By Walter F. Roche Jr.
The settlement of millions of dollars in Medicare liens remains a major obstacle for victims of the 2012 fungal meningitis outbreak, but legal experts say such liens are routinely negotiated with federal officials by a widely accepted formula.
A review of past cases and legal journal articles shows a typical case with a $25,000 Medicare lien on a $50,000 settlement would be negotiated with the federal government getting a payment of $17,500 instead of the full $25,000. (See Excerpt Below)
Medicare and Medicaid liens on a $200 million trust fund established for outbreak victims have been the subject of ongoing negotiations between lawyers for victims of the outbreak and federal lawyers representing the Centers for Medicare and Medicaid Services.
Fredric Ellis, a Boston lawyer, who has been involved in negotiations for a master settlement in the meningitis cases recently told a federal judge that he expected those talks would end soon, though he did not predict whether they would end in success or failure.
Victims have been told they cannot get any payments from the trust fund until the liens are resolved.
In a hypothetical case cited by the Center for Medicare Advocacy, a claim for $100,000 was settled for $50,000 while Medicare claimed reimbursement for the $25,000 it paid in medical bills.
Under the hypothetical case, the Medicare claim would be reduced by an amount equal to the fee paid to the victim's lawyer, plus actual costs incurred in the case.
With a legal fee based on 30 per cent of the settlement, Medicare would reduce its fee to $17,500. The lawyer would get $15,000.
That would leave the victim $17,500 going to the victim, according to the advocacy group.
If the negotiations for a master settlement with CMS fail, legal experts say, it is likely that a process similar to the hypothetical case will be applied to the individual claims of the 2012 outbreak victims.
Ellis did tell U.S. District Judge Rya Zobel that he expected initial payments for some 1,200 victims would be made in July.
Example From the Center for Medicare Advocacy
Example: Ben Beneficiary received a settlement of $50,000 following an accident. His medical expenses were $40,000, of which Medicare paid $25,000; his pain and suffering were valued at $10,000; lost wages were $20,000; and his permanent loss of limb was valued at $30,000.
Despite the fact that Ben's settlement was only 50% of his $100,000 damages, Medicare will demand recovery of its entire $25,000 outlay, reduced only by its proportionate share of the procurement costs. Assuming a 30% contingency fee arrangement, Medicare will claim $17,500, Beneficiary's personal injury attorney will receive a fee of $15,000, and Ben will receive only $17,500, leaving him with $82,500 in uncompensated losses.