The Best And Most Cost Effective Way To Handle Substantial Liens Against Your Settlement


A cottage industry of specialty law firms has emerged over the past few years that specialize and dedicate all of their time to negotiating Medicare, Medicaid and private healthcare lien on behalf of personal injury plaintiffs. Prior to the emergence of these specialty law firms, negotiating liens has been done by the plaintiff’s attorney at no extra charge to the client. The attorney had to ferret out the liens that were asserted against the lawsuit, and under the federal rules, he has to actively investigate any possible lien held by Medicare (42 C.F.R. 411.25).

Many clients have multiple healthcare liens asserted against their recovery. For example, many clients who are entitled to Medicare are actually “dual beneficiaries”, having Medicaid pay the coinsurance and deductible applicable to their Medicare coverage. Also, a client who is only a Medicare beneficiary may have to deal with three separate healthcare reimbursement claims in the end, i.e., Medicare Part A, Part B, Part D–all with unique rights of recovery, tort recovery departments and protocols to follow.

Given the complexities of lien resolution, the plaintiff’s attorney faces the risks of liability associated with lien resolution. If an attorney fails to discover or pay an outstanding Medicare lien, he can be held personally liable for twice the amount of the original lien, plus interest. 42 U.S.C. section 1395y(b)(2)(A)(ii-iii). Lien resolution can take months or even years after a case is settled and can delay disbursement of the settlemnet proceeds to the client. In lawsuits involving substantial and complex liens with Medicare and Medicare, the question is whether a specialty firm should be handled to resolve the lien and if so, whether the cost of the specialty firm can be passed along to the client as a disbursement of the case.

Fees incurred in the resolution of Medicare, Medicaid and private healthcare liens may be charged in the same manner provided certain conditions are met, namely, at the outset of the representation, the retainer agreement with the client should provide that the attorney may engage an outside firm for lien resolution and that the fee for this service will be charged as a disbursement.

If the client is not notified in advance of the added expense of lien resolution, he/she will object to bearing a cost that has only been brought to their attention late in the lawsuit. Courts have taken a dim view of case expenses that are sprung upon a client after the parties sign a retainer agreement. Thus, the original fee agreement should provide that the attorney may, at his discretion, obtain outside expertise on the matter of lien resolution and that the cost may be charged as a disbursement.

The fee for a specialty firm to handle the resolution of a complex Medicare, Medicaid or private healthcare lien on a settlement may be charged as a client disbursement only provided: (a) that at the commencement of the representation, the retainer agreement with the client provides that the attorney may do so, and that the client has given informed consent; (b) the actual charges are passed on to the client at cost without any overage or surcharge and the actual charges are reasonable; and (c) the transaction results in a net benefit to the client.