If someone caused your injury, you’re typically focused on the total amount of the 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.
The following are some examples of first party coverage and how they apply in a personal injury case:
1. Health Benefits (Insurance)
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.
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 doesn’t legally have to reduce your lien that much (if at all).
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”.
Medicare will reduce its lien by attorney’s fees and costs if it pays benefits. The formula used to decide how much the amount of reduction should be may be found at 42 C.F.R., Sub-Section 411.37.
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 now 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.
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.
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.
A Florida hospital or doctor may choose not to bill Medicaid if the injured person has a personal injury claim. You have to repay Florida Medicaid from your personal injury settlement if Medicaid pays for accident related medical expenses.
In Florida, you can check out some frequently asked questions about Medicaid in casualty/tort recovery.
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
People who have served in the naval or air service and are separated under any condition other than dishonorable may have VA health care benefits. The VA has been reasonable in reducing their lien for medical expenses that they paid.
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.
7. Uninsured motorist (UM) coverage
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.
9. Workers Compensation
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.
However, a PIP insurer who pays PIP benefits under a private automobile policy has a right of reimbursement under from the owner or insurer of a “commercial motor vehicle” if the PIP insurer pays PIP benefits to its insured who was injured while a passenger in a “commercial motor vehicle” or when struck as a pedestrian by a “commercial motor vehicle.” Florida Statute 627.7405; Amerisure Ins. Co. v. State Farm Mutual Auto. Ins. Co., 897 So.2d 1287, 1290 (Fla.2005).
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 has been completely revamped and updated.