First Party Insurance Benefits in an Injury Case (and Paying Back Liens)
Justin Ziegler, Lawyer
If someone caused your injury, you’re typically focused on getting a big settlement.
But here’s the kicker:
What is just as important is the amount that you’ll have to pay back for any first party benefits that you’ve received for accident related injuries.
“First party” means that you are an insured or member of a plan. You do not need to purchase first party benefits to be considered a plan member or an insured. You may be an insured if someone else purchased an insurance or health plan in which you are covered.
For example, in addition to other situations, perhaps your spouse or parent may have purchased coverage and added you as a member.
Below, I share some examples of first party coverage and how they apply in a personal injury case. You’ll also see some examples that show the amount of money that the injured person got after paying the medical bills and attorney’s fees.
Health insurance or a health plan may pay your medical bills from an accident. You may be required to repay your health insurer or health plan from the personal injury settlement.
You usually have the best negotiation position if you have individual health insurance. The same is true if you work for a non-federal government entity.
County, city and state employees usually have a great leverage when it comes to negotiating down their health insurance lien. Your health plan must reduce by your pro-rata attorney’s fees and costs.
Here is an example:
Angela slipped and fell at a hotel near Orlando, Florida. She claimed that the surface that she slipped on was unreasonably slippery.
As a result of the fall, she broke her arm. She had health insurance through the local government. It paid over $20,000 to the hospital and her doctors.
Angela felt that the hotel was at fault. She got a free consultation from me and she hired me to make a claim against the hotel.
Through hard fought negotiation, I settled her personal injury case for $250,000.
That’s not it:
I was able to get the health plan to take a fraction of the amount that it paid.
As you can see, this put more money in Angela’s pocket. Take a look at the final negotiated health insurance liens.
On the other hand, an injured person usually has the worse negotiation position if their health “insurance” was acquired through a big employer.
If the injured person’s health insurance is through a big employer, the plan is usually self-funded. Thus, federal law applies and, when it comes to reductions, it is much more favorable to big corporations than individuals.
So, for employees of Walmart, Publix, Target, CVS, the health plan likely doesn’t legally have to reduce your lien.
But don’t get to discouraged. I’ve seen some huge self funded health plan language that requires them to reduce by pro-rata lawyer fees and costs. However, this is not common.
Do international visitors have to repay their health insurance company?
Maybe. Unfortunately, many international visitors are injured as tourists in Florida. I’ve had their health insurance and travel insurance pay for their medical bills. Sometimes, we must pay the health or travel insurance company back.
Let me give you an example.
A European man was visiting Miami, Florida. While in Coconut Grove, a car hit him. As a result of the impact, the pedestrian broke his leg.
An ambulance rushed him to the hospital. There, he had surgery to his fix his tibia (lower leg bone). The pedestrian flew back to Europe. He chose to get a free consultation from me by filling out my simple contact form. We spoke on Skype.
He wanted to know if I could get him compensation. After we spoke, he hired me as his lawyer.
My client had health insurance from his European employer. His health insurance paid his the hospital and doctors over $100,000 for his medical bills.
The bad news?
They wanted us to repay this money if we settled his personal injury case.
After intense negotiation, I settled his personal injury case against the at fault driver and two other parties for $325,000. In this case, I even sued the United States of America!
It gets better:
I was able to get his European health insurance to reduce its claim for repayment of medical expenses from over $100,000 down to $73,350. He was very happy!
After my attorney’s fees, costs and paying back his health insurance company, I sent my client a check for $151,522.
Check out the final health insurance lien:
International visitors who are injured at Disney World, Universal Studios or anywhere in Florida, should hire a lawyer. This assumes that someone else caused their accident and injury.
2. Medicare
Medicare is a health insurance program for certain individuals. If you are injured in an accident, Medicare is usually, though not always, the Secondary Payer. You should always give your Medicare card to a doctor or medical provider who is treating you, even if you are in a car or truck accident.
Medicare has a lien against liability, no-fault insurance and UM coverage. 42 CFR 411.24(b) says that Medicare’s rights attach to payments made by any “primary payer”, the definition of which includes “any liability or no-fault insurance”. 42 CFR 411.50(b) includes UM within the definition of “liability insurance”.
So this lien reduction applies in Florida and every state. Without an attorney, you will not get this benefit. In certain occasions, Medicare may reduce by more than attorney’s fees and costs. This is one reason why a Medicare beneficiary should hire an attorney.
Medicare can deny future medical care (you can plan accordingly)
Medicare can deny paying future medical care for the same injury for which you received compensation in an injury settlement. Medicare can do this if your settlement occurred within 30 months prior to you becoming Medicare eligible.
By the time you are ready to settle your personal injury case, you should ask your treating doctor if you need future medical treatment. (This way, you know how much your case is worth.) I’m talking about the doctor who treated you for the same injuries (ICD-10) that the at fault party’s insurance company is paying you for to settle your personal injury case.
When you settle your personal injury case with the insurance company, you may want to ask them if they will put these ICD-10 diagnosis in the settlement release. Some insurance companies will agree to list the ICD-10 codes in the settlement release. On the other hand, some large self-funded companies won’t agree.
If the insurance company won’t list the ICD-10 codes, ask them to send them you an email letting you know which ICD-10 codes they have reported to Medicare. Most adjusters will send you this email. It also may give you an idea of what injuries the insurance company believes are related to your accident.
Here’s a tip:
If your treating doctor says that you don’t need future medical treatment, ask him if he’ll complete a short form stating this.
If Medicare later denies claims for treatment after the settlement date, you can show the doctor’s form to Medicare. Hopefully, Medicare will then pay the claims.
One of the first questions that I ask potential clients when they call my office is whether they receive Medicare. This allows me to notify Medicare of the personal injury claim at the right time.
2a. Medicare Supplement Plans
Medicare Supplement Plans are private insurance and thus they are subject to Florida’s collateral source statute. This is great for people injured in Florida (due to someone’s negligence).
This is because Florida law requires the Medicare Supplement plan to reduce its lien by attorney’s fees and costs. The plan is also required to reduce its lien by any other equitable factors. Equitable means fair.
2b. Medicare Advantage Plan
A Part C Advantage Plan (MAO) have the same subrogation rights as Medicare. An MAO generally only allows for reduction of their lien by attorney’s fees and costs. But this is still a big benefit of hiring a lawyer.
Even if Medicare (Part A/B) was paid back for conditional payments, a MAO may have paid benefits. And Medicare (or CMS) won’t tell the injured person (or his lawyer) that an MAO has made payments. Medicare doesn’t have a way of knowing how much an MAO paid for treatment.
The injured person should tell his/her attorney that they have a MAO. Then, This may prevent the personal injury case from taking longer to settle.
Why are MAO plans allowed to get reimbursed?
The Medicare Secondary Payer (MSP) statute gives them a claim to reimbursement. 42 C.F.R. § 422.108(f). Their repayment formulas is the same as Medicare under 411.37 (c) and (d).
MAO plans are often willing to reduce their lien. Also, it’s possible that they must offer a way for a lien waiver or compromise if they use the MSP.
What happens if you don’t pay a MAO?
The answer is scary.
The MAO can sue you for double the amount of the lien. See Humana Medical Plan, Inc. v. Western Heritage Insurance Company, 832 F. 3d 1229 (11th Cir. 2016).
This double damages right is stated in the Medicare Secondary Payer Act.
3. Medicaid
The Florida Medicaid Program provides medical coverage for Florida residents who meet the program’s eligibility requirements. If you do not have Medicaid and are badly injured and you have limited financial means, then you should quickly apply for Medicaid.
Military personnel may have Tricare. Thus, Members of the Army, Air Force, Marines and Navy get Tricare.
TRICARE can assert a subrogation claim under the Federal Medical Care Recovery Act (FMCRA), 42 U.S.C. §§ 2651-2653, which allows recovery of the reasonable value of medical care furnished or paid for by the United States under circumstances creating tort liability for such medical care in a third party. 32 C.F.R. § 199.12(b).
Tricare has generally been reasonable with giving my clients a reduction for attorney’s fees and costs. After Tricare has notice of the personal injury case, Tricare will send the injured person’s attorney a letter that says:
We stop adding to this lien when your client stops seeking treatment for his/her associated injuries. If you request a final lien and your client is still treating, we would then have to, in accordance with Federal regulations located at 32 CFR 199. 12(i)(3), not settle, compromise or waive our lien without full consideration being given to the possible future medical payment aspects to the individual case.
This language means that Tricare can ask for more money (than what they’ve paid) if you’ll need future medical payments for your injury.
I assume that the Tricare member would get the same letter if he/she didn’t have an attorney.
I settled a case for $64,900 where Tricare had paid $8,000 or so in medical expenses. All settlements on this page are before deduction for attorney’s fees and expenses. Most cases result in a lower recovery. It should not be assumed that your case will have as beneficial a result.
In that case, Tricare agreed to reduce its lien by one-third.
5. VA Health Benefits
If you have served in the naval or air service and are separated under any condition other than dishonorable, you may have VA health care benefits. In the past, the VA has been reasonable in reducing their lien for medical expenses that they paid.
The bad news?
I recently heard that the VA has recently made the argument that you need to repay it for the billed charges and not just the amount that the VA paid to a non-VA provider. Basically, the VA has claimed that 38 CFR 17.101 requires VA to bill “the higher of the charges determined according to [38 CFR 17.101], or the amount VA paid to the non-VA provider.” 38 CFR 17.101(a)(7)
I’ve heard that the VA has claimed that it is obligated by law to pursue this amount. I’ve heard that the VA says that:
Any evidence of the amount VA paid to the non-VA facility has no probative value as to what VA charges. As administratively fixed rates, VA charges are not subject to challenge for being unreasonable or arbitrary.
U.S. v. Jones, 264 F.Supp. 11, 14 (E.D. Va. 1967).U.S. v. Jones, 264 F.Supp. 11, 14 (E.D. Va. 1967).
6. Medical Payments (Medpay) Coverage in an Auto insurance policy
In Florida, the medpay insurer must reduce its lien by attorney’s fees and costs. Florida Statute 768.76. They only reduce the lien by attorney’s fees and costs if the claimant has an attorney.
Without an attorney, you will not get a reduction for attorney’s fees and costs. The injured person may also be able to further reduce the lien.
Is Uninsured Motorist Coverage law easy to understand?
No. Uninsured motorist coverage is very complex. Many injury attorneys do not fully understand it.
I have a much greater understanding of UM coverage than I did ten years ago.
8. Short or Long Term Disability Insurance
Short term (STD) insurance or Long-Term disability (LTD) insurance are optional coverages that may pay Long term disability can pay up to 60% of your income, so you have financial support to manage your disability and your household.
Several factors will determine whether you need to pay a STD or LTD alleged lien from the settlement.
I recently settled a case for $300,000 where the LTD insurer, Prudential, asked to be repaid approximately $40,000 or so in benefits that it paid my client when he could not work.
The LTD insurer was adamant about getting repaid in full. We fought this lien and ultimately they did not seek repayment. This resulted in a $40,000 savings to my client! It is important to know Florida law as it relates to whether you need to repay a claimed LTD or STD lien.
10. Personal Injury Protection (PIP)/ No Fault Insurance
In Florida, Personal Injury Protection (PIP) provides injured drivers up to $10,000 in immediate medical coverage regardless of fault. In Florida, a personal injury protection (PIP) insurer usually doesn’t have a right of subrogation.
You may be able to use your PIP to pay off other first coverages, even if a PIP adjuster tells you that this is not true. I had an adjuster tell me, in a case that I settled for $210,000, that my client’s PIP could not be used to pay off his workers compensation lien.
I argued with the PIP insurer and sent them case law. They quickly paid us $10,000, which we used to pay the workers’ compensation lien.
11. Supplemental Insurance
Supplemental insurance, for individuals and groups, pays benefits your major medical insurance doesn’t cover.
Aflac is an example of supplemental insurance. If you use Supplemental insurance in an injury claim, then you may be required to reimburse the supplemental insurer.
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Editor’s Note: This post was originally published in June 2014 and is updated periodically. Always speak with a lawyer for your particular situation. This article is not legal advice.
