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How To Avoid Liability For Plaintiff’s Medicare Lien

January 28, 2011 • Posted By Jenna E. Elkind • Trial Practice

After conclusion of settlement negotiations (or upon a decision of a binding arbitration), pursuant to CPLR § 5003-a, a defendant has twenty-one (21) days from tender of a duly executed release and stipulation discontinuing an action to provide the settlement check to plaintiff.  However, if plaintiff is a recipient of Medicare benefits, and Medicare had paid for any treatment underwent as a result of the subject accident, Medicare is entitled to receive repayment of the expended amounts pursuant to the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”).  Medicare will, therefore, hold a lien on any settlement or recovery proceeds. 

If the settling defendant pays out the settlement proceeds to plaintiff without taking out the Medicare lien amount, the defendant’s insurance carrier will thereafter be liable to pay the lien amount in addition to the settlement proceeds already paid to plaintiff.  In addition, Medicare may obtain interest and other costs for any non-payment.  Pursuant to MMESA, group health plans, liability insurers and self insurers are required to notify the Centers for Medicare and Medicaid Services with information regarding all liability settlements or open claims for Medicare recipients.

A request for a lien amount is not required to be sent to Medicare before a settlement is reached or an arbitration award is entered into.  The problem arises in that from the date the request for a lien amount is sent, it may take over two (2) months to get a reply.  However, if defendant receives discontinuance documents from plaintiff and does not send the settlement check within (20) days, plaintiff may obtain a judgment for interest, costs, and disbursements pursuant to CPLR § 5003-a.

One solution to this is to send a request for a lien amount before entering into a settlement or a binding arbitration.  However, another problem arises in that plaintiff will, at times, refuse to provide the necessary authorization to obtain the lien amount.  MMSEA states that the Medicare information of a claimant or beneficiary is not required to be provided to the Centers for Medicare and Medicaid Services (“CMS”) until “after the claim is resolved through a settlement, judgment, award or other payment” (42 U.S.C. § 1395y(b)(8)), and plaintiffs use that provision of MMSEA to deny authorizations or identifying information of plaintiff necessary to obtain the lien amount to requesting defendants.

No published New York decision has yet addressed the issue of a plaintiff refusing to provide authorizations to defendants for the purpose of complying with MMSEA.  However, Seger v. Tank Connection, LLC, a case in the U.S. District Court in Nebraska, decided in 2010, exactly addresses the issue.  Seger v. Tank Connection, LLC, U.S.D.C., D. Neb. (2010).

In Seger, after the plaintiff refused to provide information regarding his receipt of Medicare benefits, including his social security or Medicare Health Insurance Claim Number (“HICN”), defendant moved to compel the production, claiming that the information was needed to aid the insurer in complying with MMSEA and to facilitate discovery information regarding damages.  The Court found that defendant met the burden of proving the relevance of the requested information and that there was no harm to plaintiff in providing the information sooner than required by MMSEA.

Until the Appellate Divisions and ultimately the Court of Appeals decide this issue, it would be prudent to make sure any Medicare lien is satisfied prior to formalizing any settlement.