario where the MSA is temporarily exhausted, in which case Medicare will resume normal coverage until the next annuity payment is deposited into the MSA. Lump sum funding makes more sense when the MSA is smaller, and an annuity would not be advantageous.


The next step is determining how to administer the MSA. This depends on the client’s capacity, willingness, and whether they have means-tested benefits. For clients with capacity and no means-tested benefits, one option is to self-administer their MSA. This means they will take the recommended amount from their settlement, place it in a separate account, and pay any Medicare-covered, injury-related bills from this account. It requires some work on the client’s part to manage the account, keep records, and report to CMS (if required).[5] For those who do not want the hassle of administering their own account, there are companies that offer professional administration. These companies take custody of the MSA funding, provide the Medicare beneficiary with a card they can show when receiving injury-related care (similar to an insurance card), and handle all payments, recordkeeping and reporting. Generally, they can also get fee discounts for their clients on various services using their networks, which help the MSA last longer. There is a fee for these services, which unfortunately cannot be paid from the MSA funds. These companies often also have self-administration assistance services at a lower cost for those who wish to self-administer, but want some help with certain aspects, or want to take advantage of the network discounts.

If the client is dual-eligible, meaning they have both Medicare and Medicaid (or other means-tested benefits), then it is important to determine whether the MSA will be a countable resource for them. In most states and under most programs, it is countable, meaning the money in that account is treated like any other cash the client has available to them; however, some programs have begun to create exemptions for counting MSAs, so it is worth exploring where your state stands on this. If the MSA will be countable, then self-administration is not an option, and the MSA should be professionally administered and held in a special needs trust.  


When a client has public benefits, it is important to understand which benefits they have, how those programs work, and what options are available. If they want to preserve their benefits, then there are likely to be some steps they need to take to ensure no interruption in the services they receive. It is helpful to get experts involved who understand these programs and can make sure the client makes an informed decision, whatever that decision may be.

Synergy Settlement Services works with clients every day to help them understand their obligations under the Medicare Secondary Payer Act and how to preserve eligibility for their benefits. Call Synergy today at (877) 242-0022 to learn how we can help.


[2] Memorandum from Sally Stalcup, MSP Regional Coordinator, CMS, Medicare Fee for Service Branch, Division of Financial Management and Fee for Service Operations (May 25, 2011), available at

[3] Id.

[4] Id.; Memorandum from Charlotte Benson, Acting Director, Financial Services Group, Office of Financial Management, Department of Health & Human Services, Centers for Medicare & Medicaid Services, to Consortium Administrator for Financial Management and Fee-for-Service Operations, Medicare Secondary Payer—Liability Insurance (Including Self-Insurance) Settlements, Judgments, Award, or Other Payments and Future Medicals – INFORMATION (Sep. 30, 2011), available at

[5] CMS offers a self-administration toolkit for those who wish to handle this themselves:

August 1, 2022

By Jason D. Lazarus, J.D., LL.M., MSCC

You might ask yourself, why hire experts to assist with lien resolution when I can do it myself.  You also might ask whether it is ethically permissible to outsource lien resolution to a lien resolution company.  The first question is quite simple to answer and the second one requires a little more examination of the rules regulating lawyers.

The problem really starts with the responsibilities a law firm has at the beginning of each new case as it pertains to liens.  I use lien synonymously with subrogation, reimbursement, and debts here even though there are differences.  Given the law, a law firm must track liens that are asserted against their client’s personal injury claim and in some instances will have an affirmative duty to investigate and identify possible liens (Medicare & Medicare Advantage plans are good examples). 

The law firm must determine whether a lien holder’s claim has merit and is legally valid.  To reach resolution, this requires a law firm to have significant contact and interaction with a variety of lien holders along with recovery vendors.  At the conclusion of the case, it frequently requires protracted negotiations to reach an agreement to resolve the claims made by a lien holder or recovery vendor against a settlement, judgment, or verdict.  The bigger issue, given the distractions it creates, is that law firms frequently wait too long to begin to negotiate a reimbursement to a lien holder which can delay disbursement to the injury victim.  All the foregoing creates pressure on law firms to outsource lien resolution functions.   

Why Outsource?

As to the question of why outsource, it really comes down to efficiency and results.  When resolving a lien on behalf of an injury victim, you typically are either dealing with a government benefit health plan or an aggressive recovery vendor on behalf of a plan.  Dealing with Medicare, Medicaid, FEHBA on the government side can be time consuming and ineffective.  Having to negotiate with and against recovery contractor groups for Medicare Advantage plans and Rawlings, Equian, Optum and Conduent can be equally difficult if not more so.  Recovery contractors are massive corporations whose sole reason for existence is to take dollars from a personal injury victim’s recovery.  They do this by relying upon the efforts of talented trial lawyers who secure settlements and receive verdicts.  These recovery contractors have very deep pockets and large staffs to pursue nothing but liens which makes for lopsided battles. 

So, to sum up succinctly why you may want to hire an expert lien resolution group to help you and your client:  

  1. To make your law firm more efficient by reducing operating expenses
  2. Give you a deep team of experts to fight the massive recovery vendors and
  3. Most importantly, get the best possible resolution for the injury victim when it comes to what must be paid back to a lien holder

Before moving on to ethics, let’s unpack a little bit more about the reasons to partner with an experienced lien resolution provider.  While the idea of subrogation and reimbursement may seem quite simple, the task of resolving these demands made against a personal injury settlement can become very time consuming as well as very complex.  “Lien law” is a dynamic and evolving area of the law with each type of lien having nuances and peculiarities along with resolution challenges. 

This is so much so that the health insurance industry has for decades recognized these complexities and turned to lien resolution/recovery contractor vendors themselves to make sure they get paid back after an injury is sustained.  Frequently, an attorney representing an injury victim is left to fight these vendors with one hand tied behind their backs due to a lack of resources, time, and specialized knowledge.  The recovery vendors business model relies upon this to make it much more difficult than it needs to be for trial lawyers. They know it can be overwhelming and they exploit that to their own advantage. So, the first question to ask yourself is do you want to take on large well-funded recovery vendors or partner with a lien resolution group who has the requisite expertise to fight fire with fire? 

Partnering with a well-qualified lien resolution group minimizes a law firm’s operating expenses. Every business seeks to decrease operating costs and increase efficiency. This can be accomplished by outsourcing all the time-consuming lien resolution functions. The large amount of time and effort a personal injury law firm devotes to post-settlement lien resolution issues typically creates a loss to the firm’s bottom line. Alternatively, outsourcing lien resolution functions allows the lawyer or firm to pass on the cost to the client, in most states, similar to the cost of retaining an expert. A trial lawyer’s valuable time is better spent on moving cases toward settlement or trial and not on cutting through government/private health plan red tape. Which, as stated above, are designed specifically to be difficult or frustrating to navigate.

Hiring a lien resolution group provides your law firm with a powerful partner in the lien resolution process. By partnering with lien resolution professionals, you gain a knowledgeable partner and resource for the lien resolution issues plaguing law firms. Without knowing every potential lien resolution argument and the latest rules/processes associated with health plan liens, attorneys and their staff are prone to inefficiency or worse yet mistakes.

A lien resolution group will have the necessary expertise to accelerate the lien resolution process as well as to get the best possible reduction.  Before moving on the last point, it is important to explore some examples.  Dealing with multiple lien types in a single case can pose significant challenges for even the most experienced trial lawyers as they all will have unique rights of recovery, recovery departments and differing practices related to notice, perfecting, and compromising claims.

For example, someone covered by an employer-based ERISA plan might move to a Medicare plan after losing their job due to the injuries they suffered.  These plans will have different processes to resolve.  You can have a client who is dual eligible meaning you have both Medicaid and Medicare liens.  Both Medicaid and Medicare lien resolution issues are quite complex by themselves – understanding Ahlborn/Gallardo for Medicaid and Medicare compromise/waiver processes for Medicare.  Another problematic area can be ERISA lien resolution and the impact on applicable lifetime coverage limits and future care denials. 

Given the ever-shifting legal landscape of lien resolution, lawyers must keep up to date in a variety of ways from Medicare-to-Medicare Advantage and Medicaid.  Add in ERISA, FEHBA, military, hospitals, provider, and private health insurance liens and you have a tremendous amount of law to keep up with and necessary analysis of the issues to get it all correct.  For a lawyer handling a personal injury case, there are a multitude of questions to answer related to each lien such as:

  • What are my legal obligations as plaintiff’s counsel and am I personally liable?
  • When looking at the client’s net recovery, are they made whole and is full reimbursement to the lien holder proper?
  • Is there a lien?  Reimbursement obligation?  Just a debt?
  • What standard reductions are provided by state or federal statutes for the applicable lien?
  • What other reductions of a lien or reimbursement obligation may be available to the client such as legal defenses, compromise/waivers or offsets?
  • Is the reimbursement obligation owed limited to past payments or does it also include future payments? 
  • Are there any state specific laws peculiar to the jurisdiction that impact lien resolution for the client?
  • For non-government benefit plans, what law applies?  State or federal?  Is it governed by ERISA, FEHBA, FMCRA or state law?  Combination of laws?
  • Who is the plan administrator and recovery vendor for non-government plans? 
  • Can the Plan or vendor actually prove it is the type of plan it claims to be? And its recovery rights under the law?

Proper expertise and a team to issue spot these kinds of problems along with powerful negotiation strategies can make sure the end result is the best possible outcome and is in the injury victim’s best interests. 

Lastly, the importance of an outstanding resolution result for a lien can’t be overstated.  Getting outstanding results when it comes to lien resolution leaves the client with a positive, lasting impression at settlement. Clients who are not properly educated about lien resolution, don’t understand these obligations, and have to pay back too much are often frustrated and discontent with the end result. A client’s poor impressions post settlement can affect a lawyer or law firm’s reputation in the community. Ultimately, client satisfaction with regard to the resolution of lien obligations may produce repeat business or boost new client referrals for a lawyer or law firm.

Ethics of Outsourcing Lien Resolution

Given the fact that litigating trial lawyers focus on personal injury law (proving causation, liability & damages), they may require outside assistance with certain areas beyond their scope of representation.  Historically, personal injury law firms have sought the help of outside legal counsel along with non-attorney specialists to professionally and efficiently deal with a variety of complex issues that arise at settlement.  Lien resolution is no different than when an attorney seeks the assistance of experts in other complex areas of law that he or she may be unfamiliar with.

For example, such outsourcing occurs regularly when an attorney is faced with dealing with probate, guardianship, government benefit preservation, tax, or bankruptcy situations that can and often do arise out of an underlying personal injury matter.  Personal injury attorneys also frequently engage experts to help with accident reconstruction, valuation of economic damages and Medicare experts.  Subrogation experts are just one more type of expert that a personal injury lawyer can turn to that will enhance the bottom-line net recovery while helping to navigate the pitfalls commonly encountered during the resolution process. 

The law governing health insurance subrogation claims are often litigated and are complicated as well as extensive.  ERISA, the Medicare Secondary Payer Act, Medicaid, FEHBA and other types of private insurance liens are specialties unto themselves; each rest on their own statutory and regulatory authority, can be governed by different state regulations and can often exist in concert with each other on the same case.  Additionally, the fact that oftentimes a personal injury victim will have multiple different types of liens asserted against their recovery, significantly complicates the lien resolution function.  A good example of this is Medicare where Parts A/B will have a conditional payment obligation to be satisfied, a Part C Advantage Plan lien (which Medicare itself doesn’t provide information about) and then a Part D prescription plan which could have a claim as well.  All stemming from one accident.  If a client has treated over the course of years post injury, they could have jumped between these plans each year.  

Therefore, it makes sense to ethically allow trial lawyers to outsource this function.  This is especially so to get the best possible outcome for the client and because liability falls on the trial lawyer to make sure that all subrogation claims, reimbursement obligations and liens are resolved in accordance with the law. 

Before moving away from the point of liability, it is important to realize that as a trial lawyer you can expose your client to litigation and possibly loss of health care coverage by failing to pay a valid lien holder.  In addition, a personal injury lawyer might be guilty of legal malpractice by paying a lien holder who doesn’t have a valid claim or by reimbursing a lien holder too much.  And worse yet, in the case of Medicare conditional payments or Medicare Advantage liens, you could be held personally liable for double the lien amount under the Medicare Secondary Payer Act’s double damages provision.  To further reinforce the point, ABA Model Rule 1.15, in the comment (4) states: 

“Paragraph (e) also recognizes that third parties may have lawful claims against specific funds or other property in a lawyer’s custody, such as a client’s creditor who has a lien on funds recovered in a personal injury action. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client. In such cases, when the third-party claim is not frivolous under applicable law, the lawyer must refuse to surrender the property to the client until the claims are resolved. A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party, but, when there are substantial grounds for dispute as to the person entitled to the funds, the lawyer may file an action to have a court resolve the dispute.”

Many states have ethical rules or opinions which mirrors Model Rule 1.15 which can be read to impose a duty upon trial lawyers to safeguard disputed funds, for example, when a lien holder claims more than they are entitled to from a settlement, judgment, or award.  Making this area even more treacherous for personal injury law firms.  In addition, Model Rule 1.1 requires a lawyer to have the requisite knowledge, skill, thoroughness, and preparation necessary for lien resolution if they undertake the responsibility.  Under my reading of 1.1’s comments, if a lawyer lacks the necessary expertise to resolve liens, then they must ensure competent representation through other means, such as by retaining other experts. 

Since resolving health care liens is complex from a procedural and legal perspective, a personal injury lawyer who lacks necessary knowledge, experience, and expertise to effectively resolve health care liens potentially jeopardizes the client’s interests in their settlement and creates professional liability for himself/herself as well as the firm. 

That brings us to the question at hand, what are the ethical rules guiding the outsourcing of lien resolution services to experts?  The ABA’s Formal Ethics Opinion 08-451 is a great starting point for the analysis.  While it does not address lien resolution directly, it does give the guiding framework for outsourcing.  The operative provisions of the ethics opinion state:

“A lawyer may outsource legal or nonlegal support services provided the lawyer remains ultimately responsible for rendering competent legal services to the client under Model Rule 1.1. In complying with her Rule 1.1 obligations, a lawyer who engages lawyers or nonlawyers to provide outsourced legal or nonlegal services is required to comply with Rules 5.1 and 5.3. She should make reasonable efforts to ensure that the conduct of the lawyers or nonlawyers to whom tasks are outsourced is compatible with her own professional obligations as a lawyer with “direct supervisory authority” over them.

In addition, appropriate disclosures should be made to the client regarding the use of lawyers or nonlawyers outside of the lawyer’s firm, and client consent should be obtained if those lawyers or nonlawyers will be receiving information protected by Rule 1.6. The fees charged must be reasonable and otherwise in compliance with Rule 1.5, and the outsourcing lawyer must avoid assisting the unauthorized practice of law under Rule 5.5.”

To summarize, if you are going to outsource you must remain ultimately responsible for the work and provide “direct supervisory authority” over those to whom you outsource to.  You must protect confidential information and ensure that the provider who will be outsourced to is competent and suitably trained.  Disclosure and informed consent of the outsourcing should be obtained from the client. 

While that is the general framework, some states have further defined what is ethically required when outsourcing lien resolution.  One great example of this is New York.  In an opinion issued in July of 2008, the NYCLA Professional Ethics Committee permitted New York lawyers to retain an outside lien resolution law firm and charge its fee as an expense of litigation paid by the client.  According to the opinion, NYCLA, Ethics Op. 739 (7/7/2008), with the client’s informed consent, a personal injury law firm may contract with a lien resolution firm and asses its fee as a cost in a contingency fee arrangement as long as the fee was reasonable. 

The definition of the fee being reasonable was analyzed in terms of “net benefit to the client”.  The example was given that a “lawyer who outsources a complex lien problem to another attorney who, in turn, resolves it for a fraction of the lien amount, gains a net benefit to her client.”  The general parameters of outsourcing in New York were laid out as: 

“It is ethically permissible for a plaintiff’s personal injury attorney to retain a specialty firm to handle the resolution of a Medicare, Medicaid or private healthcare lien on a settled lawsuit. Under the following conditions, the fee for said outside service may be charged as a disbursement against the total proceeds of the settlement: (a) at the outset of the representation, the Retainer Agreement with the client provides that the attorney may do so, and the client has given informed consent thereto; (b) the actual charges are passed on to the client at cost (without any overage or surcharge) and must be reasonable; (c) the transaction results in a net benefit to the client on each lien negotiated; ( d) the transaction complies with all principles of substantive law, including the fee limitations on contingent fees in the New York Judiciary Law and Appellate Division rules; and ( e) the referring attorney remains responsible for the overall work product. If counsel cannot comply with all of the above conditions, the fee for said services should be charged against the attorney contingency fee.”

Another great example is Ohio.  The Ohio Opinion 2009-9 (12/4/09) stated:

“If a plaintiff’s personal injury lawyer retains an outside law firm to provide health care lien resolution services in a settled matter, the plaintiff’s lawyer may use professional judgment as to whether to charge the client for the service as part of the contingent fee or as an expense of litigation. Either way, the client’s consent to the outsourcing and the fee arrangement must be obtained prior to outsourcing the service. Either way, the fees and expenses must be reasonable, not excessive. Either way, the nature and basis of the fee arrangement must be communicated to the client and pursuant to Rule l .5(c) a contingency fee agreement must be in writing. If the outsourced legal fee is included as part of a contingency fee, there is a division of fee among lawyers not in the same firm and that triggers the requirements of Rule 1.S(e). If the outsourced service is charged to the client as a litigation expense, the contingency fee rate must be appropriately set to not result in a duplicative and excessive legal fee charged to a client for a service that is billed separately as an expense.”

Similarly, Utah has directly addressed the outsourcing of lien resolution by personal injury lawyers to lien resolution specialists.  The Utah opinion, 14-01 (2/3/14), addressed two questions.  First, can a lawyer ethically and appropriately outsource lien resolution?  Second, should the fees associated with lien resolution be treated as a “cost” to the client?  The opinion addressed both those questions and found that the answers to both questions were yes.  The opinion stated:

“It is ethical for a personal injury lawyer to engage the services of a lien resolution company that can provide expert advice or to associate with a law firm providing this service.  If properly disclosed in the retention agreement, fee resolution services may be included as “costs” to the client provided the resolution services are professional services equivalent to accountants or appraisers.”

While most states have not directly addressed the outsourcing of lien resolution, the New York, Ohio, and Utah opinions give a general framework to use when deciding to outsource then passing along the fee as a case “cost”.  These opinions all find that it is permissible to outsource and pass along the fee as a case cost  if: (a) the personal injury lawyer’s retainer agreement with the client provides that the attorney may do so and the client has given their informed consent; (b) the fees charged are reasonable and are passed on without any surcharge; (c) the lien resolution service results in a net benefit to the client on each lien negotiated; (d) the outsourcing transaction complies with state specific bar rules and substantive law, including fee limitations for contingent fees; and (e) the referring attorney maintains ultimate responsibility for the work product. 

Therefore, if you desire to outsource lien resolution services the first step is amending your fee contract and providing information to the client about outsourcing these functions thereby securing informed consent.  The remainder of the parameters outlined in these opinions are typically easily met. 


There are strong reasons for outsourcing lien resolution to a team of experts with deep subrogation experience.  First, it makes your law firm more efficient by reducing operating expenses as well as removing the burden on a firm’s staff in terms of time spent on liens.  Second, since health insurance plans and government employ recovery vendors who are their experts a law firm should have its own team of experts to help fight and resolve liens.  Third, and probably most importantly, to make sure that the client’s net proceeds are protected by negotiating the deepest reduction of the amount claimed by a lien holder. 

The Utah ethics opinion mentioned above recognized that in complicated injury cases, with multiple liens, plaintiff counsel bears much responsibility to resolve these liens which can require “substantial expertise”.  The retention and assistance of lien resolution experts serves the “laudable goal” of fair resolution to both the client and lien holder.  The lien resolution services offered, according to the Utah ethics opinion, “are often a significant value enhancement for the client” since many plaintiffs personal injury lawyers may lack the necessary competence to evaluate medical billing.  These services allow a personal injury lawyer the ability to negotiate liens on equal terms with the lienholder’s lawyer by providing expert advice coupled with specialized legal resources for the personal injury attorney. 

In terms of the ethical issues surrounding outsourcing of lien resolution, the burgeoning complexities around lien resolution, potential impact to the client’s net proceeds as well as law firm liability related to liens, leads to the conclusion that outsourcing may be in everyone’s best interest. 

The question then turns to how to make sure outsourcing is done in compliance with applicable rules.  As discussed above, the ABA’s model rules certainly contemplate outsourcing of certain functions by lawyers.  The survey of states that have directly addressed the outsourcing of lien resolution have concluded that it is permissible but with protections put into place to address client confidentiality along with informed consent.  An outsourcing attorney must make sure that the lien resolution firm it hires has the competence, expertise, and suitable training to provide those services. 

Passing along lien resolution fees to the client requires that the client agree to the outsourcing as part of the retainer agreement and that the lawyer obtains informed consent for the outsourcing of lien resolution functions.  The use of a lien resolution group must produce a net positive outcome for the client with the fees being reasonable and no surcharge added on to the fees.  

The health insurance industry has known for decades the benefits of hiring subrogation experts.  A knowledgeable lien resolution partner can help even the playing field to protect your hard work and at the end of the day your client’s recovery.  It makes sense to outsource for all of the reasons enumerated herein and ethically it can be done by adhering to the principles outlined above. 

You might ask yourself, why hire experts to assist with lien resolution when I can do it myself.  You also might ask whether it is ethically permissible to outsource lien resolution to a lien resolution company. 

July 21, 2022

Rasa Fumagalli, JD, MSCC, CMSP-F

Netflix’s new baking competition show “Is it Cake” challenges judges to identify which of two identical objects is edible and which is not. Attorneys settling cases involving work-related injuries may find themselves similarly perplexed when it comes to whether a work-related injury will be treated as a workers’ compensation or liability case for purposes of the Medicare Secondary Payer Act (“MSP”). Depending on who the employer is at the time of a work-related injury, some injured employees may be covered by programs that are required under federal law. Depending on the nature of the program, the MSP compliance obligations will either be handled as a workers’ compensation or liability settlement.  For example, the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) that provides benefits for work-related injuries sustained by certain maritime and dock workers is viewed as workers’ compensation insurance when it comes to MSP compliance issues. On the other hand, the Federal Employers Liability Act (“FELA”) which provides benefits for railroad employees, who sustain injuries due to the negligence of a railroad carrier, is viewed as liability insurance when it comes to MSP compliance issues.  (See MSP Manual, Chapter 1, Section 10.4)

Both liability and workers’ compensation settlements are impacted by the MSP Act. The MSP is comprised of a series of statutory provisions intended to reduce federal health care costs. The MSP provides that if a primary payer exists, Medicare only pays for medical treatment relating to an injury to the extent that the primary payer does not pay. The MSP Act and supporting regulations specifically state that Medicare is precluded from making payments for services “to the extent that payment has been made or can reasonably be expected to be made promptly under any of the following (i) workers’ compensation; (ii)liability insurance; (iii) no-fault insurance. (42 U.S.C.§1395y(b)(2)(A)(ii), 42 C.F.R.§411.20 (a)(2)). A primary payer’s responsibility for payment may be demonstrated by “a judgment, payment conditioned upon the beneficiary’s compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary payer or the primary payer’s insured or by other means…” (42 C.F. R§411.22(b)). The parties first and foremost should ensure that pre-settlement injury-related payments (conditional payments) made by Medicare are reimbursed to the appropriate Medicare Trust Fund. In addition, and in light of the MSP, settlements that close out future injury-related medical benefits should avoid cost shifting the post-settlement injury-related care onto Medicare.

The MSP compliance distinction between a liability settlement and a workers compensation settlement is an important one since it may impact the way parties address post settlement injury related care. The Centers for Medicare and Medicaid Services (“CMS”) has issued a great deal of guidance when it comes to workers’ compensation settlements that close out future injury related medical. The Workers’ Compensation Medicare Set-Aside Arrangement (“WCMSA”) Reference Guide (“Guide”), Version 3.7, 6/6/2022, explains that parties should take Medicare’s interest, with respect to future medicals, into account by including a WCMSA into the settlement terms. The WCMSA should contain sufficient funds from the settlement to cover the total cost that will be incurred for future injury related Medicare covered treatment. CMS encourages parties to seek CMS approval of the proposed WCMSA when the settlement meets CMS’ internal workload review thresholds. The benefit to CMS’ review and approval of the proposed amount is the certainty in knowing that Medicare will become the primary payer for any injury-related services that exceed the properly exhausted CMS determined WCMSA. Although the Guide also states that CMS approval of a proposed WCMSA amount is not required, Section 4.3 notes that CMS may treat the use of non-CMS approved products as “a potential attempt to shift financial burden by improperly giving reasonable recognition to both medical expenses and income replacement.” Non-CMS approved products are MSA reports that are not submitted to CMS for review.

 If CMS concludes that there was an improper cost shift, it may deny payment for injury-related services until it is provided with attestation of appropriate exhaustion equal to the total settlement, less procurement costs and paid conditional payments.  The parties may overcome this denial by showing   CMS, at the time of the WCMSA exhaustion, that both the initial funding of the MSA was appropriate and the funds were used properly.

To understand the importance of the differences between whether a work injury is treated as workers’ compensation versus liability case in the context of the MSP, consider a FELA settlement.  FELA is treated as a liability settlement for purposes of the MSP due to its differences from the typical workers’ compensation case.  Although a FELA settlement involves a work-related injury, the railroad employee must show that his/her injuries were, due in whole or in part, to the negligence of the railroad. This burden of proof is different than the burden of proof in a typical workers’ compensation case. In most jurisdictions, for a workers’ compensation case, a worker must only show that he suffered an accidental injury, which arose out of and in the course of his employment.  There is no need to show negligence. 

Once a settlement agreement is reached in a FELA case, the parties should consider the potential impact of the MSP Act on the settlement. If the railroad employee is a Medicare beneficiary at time of settlement, Medicare will be given notice of the settlement under Section 111’s Mandatory Insurer Reporting obligation. The notice of settlement may result in the potential risk of Medicare denying post-settlement injury-related care. If the railroad employee has completed his injury-related treatment and no further treatment is indicated, the beneficiary may wish to obtain a written certification from the treating physician to that effect. Pursuant to CMS’ 9/30/2011 Memo, there is no need for a liability MSA when the treating physician makes this certification.  

If, however, the beneficiary continues to treat for his injuries, or will need future injury-related care, an MSA might be considered to avoid any potential issues with Medicare denying post-settlement injury-related care.  While a workers’ compensation settlement will usually fully fund the WCMSA, the liability MSA may at times consider the relative value of each of the elements of damage being compensated in the settlement (pro-rata apportionment).  This apportionment approach considers the ratio between the total potential case value and the net settlement. Parties may also choose to fully fund the liability MSA. The decision of how much, or how little, risk to assume when it comes to post-settlement injury-related care is one that should be made by the beneficiary and documented in the attorney’s file.

Conditional payments, payments made by Medicare for injury-related care provided prior to settlement, must also be addressed in connection with a settlement. In a workers’ compensation case, conditional payment recovery is handled by the Commercial Repayment Center (“CRC”). The CRC seeks to pursue recovery directly from the workers’ compensation insurer carrier while the case is open. Once the case settles, the conditional payment recovery will move from the CRC to the Benefits Coordination and Recovery Center (“BCRC”) since the beneficiary is now the identified debtor. Since a FELA settlement is viewed as a liability settlement, the BCRC will handle the conditional payment recovery and seek recovery from the beneficiary debtor. Payments made by a Medicare Advantage Plan (“MAP”) must also be addressed. Information regarding the MAP payments is provided by the relevant insurance carrier themselves and not the BCRC/CRC.

While one work injury case may look just like any other, your MSP compliance approach may depend on whether CMS views the case as liability or workers’ compensation.  A thorough understanding of the differences and risks of various approaches is necessary in order to avoid any unexpected consequences of inaction.

Contact Synergy Settlement Services to discuss the way our MSP compliance team may assist you.

Jason D. Lazarus, J.D., LL.M., CSSC, MSCC

June 9, 2022

On June 6th, 2022, the United States Supreme Court decided in a 7-2 decision to allow Florida Medicaid, pursuant to Section 409.910 of the Florida Statutes, to recover its lien from all medical damages past and future.  This decision has nothing to do with future eligibility for Medicaid post settlement, that is still protected by special needs trusts, instead, it allows a state Medicaid agency to pursue its lien against all medical damages in the case.  This is a departure from the dictates of Ahlborn which protected a Medicaid recipients’ property right in their settlement as dictated by the federal anti-lien provisions. 

Gallardo argued that the anti-lien provisions in the Medicaid Act prohibited Florida Medicaid from attempting to recover its lien from anything other than the amounts properly allocable to past medical expenses.  The Supreme Court held otherwise finding that it falls within an exception to the anti-lien provisions that served as the pillars of the Ahlborn decision.  Further, the court held that the assignment provisions in the Medicaid Act requires a Medicaid beneficiary, as a condition of eligibility, to assign all rights to payments for medical care from a third party back to the state Medicaid agency.  And states must enact recovery provisions that allow for the state to recover from liability third parties when a Medicaid beneficiary is injured, and Medicaid pays for that care.  While the court upheld the property right and anti-lien prohibitions against recovery from non-medical damages, it held it didn’t protect damages that were for medical care. 

The bottom line of the holding is as follows:

“Under §1396k(a)(1)(A), Florida may seek reimbursement from settlement amounts representing “payment for medical care,” past or future. Thus, because Florida’s assignment statute “is expressly authorized by the terms of . . . [§]1396k(a),” it falls squarely within the “exception to the anti-lien provision” that this Court has recognized. Ahlborn, 547 U. S., at 284.”

Justice Sotomayor’s dissent in Gallardo is right on point about the inequity of the majority’s opinion related to Medicaid liens and from what elements of damages a state agency can recover from: “It holds that States may reimburse themselves for medical care furnished on behalf of a beneficiary not only from the portions of the beneficiary’s settlement representing compensation for Medicaid-furnished care, but also from settlement funds that compensate the Medicaid beneficiary for future medical care for which Medicaid has not paid and might never pay. The Court does so by reading one statutory provision in isolation while giving short shrift to the statutory context, the relationships between the provisions at issue, and the framework set forth in precedent. The Court’s holding is inconsistent with the structure of the Medicaid program and will cause needless unfairness and disruption.”  Justice Sotomayor also recognized that due to the majority’s ruling, many injury victims would have less dollars from their settlement to place into federally-authorized special needs trusts that protect their ability to pay for important expenses Medicaid will not cover.  This is exactly what had been done for the benefit of Gallardo when her case was settled but now she will have less go into that trust since more money will have to go to reimburse Florida Medicaid. 

So, what does Gallardo mean for injury victims? A state Medicaid agency or its recovery contractor can now take the position that the recovery right applies to past and future medicals so when you do an Ahlborn analysis, it would be the appropriate reduction percentage (using a pro-rata formula) applied to the entire value of medical damages to see if there is a reduction in the lien. Pre-Gallardo, some states were already taking that position as well as some recovery contractors. From a practical perspective, in cases with a large life care plan or a lot of future medicals, there may not be a reduction at all in the lien. It is going to be important that the non-economic damages get properly valued with some multiplier times specials to make strong arguments for a reduction. 

In the end, Medicaid beneficiaries will not net out as much from their settlements as they should. Some cases may not be brought, and more injury victims will wind up quickly back on Medicaid post recovery. It is an unfortunate end result and just bad law.

To read the full opinion, click HERE

This decision doesn’t mean though all is lost, but you need experts to help you navigate through the lien resolution minefield. Contact Synergy to help find your way to the best outcome for your client.

To read a whitepaper for a summary of the law pre-Gallardo, click HERE.

June 9, 2022 

Michael Walrath, Esq.

The “reasonable value” of healthcare is an issue that weaves throughout our entire system. Even so, there’s no concrete definition of what exactly is “reasonable value”. Dr. Gerard Anderson of Johns Hopkins University School of Public Health has defined it as 40% to 45% above the cost of care[1]. No-fault insurance statutes in many states define reasonable value in their fee schedules for accident care.[2] Certain TPA’s managing employer-based health plans peg reimbursement at a “reasonable value” defined as a stated percentage above Medicare rates in their plans (often called “Reference Based Pricing” or “RBP Plans”).[3]  Meanwhile, hospital systems and the largest insurers enter into complex Provider Agreements, agreeing in advance to what both parties agree is reasonable reimbursement for hundreds of millions of covered lives in the United States.

Reasonable value of health care also appears, in personal injury actions as evidence of medical special damages caused by a tortfeasor, but under a slightly different definition. The definition of “reasonable medical damages” (the amount owed by a tortfeasor for the medical specials incurred by his or her victim) is arguably distinguishable from the amount owed to a hospital, by a patient. While a certain nexus does obviously exist, other evidentiary issues and considerations exist in tort cases, which do not exist in the simpler, more direct “payer-provider disputes” which are more akin to the hospital lien scenario.   

All States and even Hospitals, are Different

The legal framework around hospital liens is set by statutes and case law interpreting them and varies widely from state to state. Forty states, and the District of Columbia, have enacted hospital lien statues.[4] Because all states are so very different, you must follow the law and the facts of your case, when determining whether a hospital lien is attached to an injury settlement, and in developing the best strategy for reducing hospital liens and debts.

For example, California hospitals enjoy liens against injury recoveries by statute (§3045), which are limited to the lesser of “reasonable hospital charges” or 50% of a limited recovery. The burden is on the hospital to prove the “reasonableness” of its charges when seeking interpleaded funds. Not surprisingly, California law is largely consumer-friendly, in this regard, holding “[t]he full amount billed by medical providers is not an accurate measure of the value of medical services because many patients pay discounted rates, and standard rates for a given service can vary tremendously, sometimes by a factor of five or more, from hospital to hospital in California.” Therefore, the statute requires “that the charges for such services were reasonable.” State Farm Mut. Auto. Ins. Co. v. Huff, 216 Cal. App. 4th 1463, 1464 (2013). Conversely, Ohio is one of the nine states with no statewide lien statute, but the common law is similarly friendly, holding that “[i]t is a settled general rule that a physician or surgeon is, in the absence of an agreement as to the amount of his compensation, entitled to recover the reasonable value of his services. Miami Valley Hosp. v. Middleton, 2011-Ohio-5069, ¶ 1 (Ct. App.); however, the case goes on to cite Supreme Court authority suggesting “customary charges” (i.e., full billed charges) are prima facia evidence of reasonable value absent evidence to the contrary.  

Another example of state law diversity can be found in Florida. Florida hospital liens are a creature of County Ordinance, with only nine of the state’s sixty-seven counties enjoying valid, ordinal lien rights. This is after many counties lost their rights pursuant to the Supreme Court of Florida’s opinion in Shands v Mercury[5] which struck down as unconstitutional, all county lien laws created by Special Act of the Florida Legislature, . Consequently, many Florida hospitals (and indeed hospitals in many other states) have elected to simply create hospital liens against third party recoveries, by contract.

Another state with no statewide lien statute is Pennsylvania. The Superior Court of Pennsylvania has held:

Where, as here, there is no express agreement to pay, the law implies a promise to pay a reasonable fee for a health provider’s services. Eagle v. Snyder, 412 Pa. Super. 557, 604 A.2d 253 (Pa. Super. 1992). Thus, in a situation such as this, the defendant should pay for what the services are ordinarily worth in the community. Id. Services are worth what people ordinarily pay for them… Under the law, the Hospital is entitled to the reasonable value of its services, i.e., what people pay for those services, not what the Hospital receives in one to three percent of its cases. Accordingly, the damage award in this unjust enrichment action simply is unwarranted. In light of the applicable law, the Hospital should be awarded its average collection rate for each year in question. This value would be reasonable. 

Temple Univ. Hosp., Inc. v. Healthcare Mgmt. Alts., Inc., 2003 PA Super 332, ¶¶ 26-27, 832 A.2d 501, 508 – 509.

As a final example of lien law diversity, I turn to Maryland and Virginia. Maryland does have a lien statute which limits liens to reasonable charges, but Maryland is the last of the “all payer” states. Accordingly, in simplified terms, all Maryland patients pay essentially the same amount whether insured, on Medicare, or self-pay Hospital charges in Maryland are vetted and approved by a State Commission, making “reasonable value” arguments nearly impossible. Virginia actually has two different hospital lien statues; one for hospitals operated by the Commonwealth, and a second for all other hospitals. Commonwealth hospital liens are not limited to “reasonable charges” in the main section of the statute, but enforcement provisions limit collection to “reasonable charges.” So arguably, reasonableness is required. Unfortunately, the Attorney General’s Office, who collects upon Commonwealth liens in Virginia, does not agree and insists on full billed charges unless an equitable distribution of a limited settlement is required.

As these diverse examples illustrate, it is critically important to follow the law and facts of your case, in the hospital’s jurisdiction, when it comes to determining the validity of a lien against a given recovery, and the legal definition/interpretation of “reasonable value.”

Reduction Strategies – What IS “Reasonable Value,” Anyway?

Over the past fifteen years, I have worked with and presented to hundreds of lawyers and law firms, in Florida and more recently, nationwide. Despite the previously explored legal diversity regarding the validity of liens and the common-law interpretation of reasonable value, lawyers tend to approach hospital lien negotiations in a surprisingly similar way.  This is basically, a “blind” negotiation of the amount allegedly due, seeking a “discount” from full billed charges. Both sides, unfortunately, frame reductions as “discounts,” as if full billed charges are owed merely because the hospital wrote them on the lien. If nothing else, this semantic misstep sets the wrong tone, and hands all the negotiation leverage to the hospital. Under the statutes, ordinances, and the common law of all but a few states, the true power paradigm is the exact opposite. Patients and their attorneys have the money, and the law expressly limits hospitals to “reasonable charges” and saddles the hospital with the burden of proof. The only proof of reasonableness a hospital can ever muster is that they charge everyone the same rates. However, as we know, less than a few percent of patients pay those amounts and overcharging everyone equally isn’t evidence of reasonableness, anyway. Shockingly, personal injury attorneys allow themselves to be lumped in with those few percent and request “discounts” as if the hospitals are granting favors. Simply put, reframe the negotiation; put you and your client properly in the driver’s seat where you belong.

I start most presentations by asking injury firms what their average reductions are. The typical, average responses are, 1) we never accept less than a 20% discount, 2) a thirty percent discount is about average, and 3) a forty percent discount is a homerun, and we’ll recommend accepting it. Understandably, many clients are indeed happy with a 40% reduction in the amount initially shown on the Closing Statement, especially on large billsas that reduction can be a substantial amount of money. And for the avoidance of doubt, these are average results from years of questions, this is normal so if they sound familiar, that is not a bad thing. However, I do want to share why and how there are deeper reductions available.

“Inverting the Argument”

The answer is simple in theory, a bit more complex in practice. Theoretically, reduction results (notice I do not call them “discounts”) are better when you negotiate “up” from reasonable value of care that is due and owing under most state law, rather than down from the unilateral, arbitrary, and unreasonable full billed charges which nobody ever pays.  

In practice, this theoretical shift requires definition and calculation of the reasonable value of the care rendered. While more complex than simply proceeding with negotiations without any data at all, defining reasonable value and calculating it are not impossible. Case law in most states, and leading hospital billing experts suggest that the “cost” of treating patients, is a reasonable benchmark. Accordingly, a workable definition of reasonable value, and in my opinion the easiest definition of “reasonable value” for Judges and lay-people alike to understand, is “cost of care plus a reasonable profit.” And thankfully, cost of care in the hospital setting is calculable.

Every hospital which accepts Medicare patients (which, because hospitals must treat everyone seeking emergency care, effectively means every hospital in the US) submits, annually, a Hospital Cost Report (CMS Form 2552-210). These Reports contain data detailing the costs incurred and charges billed by every department and can be used to estimate the “cost of care” of any given line item of service on any hospital bill. What is the reasonable value of a CT Scan at Jackson Memorial Hospital in Miami? If the total revenue data and total cost data from JMH’s annual Hospital Cost Report are merged for the CT Scan department, a “cost to charge” ratio can be derived and applied to the charges for any single scan, yielding an estimated and defensible “cost of care,” and then, “reasonable value.” This methodology is used by experts not only in testimony before Congress, but also in studies published in highly respected healthcare journals like HEALTH AFFAIRS[6]. Reports can be obtained:

  • From CMS via FOIA Request (or searched via various online websites/portals)
  • From hospitals directly by subpoena or in discovery (if litigating the hospital lien)
  • From various data vendors online (just google “hospital cost report”)

SYNERGY SETTLEMENT SERVICES uses its proprietary database and algorithm to quickly calculate “cost of care” and “reasonable value” of any hospital bill and uses that analysis to negotiate up from reasonable value, nationwide.

The Lien/Debt Dichotomy

There is a critical difference between a lien and a debt, which dictates not only best practices in reducing/resolving liens, but also the legal and ethical exposure associated with the same. Liens can ONLY be created by statute/ordinance, or by agreement/contract; whereas debts exist whenever a patient has received care which has not been paid for (even if there is no injury case or recovery at all). A “LIEN” is a legal interest in the proceeds being held in Trust; it is merely a security interest in the proceeds (not a legal right to collect money from a patient). Think of a mortgage. When a homeowner borrows money to buy a house, she or he owes a debt to the bank, but the bank also creates a mortgage which attaches that debt to the real property, as security. The bank could loan someone money to buy a house without creating a mortgage, and the person would still owe the bank the same amount as if there was a mortgage. The only difference is the person could sell the house and pay nothing to the bank from the proceeds of that sale. The same is true of hospital debts and liens.

Accordingly, it is important to determine whether a medical bill/account is a LIEN, or a mere DEBT, and if a lien, whether its contractual or statutory, before engaging in negotiations. The steps you take for resolving a lien are different than the steps you take for resolving a debt.

If there is a valid lien against the proceeds, review the language of the statute or contract creating the legal interest in the settlement proceeds (lien). Next, estimate the “reasonable value,” and calculate the “equitable distribution” amount (provider’s pro-rata portion of an equitable share of the settlement – usually 1/3 of settlement, or 50% of NET). Then lastly, negotiate for the better/lower of “equitable amount” or “reasonable value.” And remember, many lien statutes and some contractual liens obviate or codify “equitable distribution” formulae – always follow the applicable law/language.

If there is not a valid lien against the proceeds, the best strategies to employ are different. First, I strongly recommend obtaining written confirmation that the provider is not pursuing a lien against the client’s settlement. Next, determine if your client even wants to resolve the “mere debt” from the settlement proceeds (remember, you have no ethical responsibilities towards ordinary creditors). If not, you may disburse proceeds upon demand, but I do recommend obtaining signed acknowledgment of the debt, from your client. Only if your client does wish to resolve the debt from her or his proceeds (which I recommend you advocate for), should you negotiate for reasonable value or an equitable reduction. But importantly, note that absent an agreement otherwise, equitable reduction merely resolves liens, as a matter of law. Accordingly, be sure to include language that the provider agrees to accept the equitable amount as “payment in full,” to release all debt.

Responsibility to “Discover” Liens?

Generally, it is a lienholder’s responsibility to put you on notice of their lien. However, Ethics Committees often impute some level of due diligence onto Injury Attorneys in these, as in most other, circumstances. To minimize exposure, I always recommend Injury Attorneys ask all known medical providers if they are pursuing lien rights and if so, to provide documentation of the same. If providers confirm they are not pursuing a lien, it is up to the client whether to pay from proceeds, or not. If a provider confirms they are pursuing lien rights (and provide evidence of such rights in the way of a properly filed HOSPITAL CLAIM OF LIEN or a contractual lien signed by the client), you must hold the encumbered proceeds in Trust and either negotiate a release or adjudicate the lien, if negotiations impasse. And lastly, if a provider refuses to respond or refuses to provide documentary evidence of their lien, I recommend sending several written requests, including deadlines for provision of evidence of a lien and a date for distribution. As a rule of thumb, the more evidence of your due diligence, the better. So, I typically conclude my efforts with a NOTICE OF WAIVER OF LIEN RIGHTS, advising again that any alleged rights will be waived, and monies will be disbursed, on a specific date.


In conclusion, it is ultimately YOUR responsibility to determine if a medical bill is a “lien” or a mere “debt.” Liens are third-party “security interests” in the money you are holding in Trust; you must protect them, and you may not be the “sole arbiter” of a lien dispute. If lien amounts are not agreed in advance of care being rendered, your client owes only the “reasonable value” of the care they received. And that “Reasonable Value” is most easily defined and calculated as the “Cost of Care” plus a “Reasonable Profit.” And finally, always remember that SYNERGY SETTLEMENT SERVICES compliantly negotiates hospital and provider liens nationwide, so you don’t have to spend the time doing so. We are your strategic partner, ensuring you avoid all the many ethical and legal pitfalls of hospital lien resolution, while efficiently reducing hospital liens to an objectively reasonable amount,  protecting your clients’ well deserved and hard-earned recoveries.   

[1] GERARD F. ANDERSON, PhD is a professor of health policy and management and professor of international health at the Johns Hopkins University Bloomberg School Public Health, professor of medicine at the Johns Hopkins University School of Medicine, director of the Johns Hopkins Center for Hospital Finance and Management. His work encompasses studies of chronic conditions, comparative insurance systems in developing countries, medical education, health care payment reform, and technology diffusion. He has directed reviews of health systems for the World Bank and USAID in multiple countries. He has authored two books on health care payment policy, published over 250 peer reviewed articles, testified in Congress over 40 times as an individual witness, and serves on multiple editorial committees. Prior to his arrival at Johns Hopkins, Dr. Anderson held various positions in the Office of the Secretary, U.S. Department of Health and Human Services, where he helped to develop Medicare prospective payment legislation. See

[2] In Florida for example, reasonable charges for non-emergency room care are defined as 200% Medicare, while the reasonable value of care rendered in the Emergency Room is 75% of the hospital’s billed charges.

[3] See American Hospital Association, Fact Sheet: Reference Based Pricing at

[4] Ala. Code § 35-11-370; Alaska Stat. § 34.35.450; Ariz. Rev. Stat. Ann. § 33-931; Ark. Code Ann. § 18-46-101; Cal. Civ. Code § 3045.1; Colo. Rev. Stat. Ann. § 38-27-101; Conn. Gen. Stat. Ann. § 49-73; Del. Code Ann. tit. 25, § 4301; D.C. Code § 40-201; Ga. Code Ann. § 44-14-470; Haw. Rev. Stat. § 507-4; Idaho Code Ann. § 45-701; 770 Ill. Comp. Stat. Ann. 23/1; Ind. Code Ann. § 32-33-4-1; Iowa Code Ann. § 582; Kan. Stat. Ann. § 65-406; La. Rev. Stat. Ann. § 9:4751; Me. Rev. Stat. tit. 10, § 3411; Md. Code Ann., Com. Law § 16-601; Mass. Gen. Laws Ann. Ch. 111, § 70a; Minn. Stat. § 514.68; Mo. Ann. Stat. § 430.230; Neb. Rev. Stat. Ann. §§52-401 & 52-402; Nev. Rev. Stat. Ann. § 108.590; N.H. Rev. Stat. Ann. § 448-A:1; N.J. Stat. Ann § 2a:44-35; N.M. Stat. Ann. § 48-8-1; N.Y. Lien Law § 189; N.C. Gen. Stat. Ann. § 44-49; N.D. Cent. Code Ann. § 35-18-01; Okla. Stat. Ann. tit. 42 §§43 & 44; Or. Rev. Stat. Ann. § 87.555; R.I. Gen. Laws Ann.§§9-3-4 to 9-3-8; S.D. Codified Laws § 44-12-1; Tenn. Code Ann. § 29-22-101; Tex. Prop. Code Ann. § 55.001; Utah Code Ann. § 38-7-1; Vt. Stat. Ann. tit. 18, § 2253; Va. Code Ann. § 8.01-66.2; Wash. Rev. Code Ann. § 60.44.010; Wis. Stat. Ann. § 779.80

[5] “The Alachua County Lien Law, ch. 88-539, Laws of Fla., is a special law which creates a lien based on a private contract between a hospital and its patient, and is thus unconstitutional under Art. III, § 11(a)(9), Fla. Const.”
Shands Teaching Hosp. & Clinics v. Mercury Ins. Co., 97 So. 3d 204, 207 (Fla. 2012)

[6] See Extreme Markup: The Fifty US Hospitals With The Highest Charge-To-Cost Ratios

May 5, 2022

The following communication is in response to press release 2022-76 published by the Securities and Exchange Commission on May 2nd, 2022. Synergy Settlement Services, Inc. (SSS), its principals and the Foundation for Those with Special Needs (“Foundation”) are disappointed that the Securities and Exchange Commission has opted to file a lawsuit as outlined in the press release.

We strongly believe this Government action is unwarranted under the law and facts, we adamantly deny that any trust beneficiary or retained funds were improperly used and intend to vigorously defend this case in Court.

The SEC’s press release used salacious terms like “beach parties” and “golf tournaments” to describe events held by outside non-profits but seemingly insinuated that the events were thrown by Synergy. While those terms may help generate media headlines, it’s just not accurate.  As an example, the alleged “beach parties” thrown by Synergy is actually referencing a contribution by The Foundation to a state “Civil Justice Foundation” that is a 501(c)(3).  The mission of this organization, like others The Foundation has supported over the years, is to keep the civil justice system accessible.

Since its inception, The Foundation has donated hundreds of thousands of dollars to a variety of non-profit organizations doing incredible charitable work across the country.

Rest assured that as we work through the process of exonerating ourselves, we remain 100% committed to serving our clients and the families you fight for.  This will not impact our operations or results.  We remain steadfast in our dedication to the work of improving the lives of injury victims.


The Synergy Settlements team will work diligently to ensure your case gets the attention it deserves. Contact one of our legal experts and get a professional review of your case today.

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