Mediation is a great process for resolving personal injury and wrongful death claims, but there are several specific impediments and many general impediments to a successful resolution of claims. In this article, we will identify those impediments, deal with some of them in detail and bring others to your attention so you will be aware of those impediments and can become more familiar with how to address those impediments. The specific impediments we will address are:
- Medicare Mandatory Insurer Reporting;
- Medicare liens;
- Medicaid liens;
- Medical liens;
- Apportionment, contribution and indemnity issues;
- Child support liens;
- Health insurance carriers rights of reimbursement and subrogation rights and ERISA plans;
- Assignments to medical providers of proceeds of the settlement and/or verdict in a lawsuit; and
- Lawsuit loans.
Some of the general impediments to resolution of any type of lawsuit or claim will also be discussed. Those impediments include:
- Plaintiff reports significantly more specials at start of mediation;
- Party has not provided important information or is not willing to reveal it;
- One or both of the parties threaten to leave early in the mediation;
- One of the parties is making unreasonable moves which potentially could end the mediation.
- Claim by insured against their uninsured motorist carrier;
- Plaintiff starts at higher number or defendant starts at lower number than pre-mediation;
- Defendants have under-valued case;
- Find out that true decision maker or significant influence not present; and
- Spouse plaintiffs have different views of case;
In recent years, due to mandatory insurer reporting requirements, insurance carriers have become much more concerned about Medicare issues. Mandatory insurer reporting requirements mandate that group health insurance carriers, liability insurance carriers, worker’s compensation insurance carriers and self-insured and self-administered liability entities report to the Center for Medicare and Medicaid Services (CMS) claims any settlements that may affect Medicare’s position as a secondary payer. Reporting is required when:
- Mandatory Insurer Reporting and Liability Settlement Allocation Plans
- Plaintiff or Claimant is 65 years old or older;
- Plaintiff or Claimant receives Medicare benefits;
- Plaintiff or Claimant is reasonably anticipated to receive Medicare benefits within the next 30 months after settlement or verdict; and
- Plaintiff or Claimant has end stage renal disease.
Some conditions or circumstances that should be considered in determining whether the settlement or verdict should be reported to CMS are:
- Plaintiff or Claimant is 62 1/2 years old or older;
- Plaintiff or Claimant has been receiving Social Security Disability benefits for two years or longer;
- Plaintiff or Claimant is receiving Social Security Disability benefits but is not yet Medicare eligible;
- Plaintiff or Claimant has applied for Social Security Disability benefits, has had the application for benefits denied or is appealing the denial of the application for benefits;
- The settlement or verdict is greater than $25,000 and the Plaintiff or Claimant is Medicare eligible;
- The total value of the settlement or verdict is greater than $250,000 and it is reasonably anticipated the Plaintiff or Claimant will be eligible for Medicare benefits within 30 months; and,
- The injuries are such that it can be reasonably anticipated that the Plaintiff or Claimant will be Medicare eligible within 30 months.
If the entity that has the reporting requirement fails to properly report a settlement or verdict, it is subject to a fine of $1,000.00 per day per claim, so those entities have become intent on obtaining the necessary information to properly report a settlement or verdict, even in cases where there is little, or no, chance that the Plaintiff or Claimant is, or will be within 30 months, Medicare eligible. This has created impediments, delays in settlement negotiations, and the finalization of settlements.
In addition to the reporting issues, decisions must be made about whether arrangements have to be made to satisfy the Medicare secondary payer requirements. That topic is much too broad to be covered in this article, but secondary payer issues can be addressed with Claim Settlement Allocation, Liability Settlement Allocation and Liability Medicare Set-Aside plans. There are many qualified companies that can assist you in the development of these plans.
This impediment to settlement is so well-known, I will not discuss it in great detail. If the Plaintiff or Claimant has received Medicare benefits for the injuries received in the incident that is the subject matter of the lawsuit or claim, Medicare has a lien on the proceeds of any settlement and/or verdict, and that lien can be enforced against the injured party, the tortfeasor and the tortfeasor’s insurance carrier if the lien is not satisfied, compromised and/or resolved. It is absolutely essential that the injured party’s attorney, defense counsel and the insurance claims representative determine whether Medicare benefits have been paid and they are addressed.
Medicaid Liens – O.C.G.A. § 49-4-149
If you know or suspect that Plaintiff is receiving Medicaid benefits, you should determine whether there is an enforceable Medicaid lien. Medicaid liens are filed by the Department of Community Health (DCH). The lien is for payment of medical care and treatment provided to Medicaid recipients. The lien is on the proceeds of a settlement or verdict received from a third party tortfeasor or insurer. The DCH perfects the lien by complying with o.c.g.a §§ 44-14-470 through 44-14-473. The lien must be filed within one year from the last date of treatment for which Medicaid benefits were paid. The DCH files the lien notice in the county where the Medicaid recipient resides and in Fulton County. A Medicaid lien does not affect the priority of attorney’s liens. The DCH is subrogated to the reasonable value of medical assistance provided after written notice of the lien. The subrogation right attaches when the services are provided. Subrogation action must be brought by DCH within one year of liability being finally determined. Final determination means that all of the claims arising out of the incident for which the Medicaid recipient received medical treatment have been resolved by settlement or trial.
Medical Liens O.C.G.A. – §§ 44-14-470-476
Often medical liens are not addressed or identified before a mediation. Resolution of all medical liens always becomes a condition of settlement, therefore if the liens are not addressed before the mediation, they can become a serious impediment to resolution of the case. Medical liens can be filed by hospitals, nursing homes, physicians, and traumatic burn care facilities. With respect to traumatic burn care facilities, the reasonable cost for the treatment must exceed $50,000. The lien is on the proceeds of any settlement or verdict received from a third party tortfeasor or insurer. Not less than 15 days before filing the lien, the medical care provider must provide written notice to the patient, third party tortfeasors and their insurers. The notice must be sent by first-class and certified mail or statutory overnight delivery, return receipt requested. The lien notices must be filed in the county where the medical services are provided and in the county where the patient resides. The lien notice must be filed within 75 days of discharge from the hospital, nursing home or traumatic burn facility. If the lien is being filed by a physician, the lien must be filed within 90 days of the first treatment provided by the physician. Improper perfection of the lien invalidates the lien, except those who receive actual notice of the lien by reliable forms of delivery before settlement or verdict. The lien can be enforced against a tortfeasor or the insurer that has actual or constructive notice of the lien. The action to enforce the lien must be brought within one year of the final determination of liability as defined in the Medicaid lien section above.
Right of Reimbursement – O.C.G.A. § 33-24-56.1
A health insurance carrier that provides for reimbursement for benefits paid for medical treatment received as a result of injuries caused by a third party tortfeasor may recover from the injured party if the amount of the recovery exceeds the sum of all economic and noneconomic losses incurred as a result of the injury, exclusive of losses for which reimbursement may be sought under this code section. A declaratory judgment action can be filed for a court to determine whether the injured party has been fully compensated. The injured party must provide notice by first-class and certified mail or statutory overnight delivery, return receipt requested, to the benefits provider no less than 10 days before consummation of a settlement or trial. If the injured party provides the required notice to the benefits provider, the benefits provider can only assert reimbursement rights if it has provided notice by reliable methods to the injured party of its claim for reimbursement. If the 10 day notice is not provided by the injured party, the benefits provider is not subject to the prior notice requirement.
If the health insurance policy is covered by ERISA, the Georgia full compensation statute may not apply due to federal preemption. You must determine whether the insurance policy is an insured health plan or is a self-funded health plan. If it is a self-funded health plan, the full compensation statute may not apply. The plan must specifically provide for reimbursement from settlement or verdict proceeds and comply with the specific-fund doctrine. Reimbursement is limited to the amount paid for injury related care. For the full compensation statute not to apply, the plan must specifically provide that the made whole doctrine does not apply. Depending upon the language of the plan, the injured party’s attorney’s fees may or may not be factored in.
CHILD SUPPORT LIEN O.G.G.A. § 19-11-18
Under the Child Support Recovery Act, an IV-D agency can acquire a lien for unpaid child support obligations. The lien applies to past due and accrued child support after the lien is perfected. Upon proper recordation or registration of the lien, the lien encumbers all tangible and intangible property, whether real or personal, and any interest in property, whether legal or equitable, belonging to the individual that owes child support (the obligor). The lien applies to any property interest owned by the obligor or acquired by the obligor after the child-support lien arises. Notice of the lien must be provided to the obligor by first-class mail at least once a year. If proper notice has been provided to the obligor and child-support remains unpaid, the IV-D agency can demand any person or entity in possession of property subject to the lien turn over possession of the property to the agency. The person or entity is only obligated to turn over sufficient property to pay the outstanding child support obligation. If the property is not turned over to the agency, the person or entity is subject to paying the amount of the property, up to the amount of the unpaid child support, plus costs and interest.
Assignment of Personal Injury Recovery
An injured party may assign to a medical care provider his or her rights to the proceeds that may be recovered as a result of any compromise, settlement, arbitration, mediation, litigation, award, judgment or verdict. Often times this is done when the injured party has no health insurance and is unable to pay for the medical care. If done properly, these assignments are valid and should not be ignored. In Santiago v. Safeway, 196 Ga. App. 480; 396 S.E.2d 506, the court found that the debtor, which was a first party insurance carrier, of the assignor, which was the injured party, who had notice of the assignment by the injured party to the medical provider, in this case a chiropractor, paid the debt to the assignor at its own peril. The court said that it is the established rule in the United States that an assignment for valuable consideration, with notice to the debtor, imposes on the debtor an equitable and moral obligation to pay the assignee. The long and short of this ruling was Safeway paid for the medical expenses twice. There is no reason why this case law would not equally apply to third party insurance carriers that have notice of the assignment.
There are times when injured parties with no health insurance coverage or with limited means, particularly when their injuries have resulted in an inability for them to work, need funds to pay for medical care and/or daily living expenses. There are many companies that provide loans to injured parties. To obtain the loan, the injured party assigns the proceeds of any recovery from a first party or third-party claim to the lending company. These loans often result in amounts owed that substantially impact the ability to settle the case.
APPORTIONMENT – EFFECT ON CONTRIBUTION AND INDEMNITY CLAIMS
For quite some time after the apportionment statute was passed, there was a great debate about whether contribution and indemnity were still alive and well in tort cases. After several court cases addressed this issue, it seemed to be the consensus that the apportionment statute did away with contribution and indemnity claims in tort actions. The case of Zurich American v. Heard, 321 Ga. App. 525; 740 S.E.2d 429 (2013) has brought those claims back into play in settlement negotiations.
The Court of Appeals effectively held that unless there is an adjudication on the merits of the percentage of fault of each at fault party, the non-settling at fault party can maintain a claim for contribution and/or indemnity against the settling at fault party. This case must be considered whenever you are trying to settle a case as one of the at fault parties in a multiple at fault party or non-party case. The case also has to be considered when making an offer of settlement in a multi-party case. Your client and the insurance client may still be better over settling the claims, but you must make sure they both understand the potential for a claim for contribution to be brought by the non-settling tortfeasors.
As an aside, if you are representing the defendant when there is an uninsured motorist carrier involved, you must take into consideration the uninsured motorist carrier would still have a claim for subrogation against your client.
This article has certainly not covered all of the impediments to settlement in detail, but hopefully it will help you in your preparations for settlement negotiations.