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May 11, 2023

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

In the complex world of personal injury law, litigating trial lawyers must prove causation, liability, and damages to ensure their clients receive the compensation they deserve. To navigate this challenging landscape, personal injury law firms often rely on specialized experts to help them with and prove their case. Personal injury lawyers routinely engage experts in other complex areas of law, such as probate, guardianship, government benefit preservation, tax, or bankruptcy. Attorneys also frequently rely on accident reconstructionist experts, economic damages experts, and Medicare experts.

Settlement is no different!  Lien resolution is a prime example of a specialized area where outsourcing at settlement makes sense, both ethically and professionally.  By enlisting subrogation experts, personal injury lawyers can enhance their clients’ net recovery while navigating the potential pitfalls inherent in the resolution process.

Ethics of Outsourcing Lien Resolution

Lien resolution is complicated by the varied and extensive laws governing health insurance subrogation claims. ERISA, the Medicare Secondary Payer Act, Medicaid, FEHBA, and other types of private insurance liens are specialties unto themselves. Each type of lien has its own statutory and regulatory body of law, can be subject to different state regulations, and can often coexist on the same case. A single personal injury victim may have multiple liens asserted against their recovery, which further complicates the lien resolution process.

Outsourcing lien resolution services is ethical because it allows trial lawyers to secure the best possible outcome for their clients, and ensures that all subrogation claims, reimbursement obligations, and liens are resolved in accordance with the law. The liability falls on the trial lawyer to protect their client from litigation and potential loss of health care coverage by properly addressing valid lien holders. Failure to do so could result in legal malpractice or personal liability, for example, for double the lien amount under the Medicare Secondary Payer Act’s double damages provision.

The American Bar Association (ABA) Model Rule 1.15 sets the standard for the ethical duty of trial lawyers to protect disputed funds when a lien holder claims more than they are entitled to from a settlement, judgment, or award. 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.  Furthermore, Model Rule 1.1 requires a lawyer to have the necessary knowledge, skill, thoroughness, and preparation to undertake lien resolution. If a lawyer lacks the expertise to resolve liens, they must ensure competent representation through other means, such as retaining experts.

The ABA’s Formal Ethics Opinion 08-451 provides guidance on the ethical rules for outsourcing legal and nonlegal support services. It states that a lawyer may outsource services as long as they remain ultimately responsible for rendering competent legal services to the client under Model Rule 1.1. The lawyer must also comply with Rules 5.1 and 5.3, protect confidential information, ensure the competence and training of the provider, and obtain disclosure and informed consent from the client.

Several states have further defined the ethical requirements for outsourcing lien resolution. New York, Ohio, and Utah, for example, all permit personal injury lawyers to retain an outside lien resolution firm and charge its fee as an expense of litigation paid by the client, as long as certain conditions are met. These conditions include obtaining informed consent from the client, charging reasonable fees, ensuring a net benefit to the client on each lien negotiated, complying with state-specific bar rules and substantive law, and maintaining ultimate responsibility for the work product.


In conclusion, outsourcing lien resolution services is an ethical and effective solution for personal injury attorneys. By partnering with expert lien resolution providers, lawyers can ensure the best possible outcomes for their clients while adhering to the highest professional standards. By following the ethical guidelines set forth by the ABA and state bar associations, attorneys can confidently outsource lien resolution services and focus on their primary responsibility: advocating for their clients and securing just compensation for their injuries.

The benefits of outsourcing lien resolution services go beyond merely complying with ethical guidelines. By engaging experts in the field, personal injury attorneys can save valuable time and resources, allowing them to dedicate more attention to their clients and their cases. This collaboration also enables personal injury lawyers to provide a higher level of service, as they can leverage the specialized knowledge and experience of lien resolution professionals to negotiate better outcomes for their clients.

Additionally, outsourcing lien resolution services can help law firms manage risk more effectively. Given the complexity and potential consequences of mishandling liens, partnering with specialists can significantly reduce the likelihood of errors and oversights that could lead to litigation, professional liability, or damage to the firm’s reputation. This risk management benefit further supports the ethical rationale for outsourcing these services.

In summary, outsourcing lien resolution services is not only an ethical decision, but it also offers numerous advantages for personal injury attorneys and their clients. By partnering with expert providers, attorneys can focus on their core competencies, offer enhanced services, and manage risks more effectively.

April 5, 2023

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

In today’s fast-paced legal landscape, personal injury law firms face a multitude of challenges, from tracking liens to navigating the complexities of subrogation, reimbursement, and medical debts. The pressure to provide exceptional results to their clients while maintaining a competitive edge has prompted an increasing number of firms to consider developing strategic partnerships with expert lien resolution groups. In this blog post, we explore the advantages of working with an expert lien resolution group to enhance law firm efficiency and deliver optimal results for injury victims.

Efficiency and Results: The Key to Success

Partnering with an expert lien resolution group offers several compelling benefits, most notably in terms of efficiency and results. Personal injury law firms often find themselves at a disadvantage when dealing with government benefit health plans or aggressive recovery vendors, such as Medicare, Medicaid, FEHBA, and private recovery contractor groups like Rawlings, Equian, Optum, and Conduent. These massive corporations have vast resources and a singular focus: to collect as much money as possible from personal injury recoveries.

By partnering with an expert lien resolution group, a law firm can level the playing field, gaining access to a deep team of experts capable of challenging these sophisticated recovery vendors. The benefits of outsourcing lien resolution can be summarized in three key points:

  1. Enhance law firm efficiency by reducing operating expenses.
  2. Gain access to a deep team of experts to fight massive recovery vendors.
  3. Achieve the best possible resolution for the injury victim in terms of lien repayment!

Unraveling the Complexities of Lien Resolution

The world of lien resolution is far from simple, with each type of lien presenting unique challenges, nuances, and legal requirements. Health insurers have long recognized these complexities, turning to lien resolution and recovery contractor vendors to secure reimbursement on behalf of their plans. Personal injury attorneys often struggle to keep up with the ever-changing legal landscape, leaving them ill-equipped to fight back against these formidable opponents.

Outsourcing lien resolution to a specialized group provides law firms with a powerful ally, one that understands the inside baseball, capable of navigating the intricacies of various lien types as well as being adept with the latest rules and strategies associated with healthcare liens. This partnership minimizes operating expenses, frees up valuable time, and allows attorneys to focus on moving cases towards settlement or trial, instead of being bogged down in the frustrating red tape of hospital/provider, government, and private health plan lien resolution.

Delivering Outstanding Results for Injury Victims

Ultimately, the goal of any personal injury law firm is to secure the best possible outcome for their clients. By partnering with a lien resolution group, law firms can ensure that their clients get the steepest reduction when resolving liens and accordingly maximizing their net recovery.  In turn, this leaves clients with a positive, lasting impression at the conclusion of their case. This client satisfaction can translate into repeat business and increased referrals, boosting the law firm’s reputation within the community.

The Ethical Aspect: A Win-Win Solution

Outsourcing lien resolution not only enhances efficiency and delivers optimal results, but also aligns with the ethical responsibilities of personal injury attorneys. By partnering with a well-qualified lien resolution group, law firms can ensure they are upholding their duty to provide the best possible representation to their clients, while also remaining compliant with the myriad of legal obligations and regulations governing lien resolution.


The decision to outsource lien resolution offers a win-win solution for law firms and their clients. By partnering with an expert lien resolution group, personal injury law firms can enhance efficiency, reduce operating expenses, gain access to a team of specialists, and secure the best possible results for their clients. The benefits of this strategic partnership cannot be overstated, providing a competitive edge, and ensuring the long-term success of the law firm as well as the satisfaction of the injury victims they represent.

Partner with Synergy here.

March 9, 2023

Teresa Kenyon, Esq.


Navigating the complex world of healthcare liens can be overwhelming, especially for cases involving military personnel, Veterans, Medicaid recipients and the uninsured who need hospital care. However, understanding the intricacies of programs like the Federal Medical Care Recovery Act (FMCRA), Medicaid, and hospital lien laws is crucial to ensure that those who are injured pay back as little as possible. This article explores the FMCRA, Medicaid, and hospital liens, and highlights important laws and applicable court cases that have shaped how these programs recover. By understanding the nuances of these programs, a trial lawyer can be better prepared to decide whether to partner with lien resolution experts to get the best results.


The Federal Medical Care Recovery Act (FMCRA) [1]  is designed to ensure that the person or entity responsible for a Veteran’s injury pays for their medical care, rather than the taxpayers. The Act grants the United States the right to recover the reasonable value of medical care and treatment from the party responsible for the injury. This applies to TRICARE beneficiaries and covers care provided by Uniformed Services facilities, care paid for by TRICARE, or both. The funds recovered by the program are used to supplement the budget allocated by Congress, enabling each VA medical facility to provide exceptional care and services to Veterans.

The FMCRA empowers the federal government to recover the costs of medical care in cases where the United States is authorized or required to provide or pay for medical care for someone suffering from a disease or injury caused by the intentional conduct or negligence of a third party. To recover the cost, the government relies on 10 U.S.C. § 1095 and expects beneficiaries to pursue the case to protect the government’s interests. Many military branches require the attorney hired by the injured party to sign an Attorney Protection Agreement, acknowledging their responsibility to protect those interests. However, the government does not provide attorneys representing injured parties with fees or reductions for their interests, specifically for attorney fees and costs associated with effectuating the settlement. [2]

The government has a lien on any proceeds of recovery for medical and hospital care provided by Veterans’ Administration hospitals or private health care providers. The government has three ways to recover medical and hospital care costs in cases of tort liability by a third party: subrogation, intervening or joining in any action brought by the injured person, or initiating such an action in conjunction with the injured or deceased person. None of these procedures is mandatory, and the head of the department or agency furnishing care has the discretion to choose the method.


Medicaid is a public benefit program that provides essential healthcare coverage to individuals who meet financial eligibility criteria. The program is funded by both the federal and state governments, with administration at the state level.

In the landmark case of Ahlborn[3], the US Supreme Court limited the amount of funds that Medicaid can recover when a beneficiary receives a settlement in a third-party liability situation. Under federal law, Medicaid is only entitled to recover funds that are attributable to medical expenses, rather than the entire settlement or judgment. State statutes that mandate full reimbursement of Medicaid expenditures are unenforceable, as far as they do not exempt from recovery the non-medical portions of the settlement, such as damages for pain and suffering or lost wages.

In Wos v. E.M.A. [4], the US Supreme Court held that North Carolina’s statute, which allocated up to one-third of personal injury awards to medical expenses, was preempted by the anti-lien provision of the Medicaid Act. This decision rendered arbitrary allocations in state statutes unenforceable, and the Medicaid anti-lien rule from Ahlborn prevented North Carolina’s statue from being enforced as written.

However, the recent case of Gallardo v. Marstiller[5] potentially changes the analysis set forth in Ahlborn. The US Supreme Court ruled that Florida can seek reimbursement from settlement amounts that represent “payment for medical care,” whether past or future. This decision may have implications for certain cases, and the circumstances of each case will need to be considered to determine whether the Ahlborn analysis applies or is modified now by Gallardo’s inclusion of future care.

Hospital Liens

Hospital lien laws are established by state statutes, and their interpretation through case law varies significantly from state to state. Consequently, there is no single pivotal case or statute that forms the legal basis for a hospital lien.

The key to reducing the amount owed under a hospital lien is to focus on the actual reasonable value of the services provided. Rather than attempting to negotiate down from the full billed charges presented by the hospital, it is essential to assess the fair cost of care and negotiate accordingly. Hospital bills are often inflated, bearing little relation to what should be paid for the services provided.

Those familiar with health insurance may have noticed the vast difference between billed charges and the amount paid to a provider based on contractual agreements between facilities and insurance carriers. For example, a bill could be presented for $45,000, while a health insurance carrier may have a contract to pay only $16,000. Facilities also offer uninsured discounts. It is unfair to require an injured party who receives a settlement to pay the full amount. Moreover, if there are insufficient funds to cover the bill, it is inequitable to attach a lien to the whole settlement and then assert a debt for the remaining amount, which is often significantly more than what would have been paid by Medicare, Medicaid, or a private insurer.

So, what is the reasonable cost for services? It varies depending on the location, facility, and procedure. Obtaining this information is not easy. Hospitals that receive payments from Medicare are required to submit a Hospital Cost Report (CMS Form 2552-110), which provides detailed information about the costs incurred in each department.


In conclusion, even though military medical care, Medicaid and hospital liens third party liability recovery all involve the reimbursement of the cost of medical treatment, how they are handled in the legal system varies. The Federal Medical Care Recovery Act ensures that those responsible for a veteran’s injury pay for their medical care, and the funds recovered supplement the budget allocated by Congress to provide exceptional care and services to veterans. Medicaid provides essential healthcare coverage to financially eligible individuals, with a recent Supreme Court decision potentially changing how reimbursement from settlements is handled. Hospital liens, which vary by state, can be reduced by focusing on the actual reasonable value of services and negotiating accordingly. It is essential to consider the fair cost of care rather than the inflated billed charges presented by hospitals, and obtain detailed information about costs incurred in each department. Ultimately, these topics highlight the importance of ensuring that those in need of medical care receive fair and just treatment in the legal system.


Are you tired of dealing with the headache of lien resolution on your own? Look no further than Synergy – your ultimate lien resolution partner! With hundreds of years of combined experience, our team of expert negotiators has the skills and knowledge to handle even the most complex liens, dealing with insurance carrier recovery departments and subrogation vendors like no other. By partnering with Synergy today, you’ll gain access to our unparalleled team of lien resolution specialists who will work tirelessly to maximize the reduction of liens. Don’t waste any more time struggling with troublesome and time-consuming liens. Let Synergy’s subrogation-busting team take care of it for you, so you can focus on what you do best – help other clients. Trust us, now is the time to make the smart move and partner with Synergy.

[1] 42 USC 2651-2653

[2] 5 USC 3106

[3] Arkansas Dept. of Health and Human Servs. V Ahlborn, 547 U.S. 268 (2006)

[4] Wos v E.M.A., 568 U.S. 627 (2013)

[5] 596 US ___(2022)

January 12, 2023

Teresa Kenyon, Esq.

Dealing with medical liens is the dreaded case after the case for most personal injury attorneys. As a personal injury attorney, you’ve worked hard to prove the tortfeasor has liability for the damages incurred by your injured client and secure a recovery.

When settlement is reached and the funds are received, ERISA plans, FEHBA plans, hospitals, and providers as well as government benefit programs like Medicaid, Medicare and Military agencies are standing in wait with their greedy eyes on the prize –your client’s settlement money. What gives these plans the right to seek repayment from an injured party’s settlement?

This article focuses on ERISA, FEHBA, Medicare, and Medicare Advantage plan recovery rights. A future article will focus on Military, Hospital/Provider, and Medicaid recovery rights.


When an injured party receives their health insurance through an employer provider health insurance, it is more often than not an ERISA plan. The primary exceptions are for government and religious employers. ERISA plans come in two forms: Self-funded and fully insured. These ERISA plans’ recovery rights are subject to different laws based on their funding status. So, when dealing with these plans, understanding and confirming the funding status is the first step to knowing whether the injured party needs to reimburse and for how much.

The seminal case for ERISA plans was the McCutchen[1] decision by the US Supreme Court. This case provides that the ERISA plan policy language is supremely important to the ERISA plan’s recovery right. Because of this, it is vital to obtain the right documents and obtain them from the right place – this starts with the Master Plan Document and a request directly to the employer group.


FEHBA plans are for federal employees. The seminal decision by the US Supreme Court in Nevils[2] occurred in 2017 where it was held that insurance carriers operating under FEHBA can assert subrogation and reimbursement rights despite any state laws stating otherwise. The decision primarily focused on federal preemption. Otherwise, there has not been much litigation on FEHBA plans and their right to recover. As such, subrogation vendors for these plans stand firm until challenged.

Medicare (Parts A and B)

For traditional Medicare, there isn’t a pivotal case to look to. Instead, Medicare relies upon strong statutory rights for the government to collect. The Medicare Secondary Payer Act prohibits traditional Medicare from making payment when a primary plan should make the payment.[3] This is the case when the Medicare beneficiary is injured, has medical treatment that is paid for by Medicare, and is entitled to compensation by another “plan” or entity like no-fault, Workers’ Compensation, or liability insurance.   However, there is one exception to this rule where Medicare is allowed to make payment on the condition that it be paid back. The exception authorizes Medicare to make a conditional payment if the primary plan “has not made or cannot reasonably be expected to make payment with respect to such item or service promptly.”[4]  

To resolve conditional payments, a beneficiary must notify Medicare through the Benefits Coordination & Recovery Center (BCRC). The BCRC begins identifying claims that Medicare has paid conditionally that are related to the case based on information reported regarding the type of incident, illness, or injury alleged. Medicare’s recovery rights run from the “date of incident” through the date of settlement/judgment/award. A beneficiary or their representative may dispute claims added to Medicare’s Conditional Payment ledger. Once the case settles, Medicare is to be notified and a Final Demand is issued.

Once a Final Demand is issued, the beneficiary may request a Waiver[5] or Compromise[6]. If the Final Demand has already been paid, the beneficiary will receive a refund from Medicare if the request is granted. To obtain a Waiver of Medicare’s interest, there must be financial hardship. An SSA-632 form must be completed which provides financial information about the beneficiary. Medicare can also grant a Waiver if Medicare’s reimbursement would be against “equity and good conscience.” Lastly, a Compromise can be requested where the beneficiary offers a reduced reimbursement to Medicare. Medicare may choose to accept the compromise based on an assessment of three factors: 1) whether the cost of collection justifies the enforced collection of the full amount of the claim; 2) an understanding on whether the beneficiary is able to pay within a reasonable time; and 3) whether the chances of successful litigation are questionable, making it desirable to seek a compromised settlement.

Medicare Advantage (Part C)

The Medicare Act permits a Medicare beneficiary to choose a private insurance carrier as their Medicare administrator versus receiving benefits from traditional Medicare. This is known as a Medicare Advantage Plan. Medicare Advantage Plans are governed by the Medicare Act and funded by CMS.[7] Medicare Advantage Plans are administered by insurance carriers like Aetna, Humana, Blue Shield, and United.

The seminal Medicare Advantage case was decided in 2012.[8] The Third Circuit found under the Medicare Act that a Medicare Advantage Plan has the same rights as traditional Medicare. Specifically, that the Advantage Plan has a private cause of action against primary payers and can collect for double damages if not reimbursed.

The ongoing issue s is that subrogation vendors representing the Medicare Advantage plans claim the same rights as Medicare but do not accept that they have the same responsibilities. Through a variety of misinterpretations and bad law, these Medicare Advantage recovery vendors often feel they have more rights than traditional Medicare. They believe they can collect as Medicare but do not have to reduce for procurement costs as is required under the Act. Medicare Advantage plans also do not have appropriate appeal systems set up and appear to be completely clueless about the fact that traditional Medicare often grants waivers and compromises including refunds post payment of the Final Demand.


Assessing the reimbursement rights of health insurance companies and medical benefit programs is a required part of representing an injury party. However, full reimbursement of their demand is not always required. There are many avenues to explore whether the Plan has right to claim what they are demanding and a variety of reasons that they may not have the right to receive as much as they are asking for from the injury victim.

Synergy is your lien resolution partner. Our team of experts have hundreds of years of combined experience in handling liens, dealing with insurance carrier recovery departments and subrogation vendors. By partnering with Synergy’s deep team of lien resolution experts today, you can put their decades of subrogation experience to work for you and your client accelerating the resolution of liens. Now is the time to leverage our subrogation-busting team to resolve troublesome and time-consuming liens.

Learn more about partnering with Synergy for all your lien resolution needs.

[1] US Airways v McCutchen, 569 U.S. 88 (2013)

[2] Coventry Health Care of Missouri v Nevils, 581 U.S. 87 (2017)

[3] 42 U.S.C. § 1395y(b)(2)(A)

[4] 42 U.S.C. § 1395y(b)(2)(B)(i)

[5] § 1870(c) of the Social Security Act (42 CFR § 405.355 and 20 CFR 404.506-512)

[6] See Federal Claims Collection Act of 1966 (31 USC § 3711) §§ 1870(c) and 1862(b) of the Social Security Act

[7] 42 U.S.C. § 1395w-21

[8] Avandia Marketing etc. adv. Humana Medical Plan, 685 F.3d 353(3rd Cir. 2012)

September 8, 2022

Kevin James, Esq.

Who can be a defendant in an action brought under Section 502(a)(3) of ERISA?

ERISA self-funded plans are becoming more and more aggressive about asserting their reimbursement rights when one of their members has settled a personal injury claim.  These subrogation vendors are always on the look out for a chance to stake a claim on a client’s tort settlement.  They are paid bounty hunters and as subrogation bounty hunters they require bounties to hunt. 

Since the pandemic, the vendors have shown a trend of increasingly hardline behavior.  As one can imagine, the vendors invariably took a hit to their revenue stream when the nation went into lockdown due to the COVID-19 pandemic. Because there were fewer people on the roads, there were less car accidents. Because there were fewer elective surgeries, less chances for instances of medical malpractice. As subrogation vendors searched claim data of their insurance company clients, they saw less and less traumatic treatment that they could pursue for possible subrogation. In addition, as experienced by plaintiff attorneys, with courts closed due to the pandemic, certain cases became harder to settle without the hammer of a trial.

For the last few years, the opportunities these vendors have had to drive their revenue and profits have been curtailed and many are trying to squeeze every dollar they can out of the opportunities left to them.   Unfortunately, this leaves injured persons and their advocates in the position of having to contend with these aggressive lienholders.

The risks of not dealing with ERISA self-funded liens is becoming an ever more crowded minefield for injured parties and their attorneys.  A recent case out of the Western District of North Carolina illustrates the risk that attorneys and their firms can bear if they fail to properly resolve ERISA self-funded liens.


An individual, who was covered under an ERISA self-funded plan, was injured in a motor vehicle accident. The Plan paid $18,295.88 in total medical benefits. The injured person hired a law firm to represent him in his tort claim. Prior to settlement of the of the injured party’s claim, the Plan placed the injured party’s attorney on notice that the benefits were paid by a self-funded ERISA qualified Plan and the Plan would be seeking reimbursement.

The plan language had two important provisions. First, it required full reimbursement under its terms; and second, it forbade the injured party from settling for less than an amount that would fully reimburse the plan, absent explicit written consent from the Plan.

While it’s unclear if there were any attempts at resolving the lien around the time of the settlement, the attorney eventually settled the tort claim without the Plan’s consent.  The attorney sent a letter to the Plan indicating that the case had been settled and all available funds had been proportionally distributed among the various lien holders as this was what had been requested by the injured party.  The letter also contained a check in the amount of $8,146.13 or approximately $10,000 less than the benefits expended by the Plan.   The letter went on to acknowledge that the check did not fully compensate the Plan’s lien but stated that any further obligation rested with the injured party alone and they had complied with the limited obligations the Firm had to the Plan.

The Plan not fully satisfied with this, continued its attempt for further reimbursement from the attorney.  The attorney responded to these attempts with a letter which stated, “We have closed the file and will not engage with any lien holder in any fashion or represent our client in this matter.” This second letter also indicated at least $4,603.87 had been allocated for payment to other lien holders.

The Plan filed suit against the injured party and the Firm for a constructive trust or equitable lien on the settlement proceeds with interest, a declaration of the Plan’s ownership of the settlement dollars equal to its payments, an order to turnover such proceeds and attorney’s fees and costs.  The Firm filed a motion to dismiss for failure to state a claim which resulted in the instant opinion.  


The question presented by this case is essentially which parties can be a defendant in an action that arises under Section 502(a)(3) of ERISA.

The Firm relied on a series of opinions from a sister district court, the Eastern District of North Carolina, the most notable of which was Great-West Life & Annuity Ins. Co. v. Bullock, 202 F. Supp. 2d 461, 465 (E.D.N.C. 2002).  In Bullock, which contained similar facts, it was found that ERISA was silent to the issue of who can be a defendant in a Section 502(a)(3) action and turned to North Carolina state law to fill the gap.  After a review of North Carolina state law and absent bad faith or negligence on the part of the attorney, the Court found that the attorney could not be a defendant. The Bullock court rested its view on the theory that an attorney could not be sued because there exists no privity of contract between the attorney and a Plan fiduciary.

The Western District in the instant case found that the U.S. Supreme Court had resolved the question of who could be sued two years before Bullock in its decision in Harris Trust & Sav. Bank v. Salomon Smith, Inc., 530 U.S. 238, 246 (2000)Harris was notably not cited by the Eastern District.  

The Western District found that the Eastern District’s attempt to gap fill from state law was unnecessary as ERISA, is in fact, not silent on the question who can be sued. The Western District quoted Harris andfound that Section 502(a)(3) “admits of no limit … on the universe of, possible defendants.” The only real limitation under the section is that the ERISA fiduciary is “seeking appropriate equitable relief”.   If the fiduciary is seeking appropriate equitable relief than “anyone” including an attorney or firm could be a defendant.

Finding that the Plan was seeking a constructive trust or equitable lien (thus the Plan was seeking an equitable and not a legal remedy), the Western District made four findings when denying the Firm’s motion to dismiss:

  1. The Plan had shown that it was plausibly entitled to full reimbursement;
  2. The settlement funds were identifiable and in possession of the Firm;
  3. The Firm was aware of the Plan’s right to full reimbursement;
  4. Reimbursement was not made to the Plan.

While this case arguably shows a split within the Fourth Circuit, it is within the weight of authority on ERISA cases. When an attorney has notice or arguably has reason to know an ERISA self-funded plan has an equitable lien or constructive trust, an attorney cannot simply wash their hands of the lien without potentially exposing themselves or the Firm to liability. 

This case also illustrates that an attorney’s duty to lien holders, under any relevant state law, will not serve as a defense when an ERISA qualified self-funded health plan pursues an action under Section 502(a)(3).

Synergy can assist you and your firm in resolving ERISA self-funded liens and avoid adverse results as such was found here.   This is especially true in the current environment as ERISA self-funded plans and their vendors are looking for opportunities to further extend the rights of these plans. The case is Mann+Hummel Filtration Technology US LLC v. Demayo Law Offices, LLP, Stephen Patterson.  CIVIL ACTION NO. 3:21-CV-00374-GCM-DSC.

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. 

Contact Synergy today to see how partnering with us for Lien Resolution services can benefit you and your clients.


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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