Successfully Negotiating Medicare Liens for Fresenius Litigation Clients

By: Christian P. Fannin, Of Counsel

Fresenius Case Update: Medicare Liens, Settlement is Not the End

Many plaintiffs may be unaware of the importance of considering Medicare liens when accepting a settlement. If a plaintiff has been treated by a doctor for injuries caused by another person or product, and that medical care was paid for by Medicare, then Medicare is entitled to recover a portion of any judgment, settlement or other payment that may result from a personal injury or products liability claim against that person or product. In other words, if the client, prior to receiving a settlement check has been previously compensated for the same injury by Medicare, Medicare wants to be reimbursed out of the settlement funds prior to any distribution to the client. Medicare’s right to recovery is guaranteed by 42 U.S.C. §1395y(b)(2) and §1862(b)(2) of the Social Security Act. This is known as a Medicare Secondary Payer Recovery Claim, commonly referred to as a “Medicare Lien,” and it acts very differently than any other lien that a plaintiff may be familiar with.

Kreindler negotiates a reduced lien payoff

During the Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, Kreindler and the MDL litigation team were able to convince Medicare to accept reduced reimbursement payments from plaintiffs receiving compensation as a result of the successful $250 million settlement. Medicare reimbursement payments would be calculated on a sliding scale under which individual plaintiffs would only be required to pay up to a maximum of 18% of their settlement award to Medicare, with most plaintiffs paying substantially less.

To begin with, the Medicare Lien allows Medicare to collect money from any judgment or settlement before any other person or entity, including the injured plaintiff. Medicare’s right of recovery can be enforced against the plaintiff, the plaintiff’s attorneys or the defendant. Additionally, instead of Medicare reaching out to the plaintiff to notify them of the Medicare Lien, it is the responsibility of the plaintiff, or the plaintiff’s attorney, to notify Medicare of the existence of a case on behalf of the plaintiff and the claimed injury. Traditionally, Medicare will then provide a list of medical expenses that Medicare believes they paid as a result of the injury that you are claiming was caused by the negligence of the defendant in the case and a “final demand” for payment of the amounts it expended for the plaintiff’s care associated with the accident or injury. While your attorney may challenge Medicare’s claims on the basis that the medical care was not related to your personal injury claim, there is often little room for negotiation. Regardless of the amount of the plaintiff’s recovery, Medicare can and will recover from a plaintiff’s judgment or settlement amounts it paid for medical care relating to the injuries caused by the defendant, with some rare exceptions.

One important exception is when compensation is being sought in the context of claims by a great number of plaintiffs that a product design defect caused their injuries. In the case of a multidistrict litigation (or MDL), there is the potential that thousands of cases may settle at once. Medicare is not equipped to deal with so many claims on an individual basis and, in such circumstances, can sometimes be convinced to accept an arrangement to release its lien on all the plaintiffs’ claims in exchange for payments that are less than the total amount of its lien on any individual claim without examining individual expenses. In the Fresenius case, Kreindler & Kreindler and the Plaintiffs’ Leadership of the MDL were able to convince Medicare to accept payments on a sliding scale under which individual plaintiffs, as stated above, were only required pay up to 18% of their settlement award to Medicare. Most plaintiffs paid substantially less, regardless of the fact that Medicare’s lien in any particular case may have been much more than 18% of the recovery. Such an arrangement can be very beneficial to plaintiffs and, in the Fresenius litigation, allowed us to maximize the recoveries our clients received for their injuries.

Author

Christian P. Fannin

Christian Fannin joined Kreindler in 2011 and manages many of the firm’s mass torts and complex litigation cases. Christian served on the litigation team for claims arising out of the BP Deepwater Horizon oil spill where he assisted in securing compensation for clients across the Gulf South. He served as Associate Editor of the Northern Kentucky Law review and completed an internship with United States District Court Judge David L. Bunning in the Eastern District of Kentucky.
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