Disclaimer: This article is for general information only and does not constitute legal advice.
Detailed Answer
When you receive Medicaid or Medicare benefits for medical care related to a personal injury, federal and Washington State laws give these programs a right to recover the amounts they paid. That recovery right—often called subrogation or a lien—reduces the net amount you actually receive in a settlement.
1. Washington Medicaid Recovery (RCW 74.09.520)
Under RCW 74.09.520, the Washington Health Care Authority (HCA) can assert a lien against any third-party settlement that compensates you for medical expenses. Before finalizing a personal injury settlement, you must notify HCA, obtain a written lien amount, and satisfy it out of the gross settlement proceeds. For details, see the statute: RCW 74.09.520.
2. Medicare Conditional Payments (42 C.F.R. § 411.37)
Medicare may also pay treatment costs in advance and then seek repayment after you settle. Under 42 C.F.R. § 411.37, the Centers for Medicare & Medicaid Services (CMS) issues a “conditional payment” report showing the total they paid. You must request this report, review it for accuracy, and negotiate any disputed charges. CMS then issues a final demand, which you must satisfy to avoid future liens or government action.
3. Impact on Settlement Offers
- Gross vs. Net Settlement: If you negotiate $100,000 in total damages, but Medicaid has a $20,000 lien and Medicare demands $15,000, your net recovery drops to $65,000 (before attorney fees and costs).
- Timing Delays: Both programs require written lien amounts or conditional payment reports. Waiting for these figures can delay closing your claim for 6–9 months or more.
- Proportionate Reduction: Courts often require that your attorney hold lien amounts in escrow until they receive payoff statements. This ensures that Medicaid and Medicare are paid first from the settlement fund.
4. Best Practices
Coordinate early with your attorney to obtain lien information from HCA and CMS. Dispute any charges you believe are incorrect and negotiate reductions where possible. Ensure your settlement documents reflect that these liens will be paid out of the settlement proceeds.
Helpful Hints
- Collect Lien Amounts Early: Request Medicaid and Medicare payoff statements as soon as liability is clear.
- Review Line Items: Check each medical charge for accuracy and dispute overbilling or unrelated treatments.
- Escrow Funds: Hold the lien amount in escrow until you obtain a final payoff letter to avoid claims of underpayment.
- Communicate with Insurers: Keep both HCA and CMS informed of settlement deadlines to expedite their reports.
- Consult an Attorney: An experienced personal injury lawyer can streamline the subrogation and lien satisfaction processes.