You'll recall that we started our Medicaid series on Tuesday with Part I. This is the second of what will probably be four entries on the Program. If you haven't read Part I yet, check it out here. You'll probably be kind of lost if you don't.
Medicaid is complicated!
Yes, it can be. It can also really gum up the works in your personal injury settlement if you don't handle the Program's subrogation rights in the proper way. That's why I have to advise you that if you're feeling overwhelmed with this stuff, you need to go talk with an attorney. Cool? Good!
Does Medicaid have to tell me about its subrogation rights?
Actually, it doesn't. North Carolina law doesn't require Medicaid to give any formal notice to either the recipient or the recipient's attorney. In fact, if an attorney stumbles across any information that might even suggest Medicaid involvement - like a medical bill, insurance card, et cetera - the attorney is automatically deemed to be on notice of Medicaid's involvement. The attorney then has a duty to investigate (i) whether Medicaid is involved and (ii) what the extent of that involvement might be.
You as the recipient will obviously know whether or not you have Medicaid; if you do have it, you're on notice. Trying to skip out on paying the Program won't be excused or taken lightly if you plead ignorance.
Are there any limits on Medicaid's subrogation interest?
Not necessarily always, but there can be. The traditional approach, which will be explored in more detail next week, is that Medicaid is entitled to the full amount that it has paid, but that if that amount exceeds one-third of the gross recovery, then that one-third amount is presumed to be Medicaid's full amount. This model, which I call the "Presumptive Approach," means that (i) the Program will ultimately be limited to one-third of the gross recovery, and (ii) it can't come after the recipient for any remaining balance.
Notice something very important here! The Presumptive Approach applies only to third-party recovery subject to N.C. Gen. Stat. §108A-57. If your recovery is coming to you from a first-party source that would implicate Section 59, then Medicaid is not limited to one-third of the recovery. In that situation, the Program can get back every penny that it has spent, even if that amount eats up the entire settlement. Make sure that you're aware of this!
The statutes also give us a second option for trying to minimize Medicaid's subrogation interest. This option, which I like to call the "Contemporary Approach," essentially dictates that the Program can't touch settlement money unless that money is actually calculated to compensate for medical expenses. This is going to be covered in great detail in Part III, but think of it this way:
- You get injured in an accident that results in a pinched nerve and sciatic problems. Your medical bills are $15,000, and Medicaid pays all of it.
- The at-fault driver's liability carrier refuses to pay more than $5,000 for medical expenses, arguing that you over-treated. But between lost wages of $5,000 and general damages of $20,000, your claim ends up settling for policy limits of $30,000.
- Once you put Medicaid on notice of your claim and settlement (described below), they come back and claim subrogation rights of $10,000; the full one-third amount available under the Presumptive Approach.
- You become angry.
So what the Contemporary Approach says is that since your settlement only includes $5,000 for medical expenses, it wouldn't be fair for Medicaid to come in and snap up money designed to compensate you for lost wages, pain, and suffering. Thus, you're allowed to go in front of a judge and explain the situation to him or her, asking the Court to tell Medicaid to back off. Put more succinctly, it's a way to ensure that Medicaid is only getting back money that's been earmarked for what Medicaid paid for in the first place. In the above example, Medicaid would be restricted to the $5,000 that was earmarked for medical expenses in the settlement arrangement.
Do I have to notify the Program of Settlements and/or Judgment?
You sure do! Any kind of hearing, settlement arrangement, or anything else that would serve to establish Medicaid's lien, to the extent that that amount deviates at all from the Presumptive Approach, carries with it an obligation to notify Medicaid first. Even in a litigation setting, Medicaid has a direct and vested interest in the outcome even though it probably isn't a named party to the action.
Under the Presumptive Approach, you have to disburse Medicaid's money to the Program within 30 days after receiving settlement/judgment funds, and you can't enter into any negotiations that would change Medicaid's lien amount without the Program's prior consent. If you do, you're going to end up in court arguing why that negotiation shouldn't be thrown out. Once an agreement is in place, you need to pay Medicaid within 30 days.
Stay tuned! More coming on Tuesday!