Liens: A Practical Impediment to Resolution

by Sarah J. Simkin

You have looked at every angle of your case’s strengths and weaknesses, tallied up the expenses to date, estimated the complicated calculus of damages and have finally arrived at a figure that could resolve your case…but have you considered the specter that looms over many personal-injury cases? Medical liens could sink your settlement if you have not factored for them appropriately.

In many circumstances the state and federal government, insurance companies and care providers can assert their rights against amounts recovered in personal-injury claims, either through settlement or awards at trial. Medical liens fall into two categories: statutory, such as under Medicare or ERISA health insurance plans; and contractual, under other insurance plans or agreements with individual medical care providers. Through the subrogation process, insurance providers can seek repayment for expenses they incurred in paying for a plaintiff’s personal-injury accident treatment.

The dollar amount a lienholder is entitled to is not necessarily an immutable figure—often times a Plaintiff’s attorney can get through to someone with the authority to accept a lesser amount. Giant bureaucracies such as Medicare and various health insurance entities are not known for expediency or communicativeness, but tenacious diligence will pay off. Of course, lienholders have their own interests to look after and may be simply unable to offer a reduction that will work, but depending on the circumstance, it can be of great assistance to—gently—remind the lienholder that if they refuse to lower their lien demand and that prevents the case from reaching settlement, they may well lower their lien repayment all the way down to zero percent if the case fails to resolve or resolves unfavorably to the plaintiff.

A few tips to keep in mind:

• Make a practice of routinely inquiring (or calendaring for later follow up) whether Medicare and/or Medicaid are involved at the very beginning of assuming representation in any case where a medical lien may be a factor, even in instances where you are not sure if they are applicable; much better to start the process of lien resolution or have confirmation that it will not be an issue than to be surprised down the road by an unexpected quirk.

• Always request the plan language of contractual liens: they are a tangle of legalese that your client’s interests may be bound up in. The entity seeking repayment or subrogation may not have the right to repayment that they are asserting that they do depending upon the facts of the case.

• Lastly and most importantly: confirm any and all offers and agreements in writing. Oftentimes the best way for a Plaintiff’s attorney to get an answer is through a direct call, but strongly encourage your opposing counsel to confirm any verbal agreement they are able to reach with a lienholder in writing immediately after their conversation. If a plaintiff agrees to accept x amount for a settlement with the understanding that their attorney has negotiated their repayment responsibility down y% of their medical lien, you cannot afford not to have that negotiation solidified.

Responsible lien management is not merely a best practice but an actual ethical obligation. The ABA Model Rules of Professional Conduct obligate a plaintiff attorney to notify lienholders when funds are received, promptly deliver the portion of said funds the lienholder is entitled to and provide a full accounting upon request.

When you are on the defense side, the obligation to ensure liens are repaid does not rest with your client, but that does not take liens outside the purview of “your problem.” The chunk they take out of your more-than-generous offer could reduce the dollar amount of what the plaintiff might ever actually see to a fraction that is not acceptable to them…perhaps even to the extent that they would rather take their chances at trial. As such, you must factor them into your case analysis. One possible strategy is to request that the lienholder be physically present, or at least available by phone, during negotiations. This enables real-time lien-reduction discussions. Depending upon the circumstance, it may be possible to obtain a court order compelling the lienholder’s participation.

Sarah J. Simkin is an associate in the Pittsburgh office of Rawle & Henderson LLP. She focuses her practice in civil litigation, insurance defense, and commercial motor vehicle matters.

Sarah earned her J.D. from Boston University School of Law in 2015 with a concentration in Civil Litigation and Alternative Dispute Resolution. During law school she interned for the Pennsylvania Attorney General’s Office and the Pittsburgh office of the United States Attorney’s Office, and upon graduation she served as a Legal Fellow in the chambers of the Honorable Nora Barry Fischer (U.S. District Court for the Western District of Pennsylvania). She earned her B.A., summa cum laude, in Political Science and Journalism from the University of Pittsburgh in 2012.

Sarah is active in the Allegheny County Bar Association (Women in the Law Division and Young Lawyers Division) and The Honorable Amy Reynolds Hay American Inn of Court. She serves as a mentor with the Big Brothers Big Sisters program and holds a 1st Degree Black Belt in Taekwondo.

Sarah is admitted to practice in Pennsylvania and West Virginia, as well as the U.S. District Court for the Western District of Pennsylvania and the U.S. District Court for the Southern District of West Virginia.

Sarah can be reached directly at (412) 261-5715 • ssimkin@rawle.com