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Medicare Liens and WV Personal Injury Claims

Charleston, WV — As a West Virginia personal injury lawyer, I know how important it is for a person who has been injured to recover compensation for their injuries as soon as possible.  However, attorneys must now carefully consider all Medicare liens on their client’s personal injury claims.  Medicare liens can limit an injured party’s settlement, and if not properly handled, Medicare liens can delay when a client receives his or her settlement check.

The United States District Court for the Northern District of West Virginia recently ruled that a plaintiff’s personal injury lawyer who did not timely reimburse Medicare after his client’s case had been settled may be held individually liable for the entire amount of the lien. See United States of America v. Paul J. Harris, Civil Action No. 5: 08CV102.  The Harris case involved James Richea who was injured when he fell from a local retailer’s ladder. Mr. Richea retained attorney Paul J. Harris to pursue a premises liability claim against the retailer for his personal injuries. Medicare paid approximately $22,500 for Mr. Richea’s medical care resulting from the fall. Settlement negotiations ultimately resulted in the case settling for $25,000.

Once an agreement had been reached, attorney Harris contacted Medicare with the details of the settlement. Based upon the amount of the settlement, the amount of the original Medicare lien, and the other costs and expenses associated with the case, Medicare determined that it was owed approximately $11,000 from the proceeds of the settlement. By statute, attorney Harris had 60 days from the settlement to satisfy Medicare’s lien. When he failed to do so, the U.S. government filed suit against him, personally, for the entire amount of the lien, plus interest and costs.

Attorney Harris filed a Motion to Dismiss, pursuant to FRCP 12 (b) (6), asserting that a lawyer cannot be held individually liable under 42 U.S.C. 1395 (b) (2) for unpaid Medicare liens when he distributes a client’s settlement funds with the prior knowledge and consent of the government. Because he had forwarded the details of the settlement to Medicare before disbursing the settlement funds to his client, attorney Harris argued that he could not be held individually liable for the lien.

The U.S. District Court for the Northern District of West Virginia disagreed, and denied attorney Harris’s Motion to Dismiss. The Court ruled that the Medicare Secondary Payer Statute (“MSPS”) gives the government the right to enforce its lien against the injured party’s attorney.  Because the government is authorized by statute to recover such payments from any entity, including an injured party’s attorney, the U. S. District Court denied Attorney Harris’s Motion to Dismiss. The court didn’t consider Medicare’s knowledge and consent of the settlement distribution to justify attorney Harris’s Motion to Dismiss.

This case serves as a reminder of just how serious lawyers and claimants must treat Medicare and Medicaid liens.  What this means for the non-lawyers and those who have been injured is that even though your case may have settled, there still may be a slight delay before you receive your funds while your attorney resolves any outstanding Medicare liens.   There shouldn’t be too much delay however because an effective personal injury lawyer will likely work with Medicare while negotiating with the defendant.  This will allow your attorney to know exactly how much Medicare is owed once a settlement or verdict is reached.  Your lawyer should then be able to distribute funds to you in a timely fashion, if not immediately.

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