Liens in Injury Cases and Resolving Them

Liens are a huge part of any personal injury case, whether
you are on the
defense or plaintiff’s side of the “v.” Cases where liens are not at issue are
rare. Both the defendant and the plaintiff want the liens completely resolved.
More and more, defendants are requiring it.

As a service to clients, I try to reduce liens as much as possible. This
obviously puts more money in the client’s pocket. It is important not only to
only to maximize the settlement amount on the front end, but also to minimize
any liens on the back end. Lien resolution gives finality to the outstanding
medical bills for the injured party.

Although managing and resolving liens is crucial, it can be overlooked, an
afterthought or dreaded. Do the opposite – take one liens head on,
discuss them with the client, the other side and the lienholder, during
settlement talks.

Because of the importance of liens, all civil files should maintain a separate
lien file, where notices of liens, and all correspondence and information
related thereto, are kept. That way, when the case is settled, liens are
readily ascertainable. Lien files should be maintained throughout working the
file.

I. GENERAL

A lien is a legal notification to us that the debt holder is asserting an
enforceable interest on the proceeds of the case. A valid lien has statutory
requirements to be perfected. If a lien is not satisfied the payor may have to
pay the lien as well. We are only mandated to pay bills for which we have
liens. Outstanding medical bills for which no lien is asserted need not be
paid out of the case. And legally, the lien has to be properly asserted (via
certified letter). But many of our clients want us to pay those out of the
case; we can do them the service of negotiating the non-lien bills down and
paying those out of the proceeds as well as the liens. This should be decided
on a case-by-case basis. But, the last thing you want is a client mad you did
not pay a bill out of the case, who is now chasing them, when they thought the
case was over.

Our typical settlement letter states that “no other medical bills are known to
be outstanding.” All lawyers and case managers closing cases should be sure
that information is accurate. The alternative is to state that certain medical
bills may remain outstanding and may remain their responsibility. In settling
cases I offer, if requested, to have my client protect, indemnify and defend
for all liens. I orally advise that we will pay liens and I have never had a
releasor or her insurer have a problem later on.

Note that a lawyer cannot guarantee payment of liens in a settlement. The
client can, but not the lawyer. Formal Opinion 125 (attached as Appendix A) from the
Missouri Supreme Court
advisory committee states this is a violation
of ethics rule 4-1.8(e)
. The client has the right to instruct the lawyer not
to honor the lien. But see Comment 8 to Rule 4-1.15
(“[a] lawyer may have a
duty under applicable law to protect such third-party claims against wrongful
interference by the client. In such cases, when the third-party claim is not
frivolous under applicable law, the lawyer must refuse to surrender the
property to the client until the claims are resolved”).

Illinois focuses on the comment to 4-1.15 in requiring lawyers to pay liens.
Advisory Opinion No. 06-01
agrees that Rule 1.8(d)
bars personally
guaranteeing payment of a lien but it goes on to say:

Accordingly, under Rule 1.15
, a lawyer representing a plaintiff has an
obligation to segregate the settlement funds over which a third party has a
claim, to notify persons who have an in interest in those funds (including
lien/subrogation claimants) and then distribute the funds owed to said
persons. Based on language of Rule 1.15 and the court’s opinion in
Western States Insurance Co. v.
Olivero, it is clear that a lawyer
representing a plaintiff is ethically obligated to identify the portion of
funds which are due and owing to a lien/subrogation claimant and to ensure
that those funds are properly paid to those entities.

II. MEDICAL LIENS

An injured individual may have outstanding bills from medical providers, or
may have had insurance companies or other entities pay for medical care for
the injuries caused by the defendant. Because liens can drastically affect net
settlement values, deal with them head on and early. Negotiate with medical
providers and lien holders to minimize their share of any settlement or
judgment in a personal injury matter.

Medical providers have the legal right to place a lien on an injured
individual’s personal injury claim for medical care provided to treat injuries
sustained from that accident. If the medical care is for another accident, no
lien right is provided by statute. If a medical provider does not provide a
formal written notice of lien to the liability insurance company, there is no
lien and the financial obligation is left to the injured individual.

Mo.Rev.Stat. §430.225.3 provides that medical
lien holders can only get up to
50% of the net proceeds to the client after attorney’s fees
and expenses are taken out of the recovery. Illinois has a similar statute,
770 ILCS 23/10, but classifies the bills
between health care professionals and
medical providers. And these statutes say that their entire recovery out of
the case is limited to that afforded in the statute – with a big
difference after the case: in Missouri, the lienholder cannot sue the client
for more later but in Illinois they can. My amazing paralegal,
Casey Fluegel, developed
Excel spreadsheets to calculate these all out. We send cover letters to
lienholders and we advise them of what they are bound to take to fully satisfy
the lien. See Appendix B,
attached, for pure gold – cover letter and
spread sheets for Illinois and Missouri. See section III infra for more detail
on this.

So, this provision can be used to cap all liens, and then make a pro rata
distribution among the lien holders. This happens when damages are high but
there is a lower policy limit. The client gets a great benefit from settling,
getting some money, and having all the debts washed away. The other trick we
do is to write to all providers and ask them to assert a lien – so that
we can, in turn, reduce all the bills. And when we do not have the time, we
just put all the providers in there as lien holders (and the health insurance)
and tell them that they have to take what we say as lienholders (when they are
not really). Most lienholders do not send by certified mail so whether the
lien is perfected is in doubt. We also have savvy lienors who try with
withdraw their lien or saw it was not perfected if they see a statutory
reduction coming.

Liens should begun to be negotiated prior to settlement of the case. When the
numbers are fluid and the Defendant’s offer is still low, your negotiating
position is quite strong. You have to balance the amount of charges, the
quality of the service to your client, your integrity, the size of the
settlement and other factors. Send the first (low) offer to the lienholder and
the client.

Different organizations have different styles regarding reducing bills. Some
are very easy to do, and some are hard. Each one has different administrative
protocols, or hoops, to jump through. They request different information, have
different types of reductions they are willing to take and respond
differently. If they are too unfair, you can always adjudicate the lien with a
motion to the trial court. Some lienholders ask you to, or force you to,
provide information about the exact attorney’s fees and expenses, other
medical bills etc and exact details of recovery. If they start asking whether
you reduced your attorneys’ fees they are trying to start a fight.

Client expectations are an important factor in the reduction negotiation. If a
client has an expectation of a certain amount of net money they will receive
after attorney’s fees and costs, reduction of bills and liens is a way to
arrive at that figure. Do not over promise and underperform with liens. You
would rather the client get surprisingly more money in their pocket than the
reverse.

Some Arguments to Use:

1. The provider typically will have a contract with the insurance company to
   get paid 1/3 to 2/3 of the amount charged – so give us that reduction.
   Their bill isn’t a true reflection of the value of the service –
   pre-Deck
   litigation addressed this, and applies to health insurance contracts;
2. Lien reduction statute;
3. It was a difficult case, patient had to hire lawyers to obtain recovery, and
   the lienholder should pay us for that – lienholder is effectively
   getting a collection attorney for free;
4. Tough liability and our client is reducing his recovery because of that and
   is being undercompensated – our client is not getting much money;
5. Other lien holders are reducing liens, liability is very difficult, there
   are caps on insurance recovery, and other extenuating factors in this case
   which justify a reduction (there will be these factors in every case); and
6. We’re trying to get this settlement done and are calling the lien holders to
   try to get reduction to see if we can settle the case. No settlement, no
   payment to them.

Be careful not to over reduce or be unfair to medical providers because they
have given great service to your client.

Liability insurance companies regularly devalue chiropractic medical care in
evaluating cases. When chiropractor bills are paid by health insurance, they
are closely screened with less treatments authorized and less cost per
treatment than may appear on the chiropractic bill that has been presented to
the attorney.

An attorney may want to contact the chiropractor and inquire about a marginal
reduction in the chiropractic bill, which is a savings that can be passed
along to the client/patient. In fact, some insurance claim agents have an
expectation that the chiropractor bill will be reduced after settlement and
negotiate the case with that view. Whether explicit or implicit, chiropractor
bills are just not valued by insurance companies as highly as other types of
care.

Note that if medical bills have already been paid by insurance and the medical
provider is trying to retrieve additional money from us, they cannot. They
have a contract with the insurance provider to charge the contract rate for
their services and they have contractually agreed not to seek more from the
insured (injury plaintiff). The injured party paid the health insurance
premiums and is a third party beneficiary to that contract.

If there is no insurance, the medical provider is entitled to get paid. For a
time, St. Anthony’s was paying back heath care companies if they found out the
person had good case and tried to seek full payment in the lawsuit.

Although it has only been rarely done in our office, ultimately, we do have a
right to file an action for the court to judicially determine the validity and
amount of liens in a case. The simplest and most common vehicle to reduce the
lien in court is a motion to adjudicate lien, filed as a motion in the same
overall tort suit – even if the suit has settled. Although, the movant
will want to properly provide notice to the lienholders. Often the lienholder
does not attend and acquiesces in the requested reduction. However, I tried
that in Illinois more recently and the judge only used the Illinois lien
statute, and not Medicare or Medicaid reimbursement rates, and that did not
help our client much.

III. THE MISSOURI MEDICAL LIEN STATUTE

The Missouri Hospital Lien Statute, Mo. Rev. Stat. Sections 430.225 through
430.250, provides the medical provider a way to guarantee payment from the
tortfeasor’s insurer. To fully avail itself of the lien offered by the
Statute, a medical provider must properly give notice of the lien. But to
whom? In describing the manner in which notice is to be given, Section 430.240
states that it is the tortfeasor or his insurer who is to be placed on notice:

“No such lien shall be effective, however, unless a written notice
containing the name and address of the injured person, the date of the
accident, the name and location of the hospital and the name of the person
or persons, firm or firms, corporation or corporations alleged to be liable
to the injured party for the injuries received
shall be sent
by certified mail with return receipt requested
to the person or persons, firm or firms, corporation or corporations,
if known, alleged to be liable to the injured party, if known, for the
injuries sustained prior to the payment of any moneys to such injured
person, his attorneys or legal representative, as compensation for such
injuries. Such hospital shall send by certified mail with return receipt requested
a copy of such notice to any insurance carrier, if known, which has insured
such person, firm or corporation against such liability.”

With proper notice given to the tortfeasor and/insurer, if the tortfeasor/
insurer pays out the settlement proceeds to the Plaintiff without compensating
the hospital lienholder, Section 430.250 provides the only recovery mechanism
for the lienholder. Cf., Huey v. Meek, 419 S.W.3d 875, 881-82 (Mo. Ct.
App.
W.D. 2013)(“The 2003 amendments to the hospital lien statute provide an
exclusive remedy for health care providers to seek payment out of the proceeds
of the personal injury claims of their patients…”). The lienholder has
one year after the date of the settlement
to pursue the tortfeasor or his insurer:

“Any person or persons, firm or firms, corporation or corporations,
including an insurance carrier, making any payment to such patient or to his
attorneys or heirs or legal representatives as compensation for the injury
sustained, after the receipt of such notice in accordance with the
requirements of section 430.240, without paying to such hospital the amount
of its lien or so much thereof as can be satisfied out of fifty percent of
the moneys due to such patient under any final judgment or compromise or
settlement agreement after paying the amount of attorneys’ liens, federal
and Missouri workers’ compensation liens, and any prior liens, shall have a
period of one year, after such settlement is made known to the hospital,
from the date of payment to such patient or his heirs, attorneys or legal
representatives, as aforesaid, be and remain liable to such hospital for the
amount which such hospital was entitled to receive, as aforesaid, and any
such association, corporation or other institution maintaining such hospital
may, within such period, enforce its lien by a suit at law against such
person or persons, firm or firms, corporation or corporations making any
such payment.”

In summary, medical providers seeking to avail themselves of the Statute, must
properly put the tortfeasor or tortfeasor’s insurer on notice. If the
tortfeasor or his insurer pay on the personal injury claim without
compensating the hospital lienholder, then the Statute creates the exclusive
remedy by which the lienholder may pursue the tortfeasor or his insurer
– but not the plaintiff…or his attorney. Cf.,
Truman Medical Centers, Inc. v. McKay, 505 S.W.3d
799 (Mo. Ct. App.
W.D. 2103) (lienholder cannot pursue plaintiff’s attorney).

Section 430.225 consists of a definitions section. It also includes the
lien-reduction provision attorneys are most familiar with, (Section 430.225.3)
which states:

“If the liens of such health practitioners, hospitals, clinics or other
institutions exceed fifty percent of the amount due the patient, every
health care practitioner, hospital, clinic or other institution giving
notice of its lien, as aforesaid, shall share in up to fifty percent of the
net proceeds due the patient, in the proportion that each claim bears to the
total amount of all other liens of health care practitioners, hospitals,
clinics or other institutions. “Net proceeds”, as used in this section,
means the amount remaining after the payment of contractual attorney fees,
if any, and other expenses of recovery.”

Importantly, Section 430.225.5 releases plaintiffs from debt liability on
medical bills, if the medical provider avails itself of the Statute:

“Any health care provider electing to receive benefits hereunder releases
the claimant from further liability on the cost of the services and
treatment provided to that point in time.”

There are no cases directly interpreting 430.225.5. However, a case from 2002
restates the thrust of the statute, in dicta:

“The new section 430.225 also provided that if a healthcare provider elected
to receive payment under the new hospital lien law, then it must release the
claimant from further liability for the cost of services and treatment
provided up to that point in time and could not pursue the patient for any
remaining unpaid charges.”

SSM Cardinal Glennon Children’s Hospital v.
State, 68 S.W.3d 412, 415
(Mo. banc 2002).

Section 430.230 sets out the right of medical providers to assert a lien on a
personal injury claim. Similarly, Section 430.235 simply reiterates the
previous Section, and applying the applicability to medical benefits paid to
public assistance recipients.

N.B.: Hospital liens under Mo. Rev. Stat. §§ 430.230
through 430.250 do not apply to wrongful death claims.
American Family Mut. Ins. Co. v. Ward, 774 S.W.2d
135 (Mo. 1989);
St. Anthony’s Medical Center v. Metze, 23 S.W.3d
692 (Mo. Ct. App. E.D.
2000).

IV. THE ILLINOIS MEDICAL LIEN STATUTE

Under the Illinois Lien statute, 770 ILCS 23/1:

• Total liens cannot be more than 40% of the total settlement
• No single provider/professional can get more than 33% of the settlement
• If the total liens meet or exceed 40% of settlement, then:
  • All liens of the professionals cannot exceed 20%
  • All liens of the providers cannot exceed 20%
• But, you have to reallocate the unused 40%, but it still holds true that no
  single provider can get more than 1/3
• If the liens exceed 40%, the attorney fee cannot exceed 30% of the total
  settlement
• Under the 770 ILCS 23/45, a “health care
  professional or health care
  provider, or attorney, [can pursue to] collection, through all available
  means, [i]ts reasonable charges for the services it furnishes to an injured
  person. Notwithstanding any other provision of law, a lien holder may seek
  payment of the amount of its reasonable charges that remain not paid after
  the satisfaction of its lien under this Act.”

Here is an illustration with a $50,000 settlement:

• Total liens cannot be more than ($50k x 40%) = $20,000
• No single provider can get more than ($50k x 33.33%) =
  $16,666
• If the total liens are more than $20,000, then:
  • All liens of the professionals cannot exceed more than ($50k x 20%) =
    $10,000
  • All liens of the providers cannot exceed more than ($50k x 20%) =
    $10,000
• Attorney fee AND costs cannot exceed ($50k x 30%) = $15,000

Here is another illustration with a $50,000 settlement:

• Total liens before reduction = $29,051.60
  which is more than 40% ($20,000)
  • Total Professional Liens = $8,569.58
    this is under 20% ($10,000), so ok
  • Total Provider Liens = $20,482.02
    this must be reduced to 20% ($10,000)
• Total liens after reduction: $18,569.58 ($8,569.58 +
  $10,000)
  • Now, reallocate the unused 40% ($20,000 – $18,569.58) =
    $1,430.42
• The $1,430.42 goes to satisfy the health providers
• End Result:
• Professionals get $8,569.58
• Providers get $11,430.42
• Total Liens: $20,000

Net Settlement: $50,000 – $15,000 (Atty fee + costs of
406.29) – $20,000 (liens) = $15,000.
The client could still be on the hook for $9,051.60 in unsatisfied
charges.

V. HEALTH INSURANCE LIENS

Many times, a health insurance company or other payor of medical bills of the
plaintiff will seek a subrogation lien against money obtained from a third
party based on that same medical care. It is against Missouri public policy
for a party who has paid for medical treatment for an injured individual to
assert a subrogation interest if that individual pursues a claim for damages
for those same medical costs against a third-party.
Schweiss v. Sisters of Mercy, St. Louis, 950
S.W.2d 537 (Mo.App. 1997).
Appendix C. The Missouri court’s consider this assigning part of the personal
injury claim. However, if health care payor is governed by the Employment
Retirement Income Security Act (“ERISA”) or is Medicaid or Medicare, it may
contractually agree with the injured individual that if they recover
third-party damages for medical treatment for which the payor paid benefits,
the payor is entitled to recover those payments from the injured individual as
a subrogation interest.

To be entitled to a lien, there must be a provision in the plan documents, or
summary plan documents, that gives the plan the right to subrogate against a
third-party recovery for health insurance coverage.

As a general rule, you still want to send all client treatment through the
health insurance company even if they ultimately have a right of subrogation.
So, if a health insurance company asserts a lien, you will want to:

1. send them a letter asking if they are an ERISA-governed policy and send a
   summary plan description so stating. If you want to be more aggressive,
   request the name, address, and phone number or other contact information of
   the plan trustee and the plan administrator and ask them to provide a copy
   of the plan, subrogation terms and ERISA terms;
2. if they are an ERISA policy, send them a letter requesting the plan language
   which gives them a subrogation right – you would be surprised when
   that’s not in there; and
3. if a lien right is verified, negotiate the lien down.

If an insurance company asserts a lien, an attorney should advise the lienor
that proof is needed that the insurance company is governed by the Employee
Retirement Security Act of 1974 (ERISA), which is powerful. In
U.S. Airways v. McCutchen, 133 S.Ct. 1537 (2013),
the Supreme Court
ruled that ERISA section 502(a)(3) says that
reimbursement plans are
controlled by the terms of the plan and that equitable arguments cannot trump
the plan language if it entitles the plan to full reimbursement. Ow.

But absent such proof it’s an ERISA plan, the attorney should deny the
validity of the liens and advise the lienor of such denial. If the lienor is
not an ERISA plan, an attorney should not satisfy the lien unless requested to
do so by the client. Should the lienor assert a non-ERISA lien, they should be
advised that the lienor should pursue some type of declaratory judgment or
other legal action to assert that lien.

If the case is settled with a lien issue pending, the client should be so
advised. An attorney may wish to leave the disputed sums in her trust account
for a period of time to give the lienor a reasonable opportunity to pursue any
legal action to assert a lien. After a reasonable time to pursue the claim has
elapsed, the remaining trust money should be paid out by the attorney to the
client.

Use the same negotiating tactics on issues as addressed above where
applicable. The size of the lien for health insurance can greatly impact the
case. Be especially guarded about whether or not a valid lien exists. Points
to stress are that we went and got this money for them, and they should take
1/3 off. It is more difficult to get health insurance companies down to a 50%
reduction. Sometimes they may only give a 20% reduction. This kind of depends
on the size of the settlement, the size of the lien, and various factors.
Sometimes they will require further information than a medical lien holder.
Sometimes, where the lien is big and it’s a difficult negotiation, lawyers
should handle this personally. The more the lien is reduced the more your
client gets in their pocket.

It is important to start talking about liens before the resolution of the
case. If you wait until after the case is settled, and they start asking what
the numbers are in terms of the settlement are, you are in a worse negotiating
position. It is much better to use the earlier, lower settlement offers from
the Defendant as the number to which settlement will likely be targeted. Fax
the lien holder a copy of the Defendant’s letter offering a low amount of
money. It is very important that updated information be obtained on the amount
of money being asserted on the lien. Many times, we will have a file that
shows a $500.00 lien, but when we call up, it is $1,200.00 because additional
medical has been attached to the lien, which they can do. Talk to the lien
holders and get their agreement before the deal is done. Then, you also really
know what the client is going to get in his pocket. Significant changes in the
lien holder’s position in a case can make a settlement doable, where it would
otherwise not be. Get the check, put it in your trust account, issue checks to
the different lien holders. I do not have them sign formal agreements or agree
to the lien, but I have form letters that go with the checks, that confirm the
agreement in writing regarding the resolution of the lien.

Although we speak of “arguments” to use in negotiating liens, we are really
just presenting the reality of the case. Some personal injury cases are not
going to get a lot of money, and if that case has a lot of liens, it is going
to be difficult to settle. I consider negotiating liens very important in a
case and a very important service to our clients. I cannot tell you the number
of times where I have put a lot more money in a client’s pocket than they
thought they would get.

Every lawyer should start looking at liens and negotiating long before
settlement. Pull the file, grab the lien file, look through it and make sure
that all the liens are in the lien file, start calling the lien holders and
initiating lien reduction negotiations.

The United States Supreme Court held that an ERISA healthcare benefit plan
with reimbursement rights can only obtain “appropriate equitable relief” when
enforcing its lien against a third-party settlement, thus limiting the plan’s
recovery to settlement funds still held by or on behalf of the participant:

We hold that, when a participant dissipates the whole settlement on
nontraceable items, the fiduciary cannot bring a suit to attach the
participant’s general assets under [ERISA] §502(a)(3) because the suit is
not one for “appropriate equitable relief.”

Montanile v. Bd. of Trs. of Nat’l Elevator Industry Health
Benefit Plan, 577 U. S. ____ , No. 14–723, 136 S.Ct. 651 (Jan. 20, 2016).

Under ERISA Section 502(a)(3), a civil action may be brought by a plan
participant, beneficiary or fiduciary to enjoin any act or practice that
violates any provision of Title I of ERISA or the terms of the plan, or to
obtain other “appropriate equitable relief” to redress such violations or to
enforce any provisions of Title I or the terms of the plan.

Montanile is yet another Supreme Court case that interprets the meaning
of “appropriate equitable relief,” following
Mertens v. Hewitt Associates, 508 U.S. 248 (1993);
Great-West Life & Annuity Ins. Co. v.
Knudson, 534 U.S. 204 (2002);
Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006);
CIGNA Corp. v. Amara, 563 U. S. 421 (2011); and
US Airways, Inc. v. McCutchen, 569 U. S. ___, 133
S. Ct. 1537 (2013).
Montanile continues the Court’s narrow interpretation of “appropriate
equitable relief,” limiting such relief to “those categories of relief that
were typically available in equity” before 1938 when the Federal Rules
of Civil Procedure were adopted when courts of law and equity were separate
and “legal remedies” and “equitable remedies” were strictly defined.

In Montanile, the Supreme Court makes clear that even if an ERISA
healthcare plan has a right to reimbursement and a lien against a
participant’s personal injury settlement, the plan has no claim against the
participant’s general assets (which would be a legal remedy) but only
an equitable claim against the settlement “fund,” which disappears if
the settlement proceeds are dissipated by the participant. See Appendix D for
a great article on additional Tips for Negotiating ERISA Liens in PI Cases.

Warning – Carpenter’s Union is tough and will not negotiate their liens
down. They have a good argument – Everything they collect goes to paying
for health insurance for other members. See Appendix E for a denial letter
from Carpenters.

Three ERISA success stories:

1) I thought I would share three pretty amazing ERISA subro success stories.
In Anthony Castro’s case, we reduced an ERISA lien in state court on a Motion
to Adjudicate Lien. Attached as Appendix F is the Motion to Adjudicate Lien,
Order and correspondence with OPTUM. They would only reduce his lien by 10 %
and we had asked for 20%. It wasn’t a huge lien ($1,820) but my client’s dad
has fixed my and my family’s cars for many years and he is a great guy. I
argued that the inherent power of the court to resolve liens asserted in a
case pending before it gave jurisdiction to rule on the motion and obtained a
court order reducing the lien by 50%.

2) In representing Cynthia Cooper, we successfully reduced a lien from $76,193
to only $165 because we were able to show much of the medical care in the lien
was not related to what we were suing for and was for preexisting conditions.
Attached in Appendix G are some letters (and quoted bad case law for me)
reflecting that matter. Attached in Appendix H are some letters in two other
cases where we reduced liens.

3) In representing Amber Heubi, I recently negotiated a $400,000 ERISA lien
down to $80,000. I was able to use a limited policy that was interpleaded and
would be divided among a number of claimants to reduce the lien.

VI. MEDICARE/ MEDICAID LIENS

Medicare/Medicaid liens are the most significant liens to deal with in any
case.
To address a Medicare lien, do the following:

1. Evaluate the file and see if Medicare payments have been made, including
   review of medical bills, review of notes, and talk to the client about
   whether they have Medicare.
2. In any case where Medicare is suspected, have the client sign a ‘Proof of
   Representation’ form and mail or fax it in to Medicare (MSPRC). This gives
   them authority to discuss the claim with our office. With this form, enclose
   a cover letter requesting the issuance of a ‘Conditional Payment Letter’.
   This should be done sooner, rather than later, as they take some time to
   respond.
3. Medicare’s system will automatically generate a ‘Rights and
   Responsibilities’ Letter. This should come within a few weeks. If it has not
   been received, it may be necessary to call MSPRC and make sure they have
   received the Proof of Representation and have knowledge about the claim.
   Rights and Responsibilities letter looks like a form that needs to be filled
   out. It does NOT need to be filled out.
4. The Conditional Payment Letter should
   automatically generate 65 days after
   the request and Proof of Representation was received. When the Conditional
   Payment Letter is received, always review the list of providers to make sure
   all payments listed are related to our case. If they are not, now is the
   time to dispute them. You will need to send a letter indicating which
   charges are not related to this claim if that applies.
5. When a case settles, IMMEDIATELY submit a ‘Final Settlement Detail’. This
   outlines the attorney’s fees, expenses, settlement amount, etc. Within 60
   days of receiving this info, Medicare should issue a ‘Final Demand’. At this
   time, it is ok to pay them and no longer necessary to hold money in trust.

Attached as Appendix I is a Proof of Representation Form and a Final
Settlement Detail Document. The client will also get a copy of any letter that
is sent by Medicare.

Medicare’s Contact Information:

Medicare Second Payer Recovery Contractor
MSPRC-HGHP
PO BOX 138832
Oklahoma City, OK 73113

MSPRC: 1-800-677-7220
MSPRC Fax: 800-869-3309

To address a Medicaid (MO Health Net) lien, do the following:

1. Evaluate the file and see if Medicaid payments have been made, including
   review of medical bills, review of notes, and talk to the client about
   whether they have Medicare.
2. In any case where Medicaid is suspected, send a letter advising of your
   representation along with a sign HIPAA release authorization requesting an
   itemized statement and current lien amount.
3. Medicaid will provide this information. Once this letter and information is
   received, always review the list of providers to make sure all payments
   listed are related to our case. If they are not, now is the time to dispute
   them. You will need to send a letter indicating which charges are not
   related to this claim if that applies.
4. If your case has settled and your itemized statement is correct then you are
   ok to pay the amount requested by Medicaid. If the itemized statement is
   incorrect you will need to wait for the updated correspondence from Medicaid
   to be received with the final lien amount.

Medicaid’s Contact Information:

Missouri Department of Social Services
Division of Medical Services
Third Party Liability Unit
P.O. Box 6500
Jefferson City, MO 65102-6500

MO Health Net Division: 573-751-3425

N.B.: Mo. Rev. Stat. § 208.215 sets out certain lien
rights
that arise when a welfare recipient of the Missouri Department of Social
Services recovers for personal injuries, disability, or disease of the
recipient. The words “death” or “wrongful death” do not
appear in the statute
and there is no relevant Missouri appellate opinion. This lien statute was
recognized but made inferior to the attorney’s lien statute Mo. Rev. Stat. §
484.130 in Ganaway v. Department of Social Services, 753
S.W.2d 12 (Mo.
Ct. App. W.D. 1988).

VII. WORKERS COMPENSATION LIENS

If a person is injured in the course and scope of their work, they have a
claim under Missouri’s Workers’ Compensation Act. As
a general rule, it is
usually better to settle the workers’ compensation case, and then settle the
civil case. Mo. Rev. Stat. § 287.150 gives the employer
and/or its insurance
carrier a subrogation interest in the claim against the third-party tortfeasor
for recovery of paid compensation benefits. That lien is determined by a
formula first set forth in Ruediger v. Kallmeyer Brothers
Service, 501
S.W.2d 56 (Mo.banc. 1973), and later codified.

Just like with other liens, even once the compensation lien has been reduced
by Ruediger, an attorney may also wish to try to negotiate the
compensation lien down to an even lower amount to facilitate settlement and/or
maximize her client’s recovery. If the civil case is settled before the
compensation case, the entire amount of the civil settlement will be a setoff
in the workers’ compensation case, and may swallow any recovery – as
workers’ compensation benefits are usually lower. Note, however, each case is
different and those differences may necessitate tactics different than the
general recommendation to resolve the compensation case first.

Notably, workers’ compensation liens only attach to recovery from third party
tortfeasors. A work comp subrogation lien does not apply to uninsured or under
insured insurance proceeds. Uninsured and under insured
coverage is a
contractual right of the injured party which with an insurance company, it is
not a recovery against the third-party under Missouri Statute or interpretive
case law.
Barker v. Palmarin, 799 S.W.2d 117 (Mo.App. 1990), See
Barker v. H&J Transporters, Inc. 837 S.W.2d 735 (Mo.App. 1992).

To determine the amount of the work comp lien:

1. Total amount paid in Worker’s Compensation:  

2. Total amount paid in civil claim:  

3. Divide line 1 by line 2 and write here:  

4. 
   Take line 2, subtract atty fees & costs – write here:  

5. Multiply line 3 times line 4 = subrogation amount owed:
    

An insolvent insurer cannot pursue a subrogation interest under MIGA (Missouri
Property & Casualty Insurance Guarantee Association).

1. Comp claim must settle first. And this is better for your client.
2. The attorney fee is taken out of the subro claim. The employer’s subro
   interest is reduced if your contract provides that all expenses apply to
   both the workers’ compensation and the civil claim – and they are to
   be paid from the civil claim. A higher fee in the civil claim reduces the
   subrogation interest.
3. The Employer/Insurer’s subrogation interest includes the amount paid in
   medical.
4. A spouse’s loss of consortium settlement arising out of the third-party
   claim can be protected from subrogation. The Court of Appeals approved a
   third party wrongful death settlement where $2,000.00 was for the Claimant’s
   death count and $166,000.00 was for the pre-death loss of consortium claim
   of Claimant’s widow. See
   Bridges v. Van Enterprises, 992 S.W.2d 322
   (Mo.App. S.D. 1999). Be
   certain that any independent settlement is proportionate and reasonable or
   you may run the risk of subrogation applying to the proceeds of that
   settlement. In the Bridges case, the settlement was equitable because the
   Claimant died after 2 ½ years in a coma and left a spouse and nine-year-old
   child.
5. When calculating subrogation, comparative fault must be determined by the
   trier of fact and a settlement for an amount less than a verdict DOES NOT
   annul the findings of comparative fault.
   Kerperien v. Lumberman’s Mutual Casualty
   Co., 100 S.W. 3d 778 (Mo.
   Banc 2003). Comparative fault, once
   found, factors into the calculus,
   regardless of whether or not the agreed upon settlement occurs after the
   jury verdict. The Employer’s subrogation interest is determined by the
   amount actually received in the third-party action, not the amount of the
   judgment. The court set out the formula to be used per Mo. Rev. Stat.
   §287.150.3:
   1. Calculate the employee’s net recovery:
      Gross Recovery (GR) – Attorney’s Fees (AF) – Expenses (E) =
      Net Recovery (NR)
   2. Determine the ratio contemplated in the statute:
      Employer’s Payment (EP) / Total Amount Recovered or Total Damages (T) =
      Ratio (R)

   3. Apply the ratio to the net recovery to determine subrogation
      amount:
      (NR) x (R) = Amount Due to the Insurer

   100 S.W.3d at 780.

   In Kerperien, the total amount recovered at trial was $2,500,000.
   The post-verdict settlement was $1,175,000. The jury found comparative
   fault. The Court found the correct calculus was as follows:

   1. Step One
      $1,175,000 (GR) – $470,000 (AF) & $31,505.80 (E) = $673,494.20
      (NR)
   2. Step Two
      $116,192.53 (EP) / $2,500,000 (T) = .04647701 (R)
   3. Step Three – Amount Owed to the Insurer
      $673,494.20 (NR) x .04647701 (R) = $31,302
6. When a tortfeasor’s insurer is insolvent, any insurer who has paid a claim
   that would ordinarily entitle it to subrogation will not be reimbursed by
   MIGA (Missouri Property and Casualty Insurance Guaranty Association) and no
   one may recover the subrogation amount from the tortfeasor of the insolvent
   insurer under section 375.776.2 R.S.Mo.

VIII. FEHBA LIENS

A recent case which originated in St. Louis was overturned by the United
States Supreme Court on April 18, 2017. The case,
Coventry Health Care v. Nevils, involved a
federal employee Plaintiff who received health benefits for an
injury. The Plaintiff’s health coverage was governed by the Federal Employees
Health Benefits Act (FEHBA).

Nevils settled the personal injury claim. The health insurer demanded its
money back for health benefits it provided. Nevils argued that Missouri law
did not allow subrogation from settlement in personal injury cases and that
FEHBA did not preempt Missouri law. Missouri law has long held a persona
cannot assign their injury case to another person (or health insurance
company).

The Missouri Supreme Court agreed, and the case advanced to the U.S. Supreme
Court. After a few other procedural hurdles, the U.S. Supreme Court
unanimously ruled this month that the FEHBA did in fact preempt Missouri state
law.

Plaintiffs with personal injury cases in Missouri covered by a FEHBA plan have
to pay back their insurers. This is bad as plaintiffs are already
undercompensated in many cases, and this will just exacerbate this. Injured
people pay premiums for years for health insurance coverage and should not
have to pay back insurers.

IX. ATTORNEY LIENS

There are two attorney lien statutes:

• Mo. Rev. Stat. § 484.130 is a general
  section which grants a lien from the
  time of commencement of a suit or counterclaim to cover compensation
  pursuant to an agreement, express or implied, which is not restrained by
  law.
• Mo. Rev. Stat. § 484.140 is a special
  statute which is restricted to
  contingent fee contracts whereby compensation of an attorney is limited to a
  portion or percentage of recovery and is contingent on successful resolution
  of the client’s claim by either settlement or suit. The statute requires
  that the plaintiff’s attorney provide defense counsel with notice of the
  lien. This is why it’s a good idea to send a lien letter at the start of the
  case to the defendant and/or his insurer.

“In all suits in equity and in all actions or proposed actions at law,
whether arising ex contractu or ex delicto, it shall be lawful
for an attorney at law either before suit or action is brought, or after
suit or action is brought, to contract with his client for legal services
rendered or to be rendered him for a certain portion or percentage of the
proceeds of any settlement of his client’s claim or cause of action, either
before the institution of suit or action, or at any stage after the
institution of suit or action, and upon notice in writing by the attorney
who has made such agreement with his client, served upon the defendant or
defendants, or proposed defendant or defendants, that he has such an
agreement with his client, stating therein the interest he has in such claim
or cause of action, then said agreement shall operate from the date of the
service of said notice as a lien upon the claim or cause of action, and upon
the proceeds of any settlement thereof for such attorney’s portion or
percentage thereof, which the client may have against the defendant or
defendants, or proposed defendant or defendants, and cannot be affected by
any settlement between the parties either before suit or action is brought,
or before or after judgment therein, and any defendant or defendants, or
proposed defendant or defendants, who shall, after notice served as herein
provided, in any manner, settle any claim, suit, cause of action, or action
at law with such attorney’s client, before or after litigation instituted
thereon, without first procuring the written consent of such attorney, shall
be liable to such attorney for such attorney’s lien as aforesaid upon the
proceeds of such settlement, as per the contract existing as herein provided
between such attorney and his client.”

Mo. Rev. Stat. §484.140.

If a lawyer finds himself in the unfortunate position of enforcing a lien
against a client, an important first step is to consult Rule 4-1.5(f):

“When a fee dispute arises between a lawyer and a client, the lawyer shall
conscientiously consider participating in the appropriate fee dispute
resolution program. This does not apply if a fee is set by statute or by a
court or administrative agency with authority to determine the fee.”

Missouri courts have recognized that “‘an attorney is not restricted to any
particular remedy for the foreclosing of his lien. He may proceed by an
independent suit against the party who was the defendant in the original
case…. Or he may proceed against the same party
by motion in the original case.'”
Plaza Shoe Store, Inc. v. Hermel, Inc., 636 S.W.2d
53, 56 (Mo. banc
1982) (citations omitted).

An action for an attorney’s lien is one in equity, rather than at law.
Fein v. Schwartz, 404 S.W.2d 210, 228 (Mo. App. 1966). In making the
determination of whether or not it would be unjust to permit the enriched
party to retain the benefits, the court uses equitable principles in
considering the various factors surrounding the relationship such as change of
position, hardship, unreasonable delay, unclean hands, bad faith, and other
equitable principles of defense.
Farmers New World Life Ins. Co., Inc. v. Jolley,
747 S.W.2d 704 (Mo.
App. W.D. 1988). Thus, a client-Plaintiff may assert equitable defenses
against the attorney’s asserted lien. As an attorney’s lien is grounded in
equity – not law – Plaintiff has at her disposal a myriad of
equitable defenses. We have litigated these issues in the past and can forward
other briefs to you.

“An action sounding in quantum meruit is based upon a persons’ implied promise
of reasonable and just compensation in return for the performance of valuable
services, performed at that person’s behest or with his approval.”
Turpin v. Anderson, 957 S.W.2d 421, 427 (Mo. App.
W.D. 1997) (citing
Reid v. Reid, 906 S.W.2d 740, 743 (Mo. App. 1995)). The party asserting the
right to attorneys’ fees in quantum meruit bears the burden of proving the
reasonable value of services performed. Id. Recovery is limited to “the
reasonable value of services rendered, not to exceed the contracted fee, and
payable only upon the occurrence of the contingency…”
Plaza Shoe Store, Inc. v. Hermel, Inc., 636 S.W.2d 53, 60 (Mo. 1982).
In all cases relating to quantum meruit, the services must have enriched the
client in the sense of benefits conferred.
International Materials v. Sun Corp., 824 S.W.2d
890, 895 (Mo. 1992).
“An unjust enrichment quantum in a case may be nothing if the actual value to
the client was none.” Id. The failure to prove reasonable value is
fatal to a quantum meruit claim. Reid v. Reid, 950 S.W.2d 289 (Mo. App.
1997) (vacating an award of $65,000).

The attorney seeking enforcement must present evidence that his work on the
plaintiff’s case enriched the latter’s claim. This burden is squarely on the
attorney’s shoulders as he asserts the right to attorney’s fees. Any failure
to prove reasonable value bestowed upon Plaintiff’s case is fatal to any
quantum meruit recovery he seeks.