When time comes to settle it can be upsetting to an injured claimant to find that there are claims against her settlement; sometimes these claims exceed the amount of the settlement. There are a number of steps that can be taken to reduce these lien claims and reduction of liens might be necessary to make a settlement possible. Here is an article from attorney Rex Bush addressing this subject.
1. Lien Elimination
Liens may be eliminated if they are not valid liens. For example, hospital liens, to be valid, must comply with the requirements of Utah’s hospital lien statute. A medical provider without hospital or signed physician’s lien is not a lien and can be disregarded in the lien analysis. If a lien is valid it must be dealt with.
2. Reducing Liens.
There are a number of basic principles of lien reduction that apply to most or all liens. Others, are specific to only one type of liens. Here are some of the principles:
1. Get and read carefully the contract language.
2. Narrow the claim. Using contract language as your guide. Make sure they have a right to the claim they are making. Know what settlement funds the lien claimant can go after. For example, most contract language limits the recovery to funds from a third party, and insurers do not have a right to money from UM/UIM claims.
3. Reduce for unrelated and unreasonable charges and obtain credit for co-pays.
4. Reduce for actual recovery of medical bills. If certain bills were not covered by the settlement argue they should not be included in the lien claim.
5. Argue like a defense attorney. Take the arguments you heard from the lips of the claims adjuster or defense attorney and make those same arguments with the lien claimant. Or, if you are on the side of the defense, use the arguments of the plaintiff’s attorney when he was negotiating the settlement value of the case.
6. Comparative fault. Some liens such as a health care lien are based on the fault of a third party. To the extent that the insured contributed to his injury his third party claim is reduced. And the corresponding lien should be reduced also.
7. Argue pre-existing conditions. Scour the file for evidence of pre-existing conditions.
8. Hospital liens: Make sure hospital has complied with the technical requirements of Utah’s hospital lien statute. Was the lien properly filed and perfected? Did the hospital bill available private health insurance? Were all charges reasonable and necessary?
9. Made whole doctrine.
The made whole doctrine states that the insured must be made whole before the insurer is entitled to be reimbursed from the third-party tort-feasor. Birch v. Fire Ins. Exch., 2005 UT 395.
However, an insurance carrier can specifically exclude this doctrine in its master policy as PEHP has done thus nullifying application of made whole doctrine to its insureds. Kramer v. Utah State Retirement Board, (PEHP) 2008 UT App 351. PEHP drafted its Master Policy to expressly state: "PEHP shall be and is hereby subrogated . . . regardless of whether the Insured has been `made whole' or has been fully compensated for the injury or illness.” Therefore, said our Court of Appeals, “PEHP drafted its Subrogation Clause to exclude the made whole doctrine, which practice is permissible under Utah law.”
10. Reasonable Expectations Doctrine. In Kramer plaintiff argued that the Subrogation Clause violated the reasonable expectations doctrine. PEHP could not have violated the the reasonable expectation doctrine because such a doctrine does not exist under Utah law.
11. Common Fund Doctrine. This doctrine refers to a principle that a litigant who creates, discovers, increases, or preserves a fund to which others also have a claim is entitled to recover litigation costs and attorney's fees from that fund. That doctrine is an equitable doctrine designed to prevent unjust enrichment. Source: uslegal.com.
12. Equitable defenses and ERISA. U.S. Airways v. McCutcheon. U.S. Supreme Court held that “equitable rules cannot trump a reimbursement provision…” in an ERISA contract.
Lien reduction resources:
1. The FindLaw Guide to Negotiating Liens in Personal Injury Cases
2. Negotiating Tips for Hospital Liens in Personal Injury Cases
3. Negotiating Tips for "Med Pay" Claims for Reimbursement
4. Tips for Negotiating ERISA Liens in Personal Injury Cases
5. 7 Steps to Approaching Lien Claims in Personal Injury Cases
6. How to Deal with Medicare Liens in Personal Injury Cases
7. Negotiating Tips for Health Insurance Liens in Personal Injury Cases
8. What US Airways v. McCutchen Means for Your Personal Injury Cases
9. State Medicaid Liens Limited by US Supreme Court in Wos v. E.M.A
For ERISA matters attorney Brian King did a presentation recently for the UAJ on “The Future of ERISA Liens.” (Included below). He includes a list of suggestions on how to effectively deal with these liens. If you find yourself in over your head with an intransigent plan administrator consider bringing in another lawyer with ERISA expertise to help on the negotiations.
Rex Bush maintains a state wide personal injury practice from his home office in St. George, Utah. For more article on injury law visit his website at www.utah-personal-injury-attorney.com.