Day On Torts : Tennessee Injury Lawyer & Attorney : John Day : Personal Injury, Accidents : Serving Memphis, Nashville, Knoxville

A defense lawyer and I were having a drink the other day and he told me that from time to time he has difficulty getting cases settled at mediation because plaintiff's lawyers don't have information about subrogation interests.  Here are some tips to avoid such problems:

1. At the initial client meeting, as you help you client understand his or her rights and go through the outline of the types of damages he or she can recover if the case is successful, explain the law of subrogation.  To do so you have to ask whether any insurance company or governmental entity  paid the outstanding medical bills.  Then, explain that usually it will be necessary to re-pay  the entity that paid these bills monies from the proceeds of any settlement or judgment.  This not only informs the client of his or her obligation to re-pay the bills but also sets client expectations at an appropriate level.
2. If the bills are paid by a private entity get a copy of the applicable insurance policy or summary plan description to determine if a right of subrogation or reimbursement exists and if the plan is an ERISA plan. 
3. If the bills were paid by a governmental entity (in Tennessee this usually means either Tenncare or Medicare) you need to either know the law of subrogation or look it up.  The bottom line:   government payors have a right to be re-paid and it is your obligation, as a lawyer,  to help them get re-paid.  If you don't do so you (the lawyer) will be on the hook to re-pay these bills, so it is in your best interest to understand this law and help your client fulfill their  obligation.
4. Remember that your client's medical bills may have been paid by worker's compensation.  If so, the payor has a statutory right of subrogation.  Ignore it at your peril.
5. Gather all of the medical bills and determine who paid them.  Your client may not have given you accurate information about the entity that made the payments on the bills.  For instance, sometimes a client receives both Medicare and Tenncare benefits.  You need to know each entity that paid bills.   It is also possible that your client's auto insurance carriers paid some of the bills under a medical payments provision in the policy.  Get a copy of the policy to be sure, but auto insurance carriers almost certainly have a subrogation right for any such payments.
6. Private health  insurers routinely send letters asserting subrogation interests.  Tell your client that they may be receiving such letters and make sure you get them.
7. Ascertain the amount paid by each third-party before the mediation of the case.  This can be difficult, especially with Medicare, but start early and keep at it.  Do not accept numbers over the phone - try to get the payment amounts in writing.  If you get a total-payment figure over the phone confirm the number in an email or letter.   Do not wait until the day or even the week before the mediation to do this - you will not get the information you need before the mediation.
8. You will need to check the claimed subrogation interest versus the amount actually owed.  Sometimes insurers include bills for care unrelated to the incident.  Thus, you must get a print-out of who the insurer paid and the date of service for that payment and compare it with your client's medical records.
9. Get the name and telephone number of a contact person at the third-party payor that you can contact during a mediation.  Make sure you understand if their office is on Central time, Eastern time, or some other time - you need to know how late you can reach them.   Advise them that you have a mediation on a given day and that you will need to be able to reach them during the mediation.  
10. Some payors will reduce the subrogation amount if the client is not "made-whole" even if they have no legal obligation to do so.  A version of the  made-whole doctrine is statutory for Tenncare payments and the common law made-whole doctrine applies to med-pay and non-ERISA health insurance policies in Tennessee.  Understand the law applicable to each third-party payor before the mediation.  
11. In the days or weeks before the mediation as you explain the process to your client remind them once again of the need to re-pay the entities that paid the medical bills.  By doing so  you are reminding them of their legal obligation and at the same time setting a reasonable level of expectation of what will occur at the mediation.
12. Have the relevant contact information and the claimed subrogation amounts with you at the mediation.  How often you contact the payor during the mediation is subject to many factors, but generally speaking as want to call them as the settlement appears to be coming together.  You can often negotiate the amount due, but be armed with the facts that will help you do so.  The best fact to use to negotiate a reduction is a liability insurance policy that is totally inadequate given the injuries and the lack of any assets from the defendant.   There are a multitude of other factors, such as immunity for one or more defendants, a damage cap for a governmental entity, very difficulty liability facts, etc.  If the made-whole doctrine is applicable all arguments must be marshaled and presented.  Some carriers are willing to cut their subrogation amount if you demonstrate a willingness to help get a difficult case resolved by reducing your fee.  Confirm any deals made in writing or by email.
13. Try to have the subrogation issues resolved before you leave the mediation.  If that is impossible, then attempt to make the settlement subject to a satisfactory resolution of subrogation interests in the next few days.  Be sure the language of the agreement with the defendant provides that it is you (and your client) that must be satisfied with the resolution of the subrogation interests.
14. As I mentioned above, it is difficult to get a straight, final answer out of Medicare.  Start early, and write to them often.  Try to get the name and number of  a human being.  If you cannot get an answer out of Medicare before the subrogation, you will be forced to estimate the amount of their subrogation interest.  You will usually be safe if you assume that Medicare paid 40 cents on each dollar charged by a health care provider.  In other words, if the hospital bill shows $10,000 you can assume that Medicare paid $4000.  It will usually be less.  However, this will help your client understand his or her "net" recovery and will help you negotiate with reasonable comfort.

Why should you care about all of this?  If you do not have a knowledge of subrogation law it will be more difficult to settle your client's case because your client will not be able to understand the "net" recovery.  If the client thinks that he or she is going to receive "X" and then finds out that "X" has to be reduced by a subrogation payment, he or she going to be upset.  If the subrogation interest is one that imposes an obligation of the lawyer to protect, you risk financial loss and/or disciplinary action for failure to fulfill that obligation.

In summary, part of being a plaintiff's lawyer is having a good grasp on the contractual and statutory rights of those who have paid your client's medical bills.  Another part of being a plaintiff's lawyer is addressing such matters directly in a manner consistent with the law, with both the payor and the client, to avoid future unpleasantness.

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From time to time I will see a question posted on the trial lawyers' listserve asking whether Medicare has a subrogation interest in wrongful death proceeds.  The answer is "yes," and this opinion helps explain why.

Tennessee wrongful death law permits the recovery of medical expenses incurred between the injury caused by negligence and the death.  Missouri has  similar law, and the Eighth Circuit Court of Appeals affirmed the right of Medicare assert a right to a portion of the proceeds.

The case is Mathis v. Leavitt, No. 08-1983 (8th Cir. Jan. 30, 2009).  Read it here.

By the way, I know some of you are thinking "doesn't Tennessee law provide that wrongful death proceeds are free from the claims of creditors and, if so, doesn't that mean that Medicare, asserting its interest as a creditor, does not have any right to repayment?"  Fair question, but recall that (a) medical expenses can be recovered under state law and (b) state law cannot trump federal law on this issue.

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Plaintiff's lawyers:  do you want to have the hell scared out of you?  Read this article by Rick Swedloff on Medicare subrogation entitled "Can't Settle, Can't Sue:  How Congress Stole Tort Remedies From Medicare Beneficiaries."  The article appears in Volume 41.2 of the Akron Law Review.

[A 2003 amendment to the Medicare Secondary Payor Act, which grants rights to Medicare in personal injury cases where Medicare pays benefits] significantly affects the ability of Medicare beneficiaries to bring or settle individual tort claims, the incentives for attorneys to represent Medicare beneficiaries in individual and mass tort litigation, and the tort system generally. Because of this – and despite the fact that courts and academics have largely ignored this amendment – attorneys from around the country have sounded alarm bells since the government first took the litigation position now reflected in the MSP. Lawyers have raised serious concerns about their ability to bring and settle individual and mass tort litigation under the MSP’s harsh liability rules.   [Footnotes omitted.]

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We all know that Medicare and Tenncare has a subrogation right in PI and wrongful death cases, but new information being sought by Medicare has lead some lawyers to believe that Medicare will now be looking at case proceeds for payment of future medical bills.

 The Medicare, Medicaid and SCHIP Extension Act of 2007, §111, which requires liability (including self-insured), no-fault and workers' comp insurers to report certain information about injured parties who are entitled to Medicare.  New rules have been proposed on the subject and will go into effect on July 1, 2009.  You can review and comment on the new rules here.   The data required by the new rules will give the government a significant amount of information about PI and WD claimants and the concern is that the data will be used to insist that case proceeds be used to pay future bills.

I will follow the developments in this area and keep you advised.

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The Tennessee Supreme Court has released its opinion in Health Cost Controls, Inc. v. Gifford,  No. W2005-01381-SC-R11-CV  (Tenn. S. Ct. Oct. 17, 2007).  If the style of this case sounds you familiar you are not losing your mind - this case was before the Supreme Court  on the made-whole four years ago earlier.

This time the case was before the court on the issue of whether the plaintiff was made-whole.  The Supreme Court said this about the responsibilities of lawyers and judges in resolving this important issue in any particular case:

Trial courts should support their made-whole determinations with specific findings of fact regarding the monetary value of the injured party’s recovery from all sources and the monetary value of the injured party’s total damages. Furthermore, trial courts should make specific findings as to the value of each separate element of an injured party’s damages. Finally, if the trial court finds that the injured party has been made whole, reimbursement should be awarded to the insurer only to the extent that the injured party’s total recovery exceeds the injured party’s total damages. These requirements are necessary to ensure that the made-whole doctrine is consistently applied and to facilitate appellate review of made-whole determinations.

How much proof do you need on issues of pain, suffering, loss of enjoyment of life, disfigurement, and impairement?  The court said this:

[W]e conclude that for purposes of the made-whole doctrine it is sufficient for an injured party to present evidence of non-economic damages that is “as certain as the nature of the case permits” and that “enable[s] the trier of fact to make a fair and reasonable assessment of the damages.” Overstreet, 4 S.W.3d at 703.

Of course.   You just prove the value of your client's case.    You use evidence.  And you put that evidence in the record.  Then you help your trial judge reach a decision that is sufficiently documented in the record so that an appellate court can review the decision under the appropriate standard of appellate review.  Just like you do in any case.

It is as simple as that.

Read the opinion here.

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This decision from a federal judge in Pennsylvania will cause excitement throughout the tort bar:  he ruled for a plaintiff who worked to  protect assets from a claimed ERISA subrogation interest by having the proceeds of a settlement go from the defendant to a special needs trust.

Law.com  published this article about the decision from Judge John P. Fullam.  The article does a nice job of explaining the articles put forward by all parties.

If you want to read the full decision in Mills v. London Grove Township, 2005-00122 (July 19, 2007), click here.

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The Tennessee Supreme Court issued an opinion yesterday in the Abbott v. Blount County, Tennessee case.

In an opinion by now retired Justice Al Birch, the Court made it crystal clear that an insurance company could not require a plaintiff to get approval of plaintiff's health insurance company before settling a personal injury suit.  The Court said that it is  "clear that the made-whole doctrine applies regardless of the language found in the insurance contract. Contract terms that require the consent of the insurer would allow the insurer to withhold consent from any settlement that does not make the insured whole and thereby compel the insured to seek a larger award at trial. We disapproved of allowing insurers to contract away the right to be made whole in York, and we do so again today. Finally, we note that the lack of an insurer’s consent does not make an insured more likely to receive a double recovery."

The Court said that there was a genuine issue of material fact about whether the plaintiffs were made whole.

The Court also said that "if Blount County had knowledge of the Abbotts’ lawsuit and settlement negotiations but did not intervene or warn the insured that Blount County’s subrogation rights could affect the Abbotts’ recovery, then Blount County will be deemed to have waived those rights. However, the facts concerning whether Blount County had notice of the lawsuit and settlement negotiations are disputed, and, thus, we affirm the Court of Appeals’ holding that summary judgment as to this issue is inappropriate."

The cite to the Abbott case is No. E2004-00637-SC-R11-CV ; it was filed on November 7, 2006.  Read the opinion here.

Two points.  First, note that this case is governed by state law, not ERISA.  ERISA is a much different breed of cat.

Second, this opinion points out the need for the plaintiff to prove that he or she was not made whole.  It is not enough to say "look how bad I am hurt" or "See how much my medical bills are."  The plaintiff must introduce evidence from which the value of the case can be determined.  Evidence.  Real evidence.  Just like you use in court.  Oh, that's right, we are talking about court. 

For example, in our recent hearing on this subject, the insurer stipulated to the medical bills and records.  The insurer also stipulated that the judge could draw reasonable conclusions from the records about the permanency of the injuries (to avoid the cost of taking medical depositions).  We had a nurse testify about the medical treatment of each client.  We used illustrations - no reason a nurse cannot testify as to the accuracy of those.  We had our clients testify.  The total testimony was under 90 minutes.

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