Disclaimer: This article explains Tennessee law and is not legal advice. Consult a licensed attorney for guidance.
Detailed Answer
When you suffer a personal injury in Tennessee and Medicaid (TennCare) or Medicare pays for medical treatment, federal and state rules grant those programs a right to recover those costs from your settlement. These recoveries effectively reduce the net amount you receive.
Tennessee Medicaid Liens
TennCare has a statutory lien against any recovery you obtain for health-related damages. Under Tennessee Code Annotated § 71-5-117 (link: https://law.justia.com/codes/tennessee/2014/title-71/chapter-5/section-71-5-117/), TennCare may seek reimbursement for past medical expenses it paid. You must notify TennCare of your claim and include repayment terms in your settlement agreement. If you fail to satisfy that lien, TennCare can file a lawsuit to enforce recovery.
Medicare Conditional Payments
Medicare operates under the federal Medicare Secondary Payer (MSP) Act, 42 U.S.C. § 1395y(b) (link: https://www.govinfo.gov/content/pkg/USCODE-2018-title42/html/USCODE-2018-title42-chap7-subchapXVIII-sec1395y.htm). Before you finalize any settlement, Medicare issues a conditional payment summary listing the medical expenses it covered that may be related to your injury. You must resolve these conditional payments—either by repaying the full amount or negotiating a reduction—before or upon distribution of your settlement proceeds. Failing to do so can lead to interest and penalties.
Impact on Settlement Offers
1. Reduced Negotiation Leverage – Potential defendants know that liens exist. They may lower their settlement offer to account for TennCare or Medicare repayment obligations.
2. Net Recovery Calculation – Your attorney or claims professional will calculate gross settlement minus attorney’s fees, costs, and government liens to arrive at your net recovery.
3. Lien Resolution Strategies – You can negotiate Medicare conditional payments; TennCare may negotiate in rare cases. Early lien resolution often leads to faster distribution of settlement funds.
Practical Steps
• Notify Medicaid and Medicare promptly upon filing a personal injury claim.
• Request a Medicare conditional payment letter as soon as possible.
• Include repayment and lien resolution language in your demand letter.
• Work with counsel experienced in government lien resolution to protect your net recovery.
Helpful Hints
- Gather all medical bills paid by TennCare or Medicare and review them for accuracy.
- Order a Medicare conditional payment letter early (allow 6–12 weeks for processing).
- Negotiate down Medicare’s conditional payment amounts when possible.
- Include a specific lien resolution clause in your settlement agreement.
- Document all communications with TennCare and Medicare to avoid surprises at closing.
- Consult an attorney experienced in government lien law to safeguard your settlement.