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Summary of Healthcare Lien Rights

Posted on: July 22, 2020 | Posted in: Legal Resources


Medicare Part A and B – a/k/a Original Medicare


What is it? Traditional Medicare for inpatient (Part A) and outpatient (Part B) care.
Valid Lien? Yes, but only for related benefits. If future related treatment is likely, you also must consider Medicare’s interests.
Should I notify? Yes, whenever client is Medicare eligible. If you don’t, you, your client(s), defendant(s) and/or insurer can be held liable.  Contact Center for Medicare Services (CMS) to request summary.


Any legal arguments to reduce lien? Yes, by costs of procurement, calculated as .  Also can request hardship waiver or compromise from CMS.


Medicare Part C – a/k/a Medicare Advantage Plans (MAP)


What is it? Subsidized HMO program for those eligible for Medicare that is offered in lieu of Parts A, B & D.
Valid Lien? Probably although unsettled in U.S. 2nd Circuit. Be aware of 42 C.F.R. §422.108(f) where CMS declares broad rights.


Should I notify? Maybe.  You should consider: a) Defendants/insurers will likely require hold harmless language in release and may have liability for double damages to the MAP ipso facto, so may your client.  See, e.g., In re Avandia, 685 F.3d 353 (3rd Cir. 2012); Aetna v. Guerrera, No. 3:17-CV-621 (US Dist. Ct. CT) (March 13, 2018); b) Obtaining MAP policy and confirm that it contains subrogation rights (if not, stronger argument there is no lien).


Any legal arguments to reduce lien? Yes.  At a minimum they must reduce by same procurement cost formula for Medicare A & B above.   Also, can negotiate based on uncertainty in existing law.  See e.g., Primax v. Yarmosh, No. 3:03-CV-1931 (AWT) (Sept. 7, 2006)
Medicare Part D – a/k/a Medicare Prescription Drug Plans (PDP)



What is it? Extra prescription coverage for Medicare A & B.


Valid Lien? Probably, although just like Part C, remains unsettled in U.S. Second Circuit.


Should I notify? Maybe.  See same considerations as for Medicare Part C above.
Any legal arguments to reduce lien? Yes.  Same as Medicare Part C. Courts have generally applied same rights for Part C insurers to Part D Insurers.
Medicaid – a/k/a Husky A, C and D



What is it? Need-based federally funded insurance administered by the State.


Valid Lien? Yes, but only for related benefits paid.
Should I notify? No, unless client tells you to.  However, client is likely required to pursuant to agreement to obtain benefits and should be advised of his/her responsibilities if not notifying State.
Any legal arguments to reduce lien? Possibly.  Where there is limited coverage, liability challenges or other reasons plaintiff will not be fully compensated, Medicaid must reduce its lien by same percentage as plaintiff.  See Arkansas v. Ahlborn, 547 U.S. 268 (2006) and its progeny.



ERISA Self-Funded Insurance Plans and Labor Union Self-Funded Plans



What is it? Employer funded plans and Union funded plans, which may be administered by others, including health insurance companies.


Valid Lien? Yes, if plan language provides for lien rights against specific proceeds and truly self-funded (review plan and IRS Form 5500).


Should I notify? No, unless informed client wants you to.  However, client is likely required to notify pursuant to plan documents and failing to address contractual obligations may impact client’s rights including future benefits.


Any legal arguments to reduce lien? Sometimes.  Demand full plan and summary plan documents.  Plan language must: a) identify a specific source (i.e. settlement funds) for recovery; b) specifically contain language that includes right to assert lien for particular cause of action (e.g., UM/UIM claim); and c) specifically contract away all equitable remedies like make whole or common fund doctrines.


ERISA Private Plans, Obama Care/ACA Plans, and all other Private Plans except Municipal Self-Funded Plans



What is it? All individually purchased private insurance and employer sponsored health plans, other than municipal self-funded plans.


Valid Lien? No.  Prohibited by Connecticut’s anti-subrogation statute, C.G.S. §52-225c.


Should I notify? No. There is no valid lien in Connecticut.


Any legal arguments to reduce lien? There is no valid lien in Connecticut.


Important: If there is a valid lien, there should be no collateral source post-trial reduction pursuant to Marciano v. Jimenez, 324 Conn. 70 (2016), and defendant will be liable for entire medical bills, even where lienholder plays less than full amount.

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