Hospital and Medicare Liens
If you are injured in an accident caused by someone else’s negligence, and suffer injuries requiring medical treatment or hospitalization, Arizona law provides hospitals, doctors, or other healthcare providers treating your injuries with the right to file a lien with the county recorder to secure payment of their “customary” charges against any liability settlement or trial award of damages. State and federal law also grants lien rights against settlement or trial proceeds to Medicare and Arizona’s state version of Medicaid, the Arizona Health Care Cost Containment System (“AHCCCS”).
Even though hospitals and healthcare providers may receive payment from any applicable health insurance for the treatment of plaintiff’s injuries, the “customary” charges are typically much greater than the amount the healthcare providers contractually agreed to with the insurance providers. The law allows the healthcare providers to assert liens against settlement proceeds for the difference between their “customary” charges and the amount paid by insurance.
Regarding Medicare, when a senior citizen covered by Medicare is treated after an accident or an injury, it’s generally paid for by Medicare. Those medical expenses must then be reimbursed when there is a recovery against a third-party that negligently caused the injuries. But, the process by which that was to happen was not running smoothly. The 2013 Strengthening Medicare and Repaying Taxpayers, or SMART, Act aimed to remedy that. Many claims involving Medicare beneficiaries could not settle because the parties could not determine their respective obligations to reimburse the federal government in the Medicare Trust Fund. The result was a lose-lose-lose for the beneficiary, the defendant, and the Medicare Trust Fund – all because under the former law, Medicare had no pathway to provide the amount due to the Trust Fund for “conditional payments” – those payments previously made by Medicare for the injury that will be covered by the settlement.
The SMART Act fixed this problem by creating a process for Medicare to advise parties in the process of settling, before settlement, of how much is owed, so that the parties can appropriately allocate and resolve their Medicare obligations during settlement. By requiring Medicare to provide the amount due within 65 days of a request, the settling parties will know how much money has to be set aside for Medicare, and factor that amount into their final settlement.
Hospital and healthcare provider liens under Arizona law are different in that the lien must be recorded with a verified statement in writing setting forth the amount claimed due for healthcare. Thus, when hospital and healthcare provider liens exist, the amount claimed is known by the parties and can be factored into any settlement negotiations.
Medicare and AHCCCS liens are automatic and do not require the recording of any documents. Hospital and healthcare provider liens, however, must be recorded to be perfected and legally valid. But if there are valid liens or if Medicare or AHCCCS is paying for medical care, the liens must be paid when the injured plaintiff recovers monies from the lawsuit, either by settlement or trial. If the liens are not satisfied when the plaintiff receives settlement proceeds, the lien holders can sue the plaintiff and plaintiff’s attorneys.
Whatever liens may exist, there are legal arguments and strategies that can be employed to reduce the amount of any lien. The lien may have not been timely filed and properly recorded. The provider may have already been paid its “customary” charges. The settlement funds available may be much less than the full value of the case, therefore, the lien should be substantially reduced or fully waived. Whatever the case may be, in personal injury cases it is very important that legal counsel for the plaintiff have a firm understanding of the liens that could exist that impact the plaintiff’s recovery, and how to deal with them. MCR has extensive experience in addressing and resolving lien claims to maximize recovery for our personal injury clients.