After suffering a serious injury the first priority is always to seek medical care. Ideally the injured person is insured, so that the insurance company picks up most of the initial costs of emergency care and any costs associated with follow-up treatments. If the injury also leads to a personal injury lawsuit, the insurer typically will demand that it be reimbursed from any settlement or final judgment award in a process called insurance subrogation. The same is true of Medicare, which has unique requirements for recipients who receive covered care for expenses that are later made part of a settlement.
Placing Medicare subrogation in context
Putting aside the jargon for a moment, it’s worthwhile thinking about what a personal injury lawsuit is for. The goal of filing a lawsuit is to recover compensation for all of the various costs associated with the injury, by making the person responsible for the injury also responsible for those costs. Although medical bills tend to be a substantial part of the damages a plaintiff seeks to recover, other costs like lost earnings and noneconomic factors like pain and suffering are also a component. The object of filing a lawsuit is not to give the plaintiff a big financial windfall.
In that light, insurance subrogation makes sense. Essentially the insurer that provides coverage for someone who later files a lawsuit can be thought of as having borne costs that were the defendant’s obligation. The insurer therefore naturally should be reimbursed. It would not be fair to the insurer or the defendant if the plaintiff could walk away with the cash value of medical care that the insurer has already paid for. In technical terms, Medicare is a secondary payer, while the defendant is the primary payer.
How Medicare’s right to reimbursement works
Medicare recipients must comply with a range of important requirements, beginning with the accident itself. By law Medicare is entitled to a lien on any settlement or judgment award paid out in connection with injuries that it covers. What this means in practice is that the injured plaintiff cannot receive any financial compensation until Medicare releases the lien, typically after it has determined that it has been sufficiently reimbursed. Here is a summary of the major components of Medicare’s process:
- Preliminary notice. Notify the Medicare Benefits and Recovery Coordination Contractor (BCRC) of the injury and the facts of the accident that caused it. It’s important to get this notice submitted as soon as possible after the injury, in large part because Medicare can take a long time processing these notices.
- Monitoring by Medicare, and monitoring Medicare. The preliminary notice sent to Medicare will trigger a review of the plaintiff’s file and ongoing monitoring for new costs. Medicare will eventually send what is called a conditional payment letter setting out in detail the charges that Medicare believes are related to the plaintiff’s legal claim. It is the plaintiff’s responsibility to correct any errors in the conditional payment letter, which can happen if the plaintiff is being treated for conditions other than the injury subject to the lawsuit. For example, if the plaintiff suffered a broken leg in a car crash, but later suffers a burn that requires medical care, Medicare may lump the treatment of the leg together with the burn on the assumption that the two were related. The plaintiff needs to get the burn’s costs taken off the list to prevent Medicare from seeking reimbursement for it from the defendant.
- Notice of settlement. Personal injury cases typically reach a settlement without going to trial. Once settlement is reached Medicare must be informed as soon as possible. Medicare is told how much the settlement was for, the amount of attorneys’ fees, and other details.
- Appeals process. Medicare uses the settlement information to compile a final demand letter setting out the amount it believes it is owed. This amount must be paid or appealed within 60 days. In rare cases Medicare will adjust their final demand amount, but by this point it is often difficult to get adjustments made.
This is only an overview of some of the issues that arise for a Medicare recipient who is seeking compensation for an injury. Given the stakes involved, the correct approach is always for the attorneys handling the personal injury case to also assist with the Medicare compliance process. Making mistakes with the Medicare process can lead to long, frustrating delays that are best avoided.
For over 45 years the law firm of Greenman Goldberg Raby Martinez has helped clients in the Las Vegas area recover compensation in personal injury cases. We help clients navigate the Medicare process and get the compensation they deserve. Call us today for a free attorney consultation at 702-388-4476 or send us a request on our contact page.