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					WE ALL NEED SOMEONE TO LIEN ON
Surviving In the Lien Jungle

LIEN TYPES
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STATUTORY
Government  Private
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CONTRACTUAL
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e.g. Chiropractor

FEDERAL LIENS
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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
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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
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MEDICARE NUMBERS TO CALL
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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
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HOW TO PROTECT AGAINST MEDICARE LIEN
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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

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Hospitals Can Opt Out of Medicare
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If They Accept Medicare Payments, Cannot Assert Lien

Negotiation Tip #1
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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
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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?

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HOW TO ACHIEVE HERO STATUS
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If Hospital Accepted Medicare Payment, plaintiff can’t collect more than amount paid
Hospital Can’t Claim More

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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  Ahlborn v. Arkansas Dept. of Health Services(2006)
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OLSZEWSKI v. SCRIPPS
OLSZEWSKI V. SCRIPPS  CALIFORNIA SUPREME COURT  Overturns provider’s right to refund Medi-cal and go after any recovery obtained by plaintiff from third party defendant.  Windfall for insurers.
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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
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Nishihama
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Case Summary Plaintiff’s argument: Hospital can still come after me.

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

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Did Defense Get Hanif wrong?

Greer
Full Amount of Medical Bills Admissable  Post Verdict Adjustment
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Katiuzhinsky
Finance Company Lien  Full Amount Admissible Without Reduction
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Olsen v. Reid
Knock, Knock, Knocking On Hanif’s Door  Collateral Source
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Quagmire
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HOSPITAL LIENS Civil Code 3045 et.seq.
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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
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Hypo: $50,000 in medical bills. $15,000 policy. Timely Lien Notice From Hospital

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Paid Out Policy With Honoring Lien.
Do you keep your job?

BACON SAVED
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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

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SEEKING THE “CONTRACTUAL DIFFERENCE” : THE NEW BATTLEGROUND
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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
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How To Calculate
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Costs to perfect lien(minimal) plus either: 1. Amount actually paid to providers(noncapitated 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 Lien Subtract the Following
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1. Reduction if attorney fees 2. Reduction for plaintiff’s comparative fault. 3. Maximum cannot exceed:
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1/3 of amount due to p if attorney involved ½ due plaintiff if no attorney

Made Whole Doctrine
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Make First Party Med Pay Go Away

WHY YOU NEED TO KNOW THIS
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“I GOT ALL THESE LIENS I HAVE TO PAY BACK”

HYPOTHETICAL(EASY)
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$15,000 settlement
Attorney Fees and Costs $5,000 Medical Lien(3040) $15,000

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How much does HMO get back?

Hypothetical(MEDIUM)
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$15,000 settlement No comparative fault

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Attorney Fees and Costs: $5,000
Emergency Room $7,500 How much will plaintiff get?

Hypothetical(Who the hell knows?)
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$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
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$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
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You Can Negotiate Directly!

ERISA
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Sereboff

All Other Medical Liens
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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
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Must protect

WORKER COMPENSATION LIENS

Labor Code §3852
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Employer may recover from 3rd party tortfeasor total amount of compensation paid.

Labor Code §3865
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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.
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Attorney Fee and Priority Issues
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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.
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How do I get the ?@*# Intervenor to reduce the Workers’ Compensation lien?
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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 noneconomic damages.

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

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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.
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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.
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Purchase of Lien/ Assignment of Lien
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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!
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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
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Bradley Bostick:Bradley Bostick@aol.com Christine & Shawn Friestad: Friestad@friestad.com Greg Stanfield: GStanfield@HannaBrophy.com

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