It Ends! Medicaid, Part IV

It's the end of an era; hopefully our series on Medicaid has enraptured you and enlivened your spirit.  If you have questions, let us know!

It's the end of an era; hopefully our series on Medicaid has enraptured you and enlivened your spirit.  If you have questions, let us know!

Good grief, finally!

Over these past couple weeks, we've covered just about everything there is to know about Medicaid liens and subrogation. In Part I, we talked about Medicaid's origins, its function in the healthcare insurance arena, and its applicability to third-party recoveries.  In Part II, we covered Medicaid's notice requirements and the statutory limits on its recovery. In Part III, we discussed the interaction between Medicaid and other types of liens, as well as the Presumptive Approach and the best way to determine and minimize the amount of Medicaid's subrogation interest.

So yeah, you're pretty much a Medicaid-subrogation genius at this point.

What are we gonna cover today?

Today we're going to talk about the "Contemporary Approach," which allows plaintiffs (or putative plaintiffs) to diminish Medicaid's subrogation interest below the presumptive one-third, where appropriate. There are several elements that have to be satisfied before you can use the Contemporary Approach, and we'll set those out below.  

I know that you're probably tired of hearing this by now, but if you get in over your head, call me or another experienced Personal Injury attorney. You do not want to mess this stuff up.

When would I use the Contemporary Approach?

So we remember, of course, that under the Presumptive Approach, Medicaid's subrogation interest will be paid up to one-third of the gross recovery amount. This means that if Medicaid's interest exceeds a third of the recovery amount, then you can pay them the one-third and that amount will be considered full and final payment of Medicaid's subrogation interest.  So if Medicaid is claiming a $20,000 lien against a $30,000 settlement, you can pay the Program $10,000 and they won't be able to come after you for the other $10,000. Hopefully that makes some sort of sense.

In 98 percent of cases, the Presumptive Approach works fine.  But what about when the bulk of the settlement amount is designated to compensate the plaintiff for something other than medical expenses? Until very recently, there was nothing in the law to say that Medicaid was restricted to one-third of the money earmarked for medical bills; as a result, the Program was able to hold its hand out for funds that may have been intended for lost wages, pain and suffering, and the like.

Let's say that Andrea, a concert pianist, is rear-ended and pinches a nerve in her neck, causing tingling and numbness in her left hand. Andrea goes to the Emergency Room and an orthopedic surgeon, ultimately racking up $50,000 in medical bills.  During her recovery, Andrea misses five concerts that would have paid a total of $60,000, and suffers immense pain, suffering, and stress over the loss of her income.  The adjuster refuses to pay any more than $10,000 for medical bills, arguing that Andrea over-treated, but does agree to compensate her for $60,000 in lost wages and $80,000 in general damages, for a total of $150,000. Medicaid comes back and asserts a lien of $50,000; the full amount of its expenditures and the full one-third of the gross recovery under the Presumptive Approach.  The problem here is that 80 percent of the money Medicaid seeks to recover was earmarked for lost wages and general damages; the Program is effectively claiming money that was never set aside for it.

Under the Presumptive Approach, Andrea would be out of luck, right? However, North Carolina law gives us a judicial avenue to ensure that Medicaid only gets the money that is set aside for it. This is what I like to call the "Contemporary Approach."

The Contemporary Approach, codified at N.C. General Statutes § 108A-57(a2), provides that beginning July 1, 2013, (i) Medicaid is statutorily authorized to negotiate its subrogation amounts of its own volition, and (ii) Medicaid recipients can ask the court to determine what settlement amounts are subject to Medicaid's subrogation interest. This may not seem like an option that would be used very often, but you'd probably be surprised at how much we see it used.

Okay, so how do I use the Contemporary Approach?

To start off with, remember that Medicaid is now authorized to negotiate its own lien at any point in the settlement process.  Keep that in mind and use it to your advantage. That said, you should start negotiating with Medicaid as soon as you determine that there's going to be insufficient funds available to (i) pay Medicaid's entire lien amount and (ii) fully compensate you for your total damages. That determination can be made as late as the final settlement offer, or as early as when you figure out that the available coverage will be insufficient. You're looking for a determination that the Presumptive Approach would result in Medicaid receiving money that represents compensation for something other than Medicaid's expenditures.

You'll begin this negotiation process by reaching out to the claims representative with HMS, through the Lien Reduction Request Form that we discussed in Part III the other day. Arguing this isn't rocket surgery, so don't overthink it. Use your common sense and include matters such as the amount of other bills, amount of pain and suffering, lost wages, likelihood of future care becoming necessary, and any other relevant factors.  If you have witness statements or pictures of the accident or your injuries, throw those in there as well. You never know what might work.

What's the petition supposed to look like?

If you're this far into the game, I'm going to go ahead and insist that you hire a personal injury attorney. That's because the petition is essentially supposed to be a legal complaint, and because I'm not the guy to advise you to practice law without a license, you're much, much, much better off hiring someone who does this sort of thing for a living. 

But yes, the allocation petition is basically going to look like a regular complaint naming as defendants the tortfeasor and the North Carolina Department of Health and Human Services, or a Declaratory Judgment complaint naming only DHHS as a defendant. If you already have a lawsuit pending, you'll just need to amend your complaint to include DHHS as a defendant. You'll need to serve DHHS and give them notice in accordance with the North Carolina Rules of Civil Procedure, as well.

Keep in mind that if no action is pending, the statute directs you to file in a "court of competent jurisdiction," which means either District or Superior Court. Once your petition is filed, you'll schedule a hearing where the judge will decide whether or not Medicaid's interest should be reduced.

So I have to go to a hearing? What's that like?

Basically, you're going to argue against an attorney from the Attorney General's Office. You're arguing that Medicaid's interest should be reduced, while the State's attorney is arguing that the lien is appropriate as-is. 

The hearing itself is more like a motions hearing than a full-fledged trial. Typically witnesses aren't placed under oath, and you won't need to worry with foundational requirements for evidence. As a courtesy, therefore, you should think about conferring with the AG's representative before the hearing to discuss the evidence that will be offered. You as the recipient will bear the burden of proving, by clear and convincing evidence, that the Medicaid lien should be subject to reduction.

The court will hear your petition no less than 30 days after it's filed, and can hear any number of relevant factors. Once you get an answer, you'll need to make arrangements to pay Medicaid what it's owed; whatever amount that ends up being.

Good to know!

Yes, this stuff is complicated. Yes, there can be disastrous ramifications for making mistakes. Yes, you need to talk to an attorney about it. Good luck!