WE ALL NEED SOMEONE TO LIEN ON

Surviving In the Lien Jungle

LIEN TYPES

STATUTORY Government Private

CONTRACTUAL e.g. Chiropractor

FEDERAL LIENS Uncle Sam Needs You(r) Money

MEDICARE (42 USC 11395 y(B))

Notice Requirements:

Statute of Limitations: 3 years

Priority over other liens

Effect of Failure to Pay: Double Damages

MEDICARE DON’T CARE If you say settlement was made without

admission of fault Payments were for “pain and suffering” Plaintiff’s verdict will be reduced by

comparative fault You didn’t have notice of their lien Query? $100,000 lien and $5,000

settlement

Radioactive Equals Proactive Plaintiff’s age Payor in Medical Charts Call Medicare

MEDICARE NUMBERS TO CALL MSP Guideline Questions and Other

Legal Issues: Maria Mendoza, MSP Guideline

Supervisor: (805) 367-1051, Fax: (805) 367-1155

Lori Cudahy, Third Party Liability Department: (805) 367-1052

HOW TO PROTECT AGAINST MEDICARE LIEN 1. Put Medicare on Check

2. Have Plaintiff’s attorney obtain letter authorizing payment to him

3. Contact Medicare directly

4. Have plaintiff’s attorney indemnify company

Hospitals Can Opt Out of Medicare

If They Accept Medicare Payments, Cannot Assert Lien

Negotiation Tip #1 Plaintiff’s negotiation options with

Medicare Reduced by “procurement costs” and

attorneys fees. Reduced or waived if little possibility of

recovery If you negotiate directly with Medicare,

argue a reduction on that basis

REAL LIFE EXAMPLE

Example: 61 y/o bicycle rider hit by car and has hip replacement.

Medicare reduction: $28,000 to $9,000. How much can plaintiff claim in his lawsuit against you?

Can the hospital come after you or the plaintiff for the difference?

HOW TO ACHIEVE HERO STATUS

If Hospital Accepted Medicare Payment, plaintiff can’t collect more than amount paid(Hanif, Nishimura)

Hospital Can’t Claim More

Your Hammer In Negotiations

“I’LL BE BACK” (FOR YOUR MONEY)

MEDI-CAL (Wel. And Ins. Code 14124.71-14124.791)

Notice: MUST NOTIFY MEDI-CAL SOL: 3 years from date of

settlement,judgement or award Plaintiff’s comparative fault: N/A Protect: Always

NEW LAW ALERT:OLSZEWSKI OLSZEWSKI V. SCRIPPS(6/2/03) CALIFORNIA SUPREME COURT Overturns provider’s right to refund Medi-

cal and go after any recovery obtained by plaintiff from third party defendant(not against 3rd party directly)

DECISION GOOD FOR INSURERS Reinforces Hanif

HANIF Case summary Issue: Can plaintiff make a claim for

the amount of medical expenses billed or only what was paid?

Held: Can only claim amount that Medi-cal actually paid.

Windfall: For Insurance Companies

LEGISLATIVE RESPONSE? Supreme Court:” We urge the

Legislature to remedy this anomaly in a manner consistent with federal law.”

Until that happens, continue to use Hanif.

Nishihama Case Summary

Plaintiff’s argument: Hospital can still come after me.

Court: Hospital has already been paid in full per its agreement with HMO

Windfall?: Yes Case Closed?

Quagmire

HOSPITAL LIENSCivil Code 3045 et.seq. History: Hospitals win one 1992 CC 3045 Expands Hospital’s Right to Recover Includes All treatment, not just

emergency room treatment Maximum: 50% of plaintiff’s recovery Notice? Yes Statute: One year from treatment You must protect

HYPOTHETICAL #1 Hypo: $50,000 in medical bills. $15,000

policy.

Timely Lien Notice From Hospital

Paid Out Policy With Honoring Lien.

Do you keep your job?

BACON SAVED Mercy Hospital v. Farmers(1997)

Hospital only entitled to ½ of what the plaintiff got or $7,500.

If that happens, you can still resort to the Release.

Check your release language

SEEKING THE “CONTRACTUAL DIFFERENCE” : THE NEW BATTLEGROUND

Definition Historical Overview (Nishihama) Swanson v. St. John Medical Center McMeans v. Scripps Health & Parnell v.

Adventist Health System Implications to Insurers The Bottom Line

HMOs Civil Code 3040

Newest Statute in the pantheon Purpose: limit balance billing Who It Applies To: Includes Kaiser,

Blue Cross, Insurance Companies, IPAs or medical groups.

Limits Recovery Only Applies To Plaintiffs Formula Alert

How To Calculate Costs to perfect lien(minimal) plus either: 1. Amount actually paid to providers(non-

capitated plans) 2. 80% of the “usual and customary”

charges by non-capitated providers in the area(capitated plans)

Example capitated v. non-capitated Challenge: “usual and customary”(eg.

Kaiser’s charges can be way out of line)

After Determining Amount of LienSubtract the Following

1. Reduction if attorney fees 2. Reduction for plaintiff’s comparative

fault. 3. Maximum cannot exceed:

1/3 of amount due to p if attorney involved

½ due plaintiff if no attorney

WHY YOU NEED TO KNOW THIS

“I GOT ALL THESE LIENS I HAVE TO PAY BACK”

HYPOTHETICAL(EASY) $15,000 settlement

Attorney Fees and Costs $5,000

Medical Lien(3040) $15,000

How much does HMO get back?

Hypothetical(MEDIUM) $15,000 settlement

No comparative fault

Attorney Fees and Costs: $5,000

Emergency Room $7,500

How much will plaintiff get?

Hypothetical(Who the hell knows?) $15,000 settlement offer Plaintiff 25% at fault(defense assessment) Attorney Fees and Costs: $5,000 HMO lien(3040): $10,000 How much does HMO get? Answer: subtract fee(9,000) Subtract 50% comparative fault: $1,500 50% of that is $750.00

NOTE: Plaintiff attorney negotiations with 3040 providers can be very imaginative.

Bonus Point Hypothetical $15,000 settlement $5,000 in attorney fees $10,000 in AAA first party med pay $10,000 hospital $5,000 HMO How much will plaintiff get? Answer: $5,000 How much will hospital get? Answer: $3,330 HMO: $1,670

WHY YOU NEED TO KNOW THIS #2 You Can Negotiate Directly!

All Other Medical Liens

Chiropractors, acupuncturists, massage therapists, witch doctors, faith healers.

All subject to negotiation A problem for the plaintiff

and his attorney They can’t come after you

Attorney Liens Must protect

WORKER COMPENSATION LIENS

Labor Code §3852 Employer may recover from 3rd party

tortfeasor total amount of compensation paid.

Labor Code §3865 3rd party judgment or settlement is

subject to lien of Employment Development Department.

Government Code §§20250-20255

Right of Public Employees Retirement System to subrogate.

Also see McQuillan v. Southern Pacific Co. (1974) 40 CA 3d 802. PERS cannot subrogate where the employee’s injury was the proximate result of the employer’s act.

Attorney Fee and Priority Issues

Quinn v. State of California (1975) 15 Cal. 3d 162. Active litigant can force passive litigant to pay share of costs and fees; common fund doctrine.

Gapusan v. Jay (1998) 66 Cal. App. 4th 734.

An employer’s right to reimbursement takes priority over the employee’s recovery and may be asserted after fees and costs are deducted.

How do I get the ?@*# Intervenor to reduce the Workers’ Compensation lien?

Understanding proportionate fault might help.

Da Fonte v. Upright, Inc. (1992) 2 C 4th 593. Civil Code §§1431-1431.5 must be applied where the worker’s injuries are caused by the tortious conduct of both the employer and a 3rd party. The employer’s share of the fault is not attributed to the 3rd party defendant when calculating non-economic damages.

Kemerer v. Challenge Milk Co. (1980) 105 Cal. App. 3d 334. Plaintiff’s negligence not imputed to employer for lien reduction purposes.

In order to determine amount of intervenor’s potential recovery, “Threshold Level” must be established per Associated Construction and Engineering Co. v. WCAB (1978) 22 Cal. 3d 829.

“Threshold Level” Employer negligence % as established

by Jury X Total Damage Award determines Workers’ Comp. Carrier’s recovery.

i.e. If verdict $1,000,000 and Employer Fault 40% ($1,000,000 X 40% = $400,000) employer lien $100,000, employer gets no recovery.

Labor Code §3854 If action is prosecuted by the

employer alone, payments “shall be considered as proximately resulting from such injury or death…”

Please see Breese v. Price (1981) 29 Cal. 3rd 923 – 3rd party defendant can challenge lien by arguing proximate cause.

Purchase of Lien/Assignment of Lien

Hone v. Climatrol Indus. (1976) 59 Cal. App. 3d 513. Court approves concept of lien assignments.

Quinn v. Warnes (1983) 144 Cal. App. 3d 309. 3rd party defendant entitled to deduction for full amount of lien, not just consideration paid for lien when lien assigned to defendant.

Be Careful! Raisola v. Flower Street, Ltd. (1988)

205 Cal. App. 3d 1004. Employee’s attorney entitled to fee from lien assigned to 3rd party when employee prevailed in 3rd party case.

HOW TO CONTACT US Bradley Bostick:Bradley

Bostick@aol.com

Christine & Shawn Friestad: Friestad@friestad.com

Greg Stanfield: GStanfield@HannaBrophy.com