What Is a Lien and How Does It Affect
My Personal Injury Settlement
Barry: Well, one of the big issues in every case is going to be the payment of medical expenses in an area that's of enormous concern to just about everybody. And what I encourage all of my clients do is to make sure that their medical expenses get paid either through health insurance or some other form of insurance rather than being paid through the settlement proceeds. Now, when your medical expenses get paid by health insurance or from some other source, if you look at it from the perspective of your health insurer or somebody else who's paying your medical expenses for you, it's not their fault that you got hurt in an accident either and they will have a right to get reimbursed money out of the settlement proceeds. It really becomes an effective way of putting the responsibility for those medical expenses back on the person whose accident the fault was.
Pam: Okay. Can you give some examples of where you may have an obligation to reimburse someone else out of settlement proceeds?
Barry: Well, the most common example of that is with your health insurance, your health insurance policy will have a clause on the insurance policy, which is called a subrogation clause, which basically says if you collect money as a result of a settlement from some other person, you have an obligation to reimburse us out of those settlement proceeds. That's the most common example. Another place where you'll see that is in automobile insurance policy. If you use your medical payments coverage as a way to get your medical expenses paid, there'll be a similar kind of clause in your automobile insurance policy. The last really common place where you'll have an obligation to reimburse somebody out of the proceeds of your settlement is if your bills are paid through worker's comp, and that actually becomes a broader obligation than just paying back your medical expenses bills. You also have an obligation to pay back all of the benefits that you have through worker's comp, which would include the disability benefit that you get while you're off work. Your medical expenses in any type of settlement that you got in connection with the workers' comp case.
Pam: Barry, so I was just thinking, I believe my mom is on Medicare. What would happen if she were involved in an accident?
Barry: So government-related programs like Public Aid and Medicare also have legal requirements to reimburse the government program out of the settlement proceeds. It's something that's become an increasingly sensitive issue in my field, because the way that the Medicare statute is actually written is that if Medicare isn't properly reimbursed, it gives the government the ability to recover that money, not just from the person who got the settlement money, but all of the insurance companies involved, the lawyers involved, the defendant involved and everybody else.
Pam: So how do they determine what has to be back?
Barry: The basis of reimbursement is what was actually paid out for accident related care. So for example, if you broke your leg in an accident and you were also on medication for a heart condition, the only thing that would be part of the basis of reimbursement would be care that was related to your broken leg. You wouldn't have to reimburse the government for or Blue Cross, Blue Shield for that matter, for the cost of your cholesterol medication.
Now the good news in all of this is two things. Number one is that whether it's Medicare or Blue Cross, Blue Shield or whoever else, they pay far less for your medical care than what's actually billed by the hospital. So if you go to an emergency room after being involved in say a simple rear end accident and get some x-rays and so forth, that bill might be $5,000, but the payer, whether it's Blue Cross, Blue Shield or Medicare will usually pay less than $2,000. The basis of your reimbursement is that $2,000 that was actually paid out, not the gross amount that was actually billed and what you reimburse the government or Blue Cross, Blue Shield or whoever it is, is not the full $2,000 or whatever it is that they actually paid out. It's a lesser figure which accounts for the costs of the recovery. In other words, they have to account for costs and attorney's fees and so forth. So the net reimbursement to the government is usually about 60% to 65% of what they actually paid out. The good news and all of this is what has to be reimbursed when everything is all said and done is far less than the gross amount billed. Pam: And where do people make mistakes with this?
Barry: They're really two points where people end up making mistakes with regard to the reimbursement obligation.
The first of these is that people aren't really necessarily aware or conscious of it and don't really take it into account when negotiating things with the insurance company and if it's not specifically accounted for in terms of your negotiations with the insurance company, what will happen is that they'll issue you a check with two payees on it. A check will come made payable to you and to Blue Cross, Blue Shield or to Aetna or whoever. And then in order to get that check deposited, you're going to have to work things out with Blue Cross, Blue Shield or whoever the other payee is on the check. So that's one place where people tend to make mistakes.
The other is when people are actually aware of what the reimbursement obligation is that there's some amount that needs to be paid out. They sometimes end up paying out money for things that they really shouldn't be paying back as part of the reimbursement obligation.
What you have to pay back is accident-related care and when I'm dealing with either a government agency or a private insurer as to what they are claiming in the way of reimbursement. One of the things I is I asked for an itemization of what are you claiming you're entitled to be reimbursed for and I go through that line by line, by line, by line. In a lot of times we'll find things that are stuck in that itemization for one reason or another, but you'll find things that really shouldn't be included. I handled a case not too long ago involving a gentleman who had a rotator cuff injury as a result of an accident. He also had Crohn's disease and I found all kinds of hospital treatments and visits to the gastroenterologist that related to his crones disease, which clearly wasn't part of his care and treatment for his rotator cuff injury.
And we were able to get that taken off and that actually increased the net amount of money that the client netted when it was all said and done. And that's part of the basket of services that we offer as lawyers when we're representing someone, is that I want to make sure that my clients net out when everything is all said and done as much money as possible. Part of what we do is make sure that we are limiting the reimbursement obligation to what actually has to be paid back.