Detailed Answer
When you recover damages in a Michigan personal injury case, both Medicaid and Medicare may assert rights to reimbursement for medical expenses they paid on your behalf. These rights can affect your net settlement significantly.
Medicaid Reimbursement under Michigan Law
Under Michigan’s third‐party liability statute (MCL 400.106), the Department of Health and Human Services (DHHS) may seek repayment from any settlement, judgment or verdict. This repayment is called a lien. It covers all benefits provided for the injury. The DHHS must provide notice of its claim, and you have an opportunity to dispute the amount. In practice, liens often reflect 100% of the past medical expenses paid. Before finalizing your settlement, you or your attorney should request a lien statement from DHHS. This process usually takes 30 to 60 days.
Medicare Secondary Payer Recovery
Medicare operates under the federal Medicare Secondary Payer Act (42 U.S.C. § 1395y) and regulations at 42 CFR 433.139. When Medicare pays for treatment related to your injury, it issues “conditional payments” expecting reimbursement from any third‐party award. You must report your settlement to the Centers for Medicare & Medicaid Services (CMS) and obtain a final demand letter. CMS then identifies conditional payments and issues a demand for repayment.
Impact on Settlement Offers
Settlement offers typically allocate funds between categories such as economic and non-economic damages. Because Medicaid and Medicare liens attach to the economic portion covering past medical bills, your net recovery drops by the amount of their demands. For example, if $100,000 covers medical expenses and CMS identifies $20,000 in conditional payments, you must hold back or pay $20,000 from your settlement. Failure to pay timely liens can lead to penalties, interest, and future denial of benefits.
Best Practices: Secure lien amounts early. Negotiate lien reductions. Allocate settlement funds clearly in the release. Confirm payoffs before closing your case.
Helpful Hints
- Request a Medicaid lien statement from DHHS within 30 days of filing suit.
- Use the Medicare Secondary Payer Recovery Portal to track payments.
- Allocate settlement proceeds in writing to avoid allocation disputes.
- Consider negotiating lien reductions with DHHS or CMS.
- Consult a licensed attorney to verify all liens are satisfied before disbursement.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult a licensed attorney regarding your specific situation.