LIENS
Welcome to Synergy’s blog page dedicated to the topic of lien resolution. Our team of subrogation experts share their InSights and knowledge on the latest developments and best practices in lien resolution. Stay up-to-date with the latest trends and strategies to ensure that you have the information you need to navigate the complexities of lien resolution.
Introduction
The landscape of healthcare billing can be complex and confusing, both for healthcare providers and patients alike. When there is third-party liability involved, such as in cases of accidents or injuries caused by someone other than the patient, the responsibility for billing insurance can become even more complex. In these situations, a hospital may explore various avenues to determine the primary source of payment for the medical services provided. One common question that often arises is whether hospitals and healthcare providers are obligated to bill insurance, particularly government programs like Medicare or Medicaid. In this post, we will explore healthcare billing, the role of insurance, and the requirements associated with billing Medicare and Medicaid generally and in third-party liability cases.
The Basics of Healthcare Billing
Healthcare billing is the process by which healthcare providers submit claims to insurance companies or government programs to receive payment for the services they render to patients. Health insurance, whether private or government-sponsored, plays a crucial role in covering medical expenses and ensuring access to healthcare services for covered individuals.
Providers are generally encouraged to bill insurance companies to facilitate the reimbursement process and reduce the financial burden on patients. However, the decision to accept insurance and the specific agreements between providers and insurers can vary.
Do Hospitals and Providers Have to Bill Insurance?
In the United States, there is no federal law mandating that hospitals or healthcare providers must bill private insurance, Medicaid, or Medicare. Providers have the flexibility to decide whether they will accept insurance and enter into agreements with specific insurance plans for the amount of those payments for specific services. While it’s customary for healthcare providers to bill insurance, including Medicare and Medicaid, some may choose not to participate in certain networks or programs. However, this decision can have implications for both the provider and the patient, as non-participating providers may charge higher fees, leaving patients responsible for a larger portion of the bill.
Typically, hospitals initiate billing by submitting claims to the primary health insurance for the medical services rendered. This is a standard practice, and hospitals typically bill the patient’s insurance as part of the normal billing process. In situations involving third-party liability, the hospital may engage in a process known as Coordination of Benefits. This involves determining the order in which multiple insurance policies will contribute to covering the patient’s medical expenses. The hospital may work with the patient’s primary insurance provider, and if applicable, the insurance provider who represents the at-fault third party.
The hospital will likely conduct an analysis balancing how they receive the largest payment for their services in the shortest period of time. While the hospital works through the billing and coordination process, the patient may still be responsible for co-pays, deductibles, or any charges not covered by insurance. Clear communication between the hospital and the patient about financial responsibilities is crucial.
Billing Medicare: An Overview
Medicare, a federally funded program, provides health coverage for individuals 65 and older and certain younger individuals who suffer from specified disabilities. Providers can participate in the Medicare program or be non-participating providers, though this is uncommon.
Participating providers agree to accept Medicare-approved amounts as full payment for covered services, and they submit claims directly to Medicare. Non-participating providers may charge more than the Medicare-approved amount and may require patients to pay the difference, known as “balance billing.”
It’s important to note that while providers are not required to participate in Medicare, they are prohibited from discriminating against Medicare beneficiaries. This means that providers cannot refuse to treat a patient solely because they are covered by Medicare.
When the payment for treatment is someone else’s apparent responsibility, the provider has an obligation to not bill Medicare. Under the Medicare Secondary Payer Act, Medicare may not pay for a beneficiary’s medical expenses when payment “has been made or can reasonably be expected to be made under a workers’ compensation plan, an automobile or liability insurance policy or plan (including a self-insured plan), or under no-fault insurance.”[1] However, if responsibility for the medical expenses incurred is in dispute and other insurance will not pay promptly, the hospital, provider, physician, or other supplier may bill Medicare as the primary payer.
Billing Medicaid: An Overview
Similarly, by law, the Medicaid program is the “payer of last resort.” If another insurer or program has the responsibility to pay for medical costs incurred by a Medicaid-eligible individual, that entity is generally required to pay all or part of the cost of the claim prior to Medicaid making any payment. This is known as “third-party liability” or TPL. Third parties that may be liable to pay for services include private health insurance, Medicare, employer-sponsored health insurance, settlements from a liability insurer, workers’ compensation, long-term care insurance, and other State and Federal programs (unless specifically excluded by Federal statute).
Problems can arise when a provider decides they would rather be reimbursed from a beneficiary’s tort settlement. A provider may make this decision if it suspects it would be entitled to a higher reimbursement amount than it would receive from Medicaid. This does not always work out in the provider’s favor if the settlement amount ends up not being enough to satisfy the provider’s claim. Typically, providers have only 1 year from the date of service to submit bills to Medicaid.
Navigating the Billing Process
Patients should be proactive in understanding their insurance coverage and seeking clarification from providers about their billing practices. It is advisable to confirm whether a healthcare provider accepts the insurance, including Medicare or Medicaid, and inquire about any potential out-of-pocket costs. Being informed and seeking in-network providers can significantly alleviate the complexities of the billing process.
No Surprises Act
The No Surprises Billing Act, officially known as the No Surprises Act, is a U.S. federal law enacted as part of the Consolidated Appropriations Act, 2021. It addresses the issue of surprise medical billing, a situation where patients receive unexpectedly high medical bills, often due to receiving care from out-of-network providers, even in emergencies or situations beyond their control. The act aims to protect patients from exorbitant bills for out-of-network healthcare services, particularly in emergency situations and certain non-emergency situations.
Key provisions of the No Surprises Billing Act include:
- Patients are protected from surprise billing in emergency situations, where they have little or no control over the choice of healthcare provider, by limiting their out-of-pocket costs to in-network amounts.
- In situations where insurers and providers cannot agree on reimbursement rates for out-of-network services, the No Surprises Act establishes an Independent Dispute Resolution (IDR) process. This process involves an independent third party reviewing and resolving disputes between healthcare providers and insurers regarding reimbursement.
- The Act requires healthcare providers and insurers to provide patients with a good faith estimate of the expected costs for scheduled services, allowing patients to better understand and plan for their healthcare expenses.
- Patients are protected from balance billing for out-of-network emergency services and certain non-emergency services provided at in-network facilities.
The No Surprises Billing Act primarily focuses on protecting patients from unexpected and excessive medical bills, and it does not specifically address third-party liability situations in the traditional sense. However, its impact on third-party liability scenarios can be seen in the context of emergency care and situations where patients have limited control over the choice of healthcare providers.
In cases of emergency care, where patients may not have the opportunity to choose in-network providers, the No Surprises Act helps protect patients from balance billing and ensures that their out-of-pocket costs are limited to the amounts they would pay for in-network services. While the No Surprises Act primarily addresses disputes between insurers and providers, the IDR process could potentially be used in certain third-party liability situations where disagreements arise over reimbursement for medical services.
Conclusion
In the complex world of healthcare billing, there is no universal requirement for hospitals and providers to bill insurance, including Medicare or Medicaid. The decision to participate in insurance programs is often at the discretion of individual providers. In normal situations, patients should advocate for themselves by being informed about their insurance coverage, seeking in-network providers when possible, and clarifying billing arrangements with healthcare providers. In third-party liability situations, planning is often not possible. However, the No Surprises Billing Act should add a layer of protection, preventing unexpected billing surprises for patients whether or not available insurance is billed, or the hospital maintains a debt or asserts a lien.
[1] 42 U.S.C. §1395y(b)(2).
Teresa Kenyon, Esq. and Kevin James
Effectively minimizing or eliminating the reimbursement of any claimed medical lien is a critical part of ensuring just compensation for the injured. Personal injury lawyers encounter numerous obstacles in the process of resolving liens. While the negotiation and resolution of liens can be done independently by the attorney and their teams, collaborating with a seasoned lien resolution expert can alleviate these challenges. The obstacles a personal injury lawyer may face encompass time-consuming tasks such as identification of lienholders, navigating the intricate web of jurisdiction-specific lien laws, and negotiating for the most substantial reduction possible. Confronting these challenges may prevent attorneys from focusing on what the firm does best and distract from the primary task of representing more clients successfully.
If you decide not to outsource lien resolution functions to experts, the following noteworthy precedents will serve as valuable guides in your efforts to minimize liens. The applicability of these cases for lien resolution depends on the unique context of the case and differences from jurisdiction to jurisdiction. Nevertheless, these cases have played a substantial role in shaping lien resolution principles in their respective areas.
Medicaid – Arkansas Department of Health and Human Services v. Ahlborn (2006):
Ahlborn was a landmark case that has played a pivotal role in establishing the principle of “proportional recovery” in Medicaid lien reduction. The Supreme Court ruled that Medicaid can only recover from the portion of settlement dollars that can reasonably attributed to medical expenses. The mandate from the Court is that an allocation must be made between medical expenses and all other types of damages. The parties agreed to a pro-rata reduction prior to the Court’s ultimate holding in Ahlborn, but it is most important to note that the Court expressly refused to mandate a method of allocation, only that an allocation must be done.
Medicaid – Gallardo v Marstiller (2022)
The Court provided additional clarification regarding the previous limitations for reimbursement to Medicaid as espoused by Ahlborn by holding that the Medicaid Act permits states to seek reimbursement from settlement payments allocated for future medical care, not just past medical care.
ERISA – Cigna v Amara (2011)
This case focused on whether the employees could enforce the terms of the ERISA Plan based on misleading SPDs, even if the terms of the Plan and the SPDs did not align. The Supreme Court ruled in favor of the employees, holding that the terms of an ERISA plan could be enforced based on equitable remedies when there was a discrepancy between the plan documents and the SPDs. The Court clarified that, under ERISA, the terms of the plan documents govern, but if there is a conflict or discrepancy between the plan documents and the SPDs, the actual plan terms controlled.
ERISA – US Airways, Inc. v. McCutchen (2013):
The US Supreme Court held that while ERISA plans are contractual, and their terms are generally enforceable, equitable doctrines can sometimes be invoked to limit the extent of reimbursement sought by a plan. The Court ruled that when a plan seeks reimbursement from a participant’s recovery, the common-fund doctrine and unjust enrichment principles can be considered to ensure fairness. However, the Court also emphasized that the specific terms of the Plan and the intent of the parties, as expressed in the plan documents, should guide the analysis. The Court remanded the case to the lower courts to apply these equitable principles in determining the extent of reimbursement owed to the ERISA plan, taking into account the circumstances of the case. While used by subrogation vendors as their support for why they don’t have to reduce their self-funded ERISA lien, it is also strongly support for the injured party when the policy language is not clear and concise.
ERISA – Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan (2016):
Montanile focused on whether the ERISA health benefit plan could enforce its subrogation rights to recover funds from Montanile’s settlement after he had spent the settlement proceeds on nontraceable items. The Montanile decision clarified the limitations on health benefit plans’ ability to enforce subrogation rights in certain circumstances. It emphasized the importance of timely action by plans to assert their rights and highlighted the challenges plans may face when seeking recovery from participants who have already spent settlement funds on general expenses.
Hospital/Provider – Howell v. Hamilton Meats & Provisions, Inc. (Cal 2011):
California Supreme Court case that addressed the issue of medical cost recovery in personal injury lawsuits. In this case, the court held that a plaintiff in a personal injury case could only recover the reasonable value of medical services actually provided, as opposed to the higher billed amount. The decision clarified that the “collateral source rule” did not allow plaintiffs to recover medical expenses greater than the amount actually paid for the services, typically negotiated down by health insurers. This ruling had implications for the calculation of damages in personal injury cases, limiting the amount plaintiffs could recover for medical expenses.
Medicare – Bradley v Sebelius (11th Cir 2010)
The 11th Circuit Court of Appeals dealt a significant blow to Medicare’s reimbursement practices under the Medicare Secondary Payer Act. The ruling, stemming from a case challenging Medicare’s ability to recover from the portion of the settlement dollars intended to compensate the heirs for their damages under Florida’s Wrongful Death Act’. This holding establishes that the Medicare Secondary Payer Act does not preempt the Florida Wrongful Death Act and that Medicare was limited to the funds allocated to the survivorship claim.
Medicare Advantage – In re Avandia (3rd Cir 2012):
The first court to conclude that a Medicare Advantage Plans rights under the Secondary Payer Act are identical to those under traditional Medicare. Unfortunately, some subrogation vendors for Medicare Advantage plans have twisted this and subsequent cases to mean that they have the same right to make a recovery but then do not believe it means that they have the same liabilities or requirements for reduction or compromise as traditional Medicare.
Conclusion
In conclusion, effectively managing and minimizing medical liens in personal injury cases is a multifaceted and evolving challenge. The landscape of lien resolution is continuously shaped and redefined by significant legal precedents, such as Ahlborn, Gallardo, Amara, McCutchen, Montanile, Howell, Bradley, and the Avandia case. These rulings collectively underscore the necessity for personal injury attorneys to be acutely aware of the nuanced and jurisdiction-specific legal frameworks governing medical liens.
For attorneys, these cases serve as essential guides in navigating the complex terrain of medical lien resolution. They offer strategic insights into negotiating lien reductions, understanding the scope of lienholders’ rights, and leveraging equitable doctrines to contest excessive claims. More importantly, these rulings underscore the importance of precise and informed decision-making in the resolution process.
The evolving legal landscape, characterized by these landmark cases, reinforces the value of collaboration with experienced lien resolution professionals. While personal injury attorneys possess the legal acumen to represent their clients effectively, partnering with lien resolution experts can provide the specialized knowledge and strategic insight necessary to navigate this complex area efficiently. Such collaboration not only maximizes the potential for reducing liens but also allows attorneys to focus on their core competency—advocating for their clients—thereby enhancing the overall effectiveness and success of their legal practice.
Partner with Synergy for lien resolution services here.
November 9, 2023
Introduction
In the world of personal injury law, every moment counts. The intricacies of building a solid case, negotiating with insurance companies, and advocating for your clients in court demand your undivided attention. Yet, there’s a persistent issue both during and after resolution of your case that often distracts you from your core responsibilities: healthcare liens. These liens, imposed by healthcare providers, government agencies, and private insurers, can become a legal labyrinth which negatively impacts the amount your injured clients will receive. This is precisely why collaborating with a dedicated Lien Resolution Specialist can be a game-changer for your practice.
We will explore the compelling reasons why you should outsource your lien resolution work to experts. We will delve into the complexities of different types of healthcare liens and how seasoned Specialists can positively impact your clients’ take-home recovery.
Understanding Healthcare Liens
Before probing into the reasons why you should engage experts for lien resolution, let’s take a step back and understand the nature of healthcare liens.
Healthcare liens are legal claims placed on a personal injury settlement or judgment by healthcare benefit providers. These liens aim to recover the medical expenses paid for by the health benefit program that were incurred by the injured party as a result of the accident or injury. The types of healthcare liens come in various forms including:
Medicaid Liens:
State-administered Medicaid programs that provide healthcare coverage to low-income individuals. When Medicaid beneficiaries are injured due to someone else’s negligence, state Medicaid programs may assert liens to recover the medical costs they’ve covered. Medicaid liens can have a substantial impact on personal injury settlements. However, case law, such as the Ahlborn and Gallardo decisions, have established the principle of proportional recovery. This means they should only claim a fair share of the settlement or judgment amount.
Medicare Liens:
Medicare is a federal program that provides healthcare coverage primarily for individuals aged 65+ and older or in specific other situations. When Medicare beneficiaries are injured, Medicare has an interest in being reimbursed for payments they conditionally made in third-party liability cases. Navigating Medicare liens requires an intricate understanding of federal law and the potential consequences of mistakes can be severe, including double damages or referral to the Department of Treasury for collection.
Hospital Liens:
Hospitals provide medical services to injured individuals with the expectation of receiving payment for their services. In cases where individuals lack sufficient insurance coverage or face financial difficulties, hospitals may place liens on personal injury settlements or judgments to recover unpaid medical bills. Proper itemized billing is crucial to verify the accuracy of the charges. This ensures transparency and fairness in the lien resolution process and ensures that you do not overpay hospital charges.
ERISA Liens:
Employer-sponsored health insurance plans governed by the Employee Retirement Income Security Act (ERISA) may also assert liens in personal injury cases. ERISA liens can be particularly sophisticated and difficult to resolve as they involve federal regulations as well as stringent compliance requirements. Case law has clarified the obligations of plan administrators in asserting ERISA liens, emphasizing the need for active assertion of a lien interest, clear and concise policy language and compliance with documentation requirements. Analyzing funding status and controlling documents is crucial to formulating strategies to gain leverage in negotiations.
Military and VA Liens:
Military personnel and veterans often receive medical treatment from military hospitals and VA medical facilities. When these individuals are involved in personal injury cases, the government may assert liens to recover the costs of medical care provided through military or VA healthcare systems. It’s fundamental to understand the unique jurisdiction and procedures associated with military healthcare facilities. These liens can involve complicated federal regulations. VA liens involve the Department of Veterans Affairs. It’s important to note that the laws governing VA liens can vary depending on the nature of the injury and the specific VA benefits received by the veteran.
FEHBA Liens:
The Federal Employees Health Benefits Act (FEHBA) provides health insurance coverage to federal employees and retirees. If a federal employee or retiree is injured due to the negligence of a third party, FEHBA may cover their medical expenses with the expectation that they be reimbursed from any settlement funds. FEHBA liens are governed by federal law and can be challenging to navigate. Case law that exists provides that these plans preempt state law but do not provide much other guidance.
Disability Liens:
In personal injury cases involving individuals with disability benefits, there are disability liens to consider. When these policyholders receive settlements or judgments in personal injury cases, the disability insurance company may assert liens to recover the disability benefits paid. Disability liens can present difficult legal challenges. You must navigate the terms of disability insurance policies, which can vary widely, and negotiate with insurance companies to reduce the liens and ensure clients are not unfairly burdened with repaying disability benefits that they have already received. The disability plan’s policy language and the nature of the case are important components to analyze.
Private Health Insurance Liens:
Private health insurers, such as Blue Cross Blue Shield, Aetna, or United Healthcare, provide healthcare coverage to individuals through insurance policies. In personal injury cases, these insurers may assert liens to recoup the payments made on behalf of their policyholders for medical treatment related to the injury. Understanding the terms and conditions of private health insurance policies is essential when dealing with these liens. Case law and statutory framework in each state has emphasized the need for insurers to explicitly state their subrogation rights in their policies.
Important Practice Note: It is essential to assess whether a private insurance plan is really a Medicare Advantage or Medicaid Managed Care Organization (MCO) in hiding. Those plans are not governed by state law and require your swift attention.
Navigating Complex and Evolving Laws
Healthcare lien laws are elaborate yet vague , with federal and state regulations governing different aspects of liens. These laws are subject to change, and staying up to date can be a daunting task for busy personal injury attorneys. Engaging a Lien Resolution Specialist gives trial lawyers access to the latest legal insights regarding lien resolution. Specialists keep abreast of recent case law, regulatory shifts, and evolving lien reduction strategies, enabling you to maximize your client’s recovery while focusing on what you do best.
For instance, in the complex world of Medicare or Medicaid liens, experts can calculate the appropriate proportion of the settlement that should be allocated to the lien, ensuring that clients receive their rightful share of the recovery. In hospital lien cases, experts can scrutinize itemized bills and challenge overinflated charges, leading to substantial lien reductions. Moreover, experts are skilled in identifying potential unrelated treatment or discrepancies or duplications in lien calculations on lien statements, which can result in further reductions. This attention to detail can make a significant difference in the final net amount received by the client.
Healthcare lien resolution requires a deep understanding of the specific strategies and tactics necessary for each type of lien. Lien Resolution Specialists bring this expertise to the table, tailoring their approach to the unique circumstances of each case. Each company that handles healthcare lien recovery efforts operates differently. Having an in-depth understanding of the inner workings of the recovery vendors can provide significant advantages in the negotiations.
Enhanced Client Satisfaction
When you opt to utilize an expert in lien resolution, you’re not only lightening your workload but enhancing your client satisfaction. By bringing in experts to handle lien resolution, you are demonstrating a commitment to protecting your clients’ financial interests. This can build trust and confidence, leading to greater client satisfaction. Clients are more likely to recommend attorneys who have successfully reduced their liens and ensured they received a fair portion of the settlement or judgment.
Outsourcing to Synergy is THE ANSWER
To navigate these complexities effectively and prioritize the best interests of your clients, you should engage a team of Lien Resolution experts like Synergy. By understanding the nuances of healthcare liens and the legal principles that govern them, and entrusting the resolution to experts, you are restricting the lienholders to funds only when truly entitled to reimbursement for medical expenses incurred. You are also ensuring that your client is receiving the maximum compensation they deserve. Contact Synergy to learn more.
July 13, 2023
Introduction:
When it comes to settling a personal injury case, the complexities of health insurance subrogation can significantly impact the disbursement of settlement funds. Attorneys handling these cases must navigate the intricate dynamics at play, especially when dealing with subrogation vendors who specialize in recovering funds on behalf of health insurance carriers. This article aims to shed light on the workings of health insurance subrogation, exploring the evolution of subrogation, its impact on the injured party, and the role of subrogation vendors. Lastly and most importantly, it argues in the conclusion why personal injury plaintiffs and plaintiff counsel need knowledgeable experts on their side like the recovery vendors who fight for the plan’s subrogation rights.
The Evolution of Subrogation:
Subrogation as a practice has undergone significant evolution over the years to address the rights and obligations of interested parties. Subrogation defined is when an insurance company seeks reimbursement from a responsible party for a claim they’ve already paid according to their contractual requirements. Although some of these health insurance companies have their own internal subrogation departments, many choose to outsource. To navigate the complex landscape that surrounds the various legal theories, those health insurance companies often outsource to subrogation vendors who specialize in recovering funds. They are essentially their expert partner for lien resolution. It allows the insurance carrier to do what they do best – reviewing and paying insurance claims. And it allows the subrogation vendor to do what they do best by handling the collection and battle associated with clawing funds from an injured party’s settlement and sending those funds back into the insurance company’s bank accounts, with a large cut going to the subrogation vendor for collection.
Subrogation vendors like The Rawlings Company, Optum, and Conduent typically enter into contractual agreements with health insurance companies or other entities, outlining the terms and conditions of their services. These agreements specify the scope of work, responsibilities and authority, fees for service, and other relevant details. To initiate the subrogation process, subrogation vendors gather relevant data from insurance companies claims database including all relevant information related to the submission and payment of insurance claims. They analyze this data to identify potential subrogation opportunities where the insurance company may have a right to recover funds.
The concept of subrogation has evolved over time as a legal principle to address certain situations involving the rights and obligations of parties in insurance and contract law. While it is difficult to pinpoint an exact moment when subrogation became a “thing,” its origins can be traced back to ancient legal principles and practices. Historically, subrogation emerged from the doctrine of equity, which aimed to provide fairness and justice in legal matters. In its simplest form, subrogation refers to the substitution of one person or entity in place of another with respect to certain rights or claims. This helps prevent unjust enrichment and ensures that the responsible party bears the financial responsibility for their actions or negligence. Over time, subrogation has become a well-established legal doctrine through court decisions, statutes, and contractual provisions.
The Unintended Consequences:
Unfortunately, the evolution of health insurance subrogation and the introduction and spread of expert subrogation vendors has led to unintended consequences, deviating from the principles of equity and fairness. The original purpose of subrogation, which was aimed to ensure responsible parties bear the financial responsibility of their actions, has been overshadowed by a corporate pursuit of monetary gain at the expense of the injured person. Equity is the farthest thought in the mind of most subrogation vendors. In fact, they are trained to disregard the injured person, their injury and how it may truly negatively impact their entire life.
When a health insurance company exercises its subrogation rights, it is asserting its subrogation claim to recover from the total available settlement. Consequently, the injured party’s compensation is reduced, potentially leaving them with a smaller financial recovery than they anticipated or deserve to adequately cover their future needs or compensate them for their prior trauma. Herein lies the inequity and unfairness.
The subrogation process is meant to prevent double recovery by ensuring that the responsible party bears the financial responsibility for their actions. However, in most cases, the subrogation process fails to fully account for additional costs incurred by the injured party to secure a recovery, the non-medical economic damages or the non-economic damages they have suffered. In most cases, a settlement does not allow an injured party to receive full compensation for their loss, and the subrogation claim by the health insurer further reduces their recovery since it is asserted against all damages instead of being limited to past medical expenses.
Pursuing a personal injury claim is already a time-consuming and emotionally draining process. The introduction of health insurance recovery rights adds more uncertainty regarding the amount and timing of the compensation. This can create additional financial burdens for individuals already grappling with the consequences of their injury or illness.
Vulnerable individuals, such as those with severe injuries, chronic conditions, or significant medical expenses, are disproportionately impacted by health insurance subrogation. They heavily rely on the compensation received from liable third parties to cover ongoing medical costs, rehabilitation, and other essential needs. When a portion of their recovery is usurped by the insurance company through subrogation for past medical care, it exacerbates financial hardships and impedes their ability to pay for necessary care.
In some cases, and for certain health insurance benefit programs, laws and regulations have been enacted to protect the interests of the injured party and strike a balance with insurance companies. These laws provide certain protections or limitations on health insurance subrogation, mitigating the concerns raised by the disproportionate impact on injured individuals. However, the unfortunate evolution of health insurance subrogation has allowed certain health plans, such as ERISA, FEHBA, and others, to divert more settlement dollars away from the injured person, emphasizing the need for continued subrogation reform.
Understanding Subrogation Vendors:
Focusing on subrogation vendors is essential as they have played a significant role in shaping laws that favor their corporate clients. This alignment with insurance companies not only benefits the vendors financially but also strengthens their relationship with their health insurance clients. By collecting in more situations and recovering higher amounts, they can generate larger compensation for themselves. As partners for insurance carriers, subrogation vendors enter into contractual agreements with big insurance companies that outline the terms of their services. They analyze data from insurance claims databases to identify subrogation opportunities and work to collect funds from the injured party’s settlement, receiving a significant portion of the recovery as their fee.
Negotiating with subrogation vendors can be challenging for attorneys and their clients. Here are a couple quick hitting facts about most subrogation vendors handling ERISA subrogation claims. Most are understaffed. They juggle between 700-1000 cases, leading to significant delays and often, overlooked details. And no, they aren’t reading your lengthy letter on ERISA lien law. They are swamped. Representatives are typically narrowly trained, limiting their ability to appreciate counterarguments or understand complex subrogation issues outside their training sphere. They love to twist and misinterpret their recovery rights in their favor. Contrary to their statements, simply being an ERISA self-funded plan does not mean they can’t reduce their lien. It means they don’t want to because this lien type could produce the highest recovery for them. But their rights are only as strong as the plan language dictates. Even if it’s an ERISA plan, it doesn’t necessarily mean they are entitled to recover 100% of their claimed lien. The actual recovery amount able to be collected varies based on the plan language and the case specifics.
Although it’s lost some of its pizazz because it’s now 10 years old, the US Supreme Court case of U.S. Airways v. McCutchen has been used to spread a misunderstanding of the law. Contrary to popular belief, the McCutchen case did not ultimately force the injured party to repay the plan 100% of their expenses. This is a commonly misunderstood aspect that many recovery contractors exploit. On remand, the plan got even less once plan documents were reviewed with a closer eye. Speaking of plan documents, not all plans are self-funded, contrary to what they might claim. Funding status matters. Don’t rely upon what you are told; obtain and review the relevant plan documents yourself. The Cigna v Amara case held that the Master Plan Document (MPD) is the controlling document. A subrogation vendor may claim that the plan does not have an MPD. However, often, they either don’t want to retrieve it from the self-funded group or already have it and it’s not favorable to their recovery. Instead of producing the MPD, they misdirect you to the Summary Plan Description (SPD). Because it’s what they have in house. Usually this is because the document was created by the insurance carrier whereas the Master Plan Document was created by the actual self-funded employer group, making it harder for the recovery vendor to obtain.
Believe it or not, most reduction requests never actually make it to the client or plan. This is a well-kept secret that significantly impacts the resolution process. Subrogation vendor representatives will commonly refer to their client as having the decision making power. It gives the illusion that it is the insurance company who is a Claims Administrator or the self-funded employer is calling the shots. But for many subrogation vendors, they have complete discretion in house based on their subrogation contracts with their health insurance clients. This means that they internally get to make reduction decisions without clearing through the outside party they are working on behalf of. There are internal authority processes but only in narrow situations does the representative have the file reviewed outside the subrogation vendor’s internal team.
Aside from internal processes and financial incentive of the subrogation vendor itself, another big reason why many subrogation representatives are not open to reduction is because they have a personal stake in collecting that check from the injured party’s settlement. For most subrogation vendors, employees get a bonus for each recovery check they receive whether it be based on the dollar amount of the recovery, the number of recoveries they make in a month, or the percentage of reduction they provide on all of their closed files for the month.
Conclusion:
Attorneys play a crucial role in advocating for the injured party’s rights during the subrogation process. Attorneys must be knowledgeable and strategic in their interactions with subrogation vendors to ensure their clients keep a fair and equitable portion of their settlement. Understanding how subrogation vendors operate, their financial incentives, and the importance of obtaining and reviewing relevant plan documents can assist attorneys in effectively interacting with these vendors.
All of that still might not be enough though given the unlevel playing field when fighting a subrogation vendor. That is why outsourcing to experts in the field of lien resolution, like the health insurance plans do with recovery vendors, fights fire with fire. Having a team of experts who understand the ins and outs of these recovery vendors can level the playing field making sure your client keeps every penny of their recovery that they should.
Synergy is here to be that expert for trial attorneys and their injury victim clients. With our expertise and understanding of the intricacies of subrogation, we develop strategies to maximize the available settlement funds for injured people. Our focus is on achieving equity and fairness in the subrogation process thereby ensuring health insurance companies aren’t collecting more than they are entitled to. Trust Synergy to navigate the complexities of subrogation and provide exceptional lien resolution services for you and your clients. Together, we can ensure that injured individuals receive the compensation they very much deserve. Contact us today to learn how to partner with Synergy.
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.
Conclusion
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:
- Enhance law firm efficiency by reducing operating expenses.
- Gain access to a deep team of experts to fight massive recovery vendors.
- 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.
Conclusion
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.
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