Medicare liens and other healthcare liens play an important role in personal cases and need to be addressed early on in the case and handled properly to limit the amount of the lien.
In the case of Wilson v. State Farm Mutual Automobile Insurance Company, No. 3:10-CV-256-H, 2011 WL 2378190 [2011 U.S. Dist. LEXIS 63430 (W.D. Ky., June 15, 2011), the United States District Court for the Western District of Kentucky held that an auto insurance carrier was not acting in "bad faith" by withholding payment of car accident settlement check pending determination of Medicare's potential lien and payment amount required to satisfy that lien.
In the car accident case mentioned above, the plaintiff filed an uninsured motorist claim and the case was settled for the auto insurance uninsured motorist coverage's policy limits. However, the insurance company would not pay the settlement until after it obtained Medicare's reimbursable payment amount. The injured driver sued the insurance company claiming that the delay was bad faith.
The court ruled that the withholding of payment was not bad faith. The insurance company could be held liable by Medicare if they made the payment to the Plaintiff and then the Plaintiff never makes payment to or satisfies Medicare's lien. Since they were open to potential legal liability the court ruled they did not act in bad faith.
Factually, the above auto accident case involved the plaintiff who was a passenger in a truck that was involved in a car crash. The plaintiff was injured and Medicare paid some of his accident related medical bills. Since the at-fault driver of the other vehicle was uninsured, the plaintiff filed an uninsured motorist lawsuit against his insurance company, State Farm. The auto insurance company agreed to settle the case for the uninsured motorist policy limits.
State Farm attempted to determine Medicare's conditional payment amount, which is the amount they will accept to satisfy any lien they have against the case. The plaintiff refused to help get the Medicare reimbursement amount determined and demanded that State Farm tender the settlement check. Clearly this issue is now resolved by the court as the bad faith claim by Plaintiff failed. Showing the importance of getting liens under control and amounts determined early on in a case in order to facilitate a smooth and quick payment to the injured client for their personal injury.
Medicare liens are just one of the dozens of issues that need to be handled by a professional and one of the reasons retaining a qualified and experience personal injury lawyer early on in your case is so important