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Best PracticesBlog

Navigating Medicaid Liens in NYS Personal Injury Cases

By April 17, 2024May 6th, 2024No Comments

Written by Hanna Franco, Case Manager |
Reviewed by Paul K. Isaac, Esq., ChSNC | Founder, Settlement Advisor |

Federal law mandates that U.S. states enact laws to aid in the recovery of medical payments from responsible third parties and to recoup Medicaid expenditures. When Medicaid has made payments for medical expenses related to an injury, it may assert a lien against a living Medicaid beneficiary.

In personal injury cases involving Medicaid insurance covering some or all of an injured plaintiff’s medical treatment, Medicaid may be entitled to recover a portion of any injury settlement that includes proceeds earmarked for medical expenses. In New York State, Medicaid liens in personal injury cases are legal claims for repayment applied to plaintiffs’ personal injury awards, including portions not specifically allocated for medical expenses, such as recovery for pain and suffering or lost wages.

Medicaid Lien Overview

As a “payor of last resort,” federal law mandates that states seek repayment of Medicaid insurance benefits when a beneficiary has access to alternative healthcare funding, including recovery for those expenses via a personal injury settlement or verdict. When a beneficiary receives a payment(s) for care from a third party deemed at-fault for their medical expenses, New York state law allows for the subrogation of repayment claims. Rather than make a claim against the defendant, Medicaid agencies are entitled to pursue repayment from the plaintiff’s personal injury settlement proceeds by the filing of a lien. Plaintiffs are required to work with Medicaid to recover benefits and in some instances, are legally required to satisfy their debt to Medicaid prior to accessing recovery for themselves.

Depending on the specifics of the case and a number of other factors, Medicaid liens can be reduced or even eliminated.  Read on for an overview of common lien resolution strategies, including relevant case law, or learn more about how personal injury firms can outsource lien resolution.

Medicaid Repayment Basics

New York State law authorizes Medicaid agencies’ use of all reasonable measures to recover benefits paid from third parties determined to be liable for the injury victim’s medical expenses. As an alternative to filing a lawsuit or other legal action against plaintiffs, Medicaid agencies can file a lien against their personal injury recovery. For personal injury plaintiffs, this usually means liens are placed on the proceeds of a settlement or award, restricting access to, or the use of those proceeds until the lien is satisfied or resolved.

How Medicaid Liens are Calculated

For living plaintiffs, state agencies determine the lien amount by totaling all cash assistance and injury-related medical care paid on the Medicaid beneficiary’s behalf from the date of the accident through the date of payout. They may recover “the total amount of such assistance and care furnished by such public welfare official on and after the date when such injuries were incurred” (NYS Social Services Law § 104-b).

A recent case decided by the United State Supreme Court suggests that the proceeds that Medicaid is entitled to recover from is not restricted to the amount representing past medical expenses alone. While, in NY has not yet adopted this broad interpretation by way or stature or legislation, certain Medicaid agencies have attempted to leverage the ruling in Gallardo.

Plaintiffs should also know that states like New York may issue more than one lien notice reflecting new or updated amounts as state agencies receive more information about your case. A previous notice may only represent a preliminary accounting of what’s owed because additional medical costs have not yet been incurred or the Medicaid agency has yet to find them. Therefore, it is always wise to formally request a final lien notice from your state’s Medicaid agency at the time of settlement to understand the full scope of your obligations prior to finalizing settlement terms.

How Medicaid Liens are Applied

State Medicaid agencies are known to aggressively pursue reimbursement with the use of liens. Procedurally, when a Medicaid lien is placed on a settlement in the state of New York, it is levied against all settlement proceeds. While personal awards can specify dollar amounts for specific types of damages, such as “past medical expenses” or “lost income,” Medicaid files the liens against the entire proceeds and place the burden on the personal injury victim, or their agent, to disprove the size or validity of the lien.

One should always double-check the clerk’s office in the county in which the injury victim resides or resided to see if a lien has been filed. While New York’s Social Services Law §104-b sets forth a procedural mandate for the enforcement of a valid lien, historically, New York courts have be forgiving of Medicaid’s failure to follow those procedures.

How Medicaid Liens can Affect Personal Injury Settlements

Personal injury proceeds are often distributed to a plaintiff in one of two ways. They can be disbursed as a one-time lump sum or future periodic payments based on the terms of a settlement negotiated outside of court. Liens can be recovered by the health insurer regardless of the structure and timeline of their payout. To help guarantee the longevity of their award, Plaintiffs can convert their cash into called structured settlement or other financial vehicle. While there are financial benefits to this strategy, such as possible protection from inflation and economic uncertainty, a structured settlement will not shield your money from a Medicaid lien.

Contacting Medicaid about a Lien

If you are a personal injury victim and have received Medicaid benefits at any point from the date of injury through your case’s verdict or settlement date, Medicaid may be entitled to reimbursement for healthcare-related assistance. You can reach out to the authorities administering your state’s Medicaid program to inquire about existing liens. In New York, contact your local county Department of Social Services.

However, do not assume that the agency will cooperate with you to reduce the lien. Their mandate is to collect.

What Attorneys Need to Know

Whether Medicaid liens can be reduced or eliminated ultimately depends on the specifics of a plaintiff’s case. Obtaining a favorable outcome for your client may rise significantly with help from a compassionate and experienced lien resolution specialist. Personal injury attorneys in New York and beyond should be aware of important cases affecting Medicaid repayment claims. Existing case law and procedural restrictions provides a legal basis for several possible lien resolution strategies.

For instance, in one notable decision with important ramifications on New York Medicaid lien cases, Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006), The United States Supreme Court rejected a claim by the Medicaid agency for medical expenses assessed in excess of the medical component of the settlement.

For plaintiffs and their attorneys, this case establishes important considerations for those addressing a Medicaid demand letter:

  1. Engaging states early in the settlement/litigation process can help Medicaid authorities better understand the unique details of a plaintiff’s case.
  2. Medicaid may be willing to accept reduced payment when there is a demonstrated inability to pay or other special circumstances impacting the plaintiff.

Leading the Way in Lien Resolution

Plaintiffs can protect their personal injury award or settlement from a Medicaid lien using the following tactics to challenge a state’s lien calculation:

  • Ensuring accurate injury and treatment dates
  • Refuting non-injury related expenses
  • Proving certain charges in the lien are non-recoverable
  • On rare occasion, asserting the victim’s inability to pay (even when receiving an injury award)
  • Challenging a state agency’s compliance with the procedural requirements to the lien, thereby limiting or eliminating their right to recovery

These strategies can be most effective in the hands of a specialist who is familiar with Medicaid disputes and has experience working with representatives directly to implement a resolution.

Real World Lien Resolution Results

An attorney or lien resolution specialist can help to reduce or eliminate your lien by providing Medicaid agencies with an overview of your personal injury settlement, legal costs, and any other special circumstances they should consider before pursuing recovery. This may include whether the plaintiff will remain eligible for Medicaid and need ongoing long-term care for their injuries.

In a recent successful Precision Resolution case, Case Manager Hanna Franco worked on behalf of a client to reduce the lien by 86%, from $25,500 down to $3,000. Hanna’s efforts helped the client save over $22,000, allowing the plaintiff to preserve the majority of settlement proceeds paid by the defendant’s insurance carrier.

Want to minimize time allocated to lien resolution-related tasks in your law practice or are frustrated by a challenging ongoing lien case? Contact us to free up your team to focus on higher priority objectives by entrusting the burden of lien resolution and reporting into the experienced hands of a Precision Resolution team member! Veteran lien resolution case managers like Hanna specialize in high-complexity ERISA, Medicaid, Medicare and private insurer liens.