If someone’s negligence caused your injury and Medicare paid your (or some of your) medical expenses, then there may be advantages to hiring an attorney if you want to make a claim for damages in a personal injury case.The same is true if you receive other first party benefits but that it outside the scope of this article.
If Medicare pays a claimant’s medical provider for treatment related to an accident caused by someone else, Medicare can recover payments from you that they made for the treatment. 42 U.S.C. 1395y(b)(2(B)(ii)/Section 1862(b)(2)(B)(ii) of the Act) and 42 C.F.R. 411.24(e) & (g)
If you try to avoid paying Medicare, then you can face criminal penalties, Medicare can deny future medical treatment and reduce or eliminate your social security benefits.
Medicare is entitled to be repaid for the amounts that they pay for treatment related to your claim minus attorney’s fees and costs. So you get the advantage of having an attorney – who hopefully knows the law – work on your case and Medicare will discount the amount that you have to repay them by your attorney’s fees and costs.
This can be best illustrated in an example.
Example # 1 – Medicare Beneficiary Hires an attorney in an injury case
A car hits you while you are a passenger in a car in Miami – or anywhere in Florida. The driver of the other vehicle receives a ticket for causing the accident. You hire an attorney. The driver of the at- fault vehicle is insured with State Farm.
You have shoulder injury – possibly a rotator cuff tear – and you have surgery, and you also have a knee injury. Your medical bills are $60,000. You understand how to get your medical bills after a car accident in Florida, so you make a claim with your own auto insurer.
The Personal Injury Protection (PIP) coverage on your auto insurance pays the first $10,000 in medical bills. Medicare pays $18,000 to the hospital and your other medical providers.
Because the medical providers billed Medicare, they are required by law to make adjustments to your bill. Therefore, let’s assume that you owe $2,000 in out of pocket medical costs after Medicare pays most of the billed amounts.
The driver that hit you is insured by State Farm and has $35,000 in bodily injury (BI) coverage in his auto insurance policy. Assume there is no other liability insurance coverage available. State Farm pays its BI limits of $35,000 to settle your personal injury claim before a lawsuit is filed.
Just like my fee contract, most fee contracts in Florida state that the attorney is entitled to receive 33 1/3% of the total recovery if the claim settles before a lawsuit is filed. To keep it simple I am not going to factor in attorney’s costs. Costs are generally not that large in cases that settle pre-suit.
So, although Medicare paid $18,000, it is only entitled to recover $12,000 because of the reduction in attorney’s fees allowed by law.
Let’s take a look at how much you receive as a net settlement (after all bills, attorneys fees, costs, and liens are paid):
Net Settlement = Gross Settlement – Attorneys Fees – Medicare Lien (Reduced by attorneys fees and costs) – Bills Owed
Now let’s substitute numbers from the example into the equation:
Net Settlement = $35,000 – $11,666.67 – $12,000 – $2,000
Net Settlement = $9,333.33
So your net settlement is $9,333.33 and the attorney has done most of the work for you.
Example # 2 – Medicare Beneficiary Does Not Hire an attorney in an injury case
Now let’s look at the same case except that you do not hire a lawyer. We’ll assume you are dealing with Liberty Mutual instead of State Farm. Because you do not hire a lawyer, Medicare does not reduce its lien of $18,000 by attorney fees and costs.
Net Settlement = Total Settlement – Attorneys Fees – Medicare Lien – Bills Owed
Now let’s substitute numbers from the example:
Net Settlement = $35,000 – $18,000 – $2,000
Net Settlement = $15,000
So without hiring an attorney you may get $15,000 assuming that Liberty Mutual decides to pay you $35,000 as the total settlement. Liberty Mutual could try to pay you less by arguing that your injuries are pre-existing.
For example, I had a case where the radiologist who read my client’s MRI of his knee said that he could not tell how long the meniscus tear had been there. That is helpful to the liability insurer because it is your burden to prove that your injuries are related to the accident.
You also may have to know how to handle all the legal aspects of your case. Although in this example you may receive $5,666.33 more than with an attorney, you may not discover liability insurance that exists as well as know how to fight to get PIP benefits paid.
Example # 3 – Medicare Beneficiary Hires an attorney in an injury case – Limited Insurance
Let’s take Example #1 except lets assume that you have a herniated disc in your neck and a bulging disc or back from being hit by a supermarket truck in Florida, such as Publix or Walmart truck. Although this isn’t usually the case, let’s assume that the supermarket truck only had liability insurance of $25,000.
Since a truck hit you in Florida then you can make a claim for pain and suffering if you have a permanent injury. In Florida, in a non–motor vehicle case (e.g. slip and fall, motorcycle accident, etc.), you do not need to prove that you have a permanent injury in order to get money for pain and suffering. This more liberal standard has helped me achieve many slip and fall settlements in Florida.
You hire an attorney who charges 33 1/3% of the total settlement. A herniated disc can be a serious injury thus increasing the settlement value for the pain and suffering component of neck or back injury claim. But if you are 30 years old or older, then you should expect the liability insurer to argue that you herniated disc existed before the accident.
I settled a herniated disc case for $16,500 and I think that the claims adjuster for the liability insurer argued that my client’s injuries were pre-existing. I have had many Florida car accident settlements. In Florida, one of the larger gross verdicts that I have seen for a herniated disc injury was for $536,700 in pain and suffering (this was not my case).
Back to the example. Let’s use some of the amounts from example #1.
Your medical bills are $60,000.PIP coverage on your auto insurance pays the first $10,000 in medical bills. Medicare pays $18,000 to the hospital and your other medical providers. Let’s assume that you owe $2,000 in out of pocket medical costs after Medicare pays most of the billed amounts.
The supermarket insurer pays you the $25,000. An insurer like United Automobile Insurance Company may take a tough stance on offering a fair amount of money in an un-operated herniated disc case. Assume there is no other liability insurance coverage available.
Net Settlement = Gross Settlement – Attorneys Fees – Medicare Lien (Reduced by attorneys fees and costs) – Bills Owed
Now let’s substitute numbers from the example into the equation:
Net Settlement = $25,000 – $8,333.33 – $12,000 – $2,000
Net Settlement = $2,666.67
So your net settlement is $2,666.67 and the attorney has done most of the work for you.
Example #4 – Medicare Beneficiary – No Attorney – Injury case – Limited Insurance
Let’s use the same figures as Example #3 except you do not hire a lawyer. Therefore, you have to pay the full Medicare lien back, which is $18,000.
Net Settlement = $25,000 – $18,000 – $2,000
Net Settlement = $5,000
So your net settlement is $5,000, which is only $1,300 more than had you hired a lawyer. But you have to do all the work yourself without an attorney.
The settlements that I discuss below 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.
I once had a gross $200,00 settlement for my client who had a broken wrist where it was not until I investigated and requested that the liability insurer advise me of additional coverage that they told me that there was a $1,000,000 in liability coverage available in addition to the $100,000 that they initially told me about.
I also had a gross settlement of $325,000 where my client told me that he did not purchase uninsured motorist coverage from a rental car company. He told me that he would never have known to send a written letter to the rental car company requesting the declarations page for their insured. It turned out that I was able to discover – and collect – $100,000 in uninsured motorist that he did not know that he had purchased.
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) because Florida law requires the Medicare Supplement plan to reduce its lien by attorney’s fees and costs, and any other factors that the court thinks are fair.
Medicare Advantage Plan
Medicare advantage plans are treated like Medicare and generally only allow for reduction of their lien by attorney’s fees and costs.
There are many other cases where I discovered insurance that my my clients had no idea existed. The fact that Medicare reduces its lien by attorney’s fees and costs is just one of the many reasons to hire an injury lawyer.
Were you injured in an accident?
I have settled many personal injury cases in Florida, including car accidents, slip and falls, and cruise ships accidents. I want to represent you if you were injured in an accident in Florida, on a cruise ship or boat. Call me now at (888) 594-3577 to Get a Free Consultation.
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