Detailed Answer
Under Nebraska law, Medicaid (administered by the Nebraska Department of Health and Human Services) has a statutory right to recover medical expenses it paid on behalf of a Medicaid recipient who later receives a personal injury settlement. This process is called subrogation or lien recovery. Navigating these liens properly ensures you comply with state requirements and protects the client’s net recovery.
1. Medicaid’s Subrogation and Lien Authority
Federal law (42 U.S.C. §1396k) requires states to seek reimbursement from third‐party settlements for medical benefits paid by Medicaid. Under Nebraska Revised Statutes §68-909, the state may assert a lien against any cause of action or claim for damages (Neb. Rev. Stat. §68-909). Failure to recognize this lien can delay or jeopardize distribution of settlement funds.
2. Identifying and Perfecting the Medicaid Lien
When a Medicaid recipient files a personal injury suit, notify Nebraska DHHS immediately. DHHS will issue a Notice of Lien stating the total Medicaid payments to date. To perfect the lien:
- File the Notice of Lien in the district court where the injury claim is pending.
- Serve all parties (defendant, insurer, attorneys) with the filed lien notice.
- Ensure the lien amount matches DHHS records; request a payoff statement in writing.
3. Negotiating or Compromising the Lien
Nebraska law allows DHHS to compromise subrogation claims in the interest of justice or hardship (Neb. Rev. Stat. §68-911). Key negotiation strategies include:
- Demonstrate litigation risks or low probability of full recovery.
- Show client’s financial hardship or high attorney-fee allocation.
- Propose a reasonable percentage of net recovery rather than full dollar amount.
4. Settlement Approval and Distribution
Before disbursing any settlement funds:
- Hold the gross settlement in escrow until the lien is resolved or compromised.
- Deduct court-approved attorney’s fees and litigation costs first, then satisfy the Medicaid lien.
- Issue payment to DHHS per the payoff statement or compromise agreement.
- Distribute the remaining net funds to the client.
Hypothetical Example: Jane Doe receives a $75,000 settlement. Attorney’s fees and costs total $25,000, leaving $50,000. DHHS asserts a $20,000 lien but agrees to compromise to $15,000. After paying $15,000 to DHHS, Jane’s net recovery is $35,000.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to address your specific situation.
Helpful Hints
- Request a written payoff statement from Nebraska DHHS before settlement negotiations.
- Verify the lien amount matches Medicaid’s actual payments.
- Consider negotiating a percentage-of-recovery compromise rather than full reimbursement.
- Keep settlement proceeds in escrow until the lien is formally released or reduced.
- Document all communications with DHHS for your client’s file.