[UPDATE: Complicating matters, on June 29th, 2011, a Third Circuit panel ruled in the Tristani v. Richman case (PDF) that Medicare / Medicaid has the right to assert liens, and that the default medical expenses apportionment scheme under 55 PA. CODE § 259.2 is appropriate. Expect more litigation and appeals to follow, likely beginning with a petition for en banc review. Despite the above, though, I don’t believe the below analysis has changed — insurers still have no basis for refusing to pay plaintiffs. The lien is between the plaintiff and Pennsylvania’s DPW.]

This post is meant for all of my fellow Pennsylvania injury lawyers, whether they represent plaintiffs, defendants, or insurers, but I’ll fill in the background for everyone else.

It’s no secret that medical care is expensive. The more intensive the care, the more expensive it is. A broken bone can easily cost more than $10,000 from ambulance to discharge, spine surgery can cost from $25,000 to over $100,000, and brain surgery can go even higher. Orthopedic surgeons, general surgeons, neurosurgeons, radiologists… These folks do not come cheap, and for good reason: it takes a tremendous amount of training and experience to identify, diagnose, remove and reset vertebrae and bone fragments.

The above numbers don’t even touch upon the cost of an intensive care unit (or, worse, a specialized ICU, like the neonatal or cardiac ones) or continued rehabilitative care. When all is said and done, many of our clients — particularly those with cognitive or neurologic injuries — have medical bills in the high six figures, with a couple of them going into the millions.

Somebody — either a private insurance company or Medicare / Medicaid — paid for that care, and, when we settle a case, they come looking for cut of it. Private insurance companies have their own right of subrogation, which is a subject best left alone for now.

Back to the subject of this post: a huge issue among all lawyers (whether for plaintiffs, defendants, or insurers) involved in personal injury lawsuits these days is the ability of states to recover Medicare and Medicaid funds spent caring for tort victims. As I summarized the circumstances involving DPW / Medicaid liens of personal injury settlements:

One of the big issues that’s been floating around the personal injury / wrongful death world over the past few years is the extent to which states can recoup the money they spent on an injured person’s care if that person later sues the person who caused the injury and obtains a settlement.

The Supreme Court gave us a partial answer in Arkansas Dept. of Health and Human Servs. v. Ahlborn … “There is no question that the State can require an assignment of the right, or chose in action, to receive payments for medical care, [b]ut that does not mean that the State can force an assignment of, or place a lien on, any other portion of Ahlborn’s property.”

New laws, like the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”), have raised the stakes considerably, and have exposed everyone involved in the civil litigation system — including plaintiffs, their lawyers, defendants, their lawyers, as well as insurance companies and their lawyers — to the potential for liability to satisfy a lien, to indemnify someone else from satisfying a lien, or for malpractice if they mess up the lien.

It’s a sticky situation for everyone, which has caused some insurance companies to start demanding, and some misguided plaintiffs’ lawyers to start agreeing, that the insurance company negotiate directly with the government to satisfy a Medicare, Medicaid, CMS or DPW lien, and that the insurance company then satisfy the lien by cutting a check directly to the government.

To which I say: no, no, no. In Pennsylvania, the insurance company has no right to demand that Medicare, Medicaid, CMS or DPW be added to a verdict or cut a separate cut during settlement.

Ahlborn settled that issue as far as I’m concerned: the State can only place a lien on the payments for medical care, and in most settlements there is no pre-determined amount for medical care. Thus, like in the McKinney v. PHA case I discussed, the plaintiff can do whatever the want with the settlement money until the State gets an order establishing how much of the settlement went to medical care.

But if you happened to see Ahlborn a different way, then Zaleppa v. Seiwell, 2010 PA Super 208 (Pa. Superior Court 2010) should have cleared it up:

Seiwell alleges that the trial court erred in denying her post-trial motion, which requested that the court enter an order directing her to pay the verdict either (1) by naming Medicare, along with Zaleppa and her attorneys, as payees on the draft satisfying the verdict or (2) by paying the verdict into court pending notification from Medicare that all outstanding Medicare liens have been satisfied. After careful consideration, we conclude that there is no legal basis under either federal or Pennsylvania law to assert the interests of the United States government as to the reimbursement of Medicare liens. Thus, the trial court properly denied Seiwell’s post-trial motion.

I know that, and so I do not let insurance companies try to compromise my clients’ rights by secretly negotiating with the government. The problem, however, is that some plaintiffs’ attorneys have let this happen, either unwittingly or carelessly, emboldening insurance companies and the government into doing it as a matter of course. Diligent plaintiffs’ attorneys only find out when the insurance company pays us less than the full settlement amount, requiring that we start kicking and screaming, demanding the insurance company cancel the check to the government and threatening to file a motion to enforce the settlement.

So I’ll say it again: Pennsylvania injury lawyers, stop letting insurance companies deal with the government directly over Medicaid / Medicare liens. If you have an issue, post it to one of the plaintiffs-side list servers, or pay for a lien resolution services company.

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