Navigating the complex landscape of lien resolutions in mass torts is a challenge for both plaintiffs’ and defense attorneys. One of the biggest hurdles is complying with federal and state regulations to resolve health care liens while making sure injured claimants receive as much of their settlement as possible, an outcome to all parties’ benefit once a settlement or judgment has been reached.

In the absence of clear regulations, insurers are attempting to recover their full treatment costs without taking into consideration the sum paid by other insurance carriers and the sum paid for copays and deductibles out of pocket for the claimant. This lack of clarity creates unwelcome results for both the plaintiffs’ attorneys and claimants.

Plaintiffs’ attorneys are left without the sense of fulfillment for the work they’ve done on behalf of the claimant. For the claimants, there’s a lack of closure regarding the injuries they suffered, and sometimes they won’t agree to participate in a settlement when they receive little to nothing of their gross settlement value.

Common Misconceptions

A common misconception is that only Medicare Parts A and B have a right of recovery. In reality, understanding the full hierarchy of recovery rights is essential. Medicare is just one of several entities entitled to reimbursement. The others include Medicare Parts C and D, the Department of Veterans Affairs (VA), Medicaid, and private insurance.

Medicare Advantage plans (Part C) and Medicare prescription plans (Part D) run by private insurers have the same rights of recovery as Medicare Parts A and B.

The VA in 2023 issued new guidance on fully exercising its right of recovery under the Federal Medical Care Recovery Act (FMCRA), which is similar to the Medicare Secondary Payers Act (MSPA).

Medicaid programs are granted the right of recovery through federal frameworks, Social Security Act (42 U.S.C. § 1396k), and state-specific provisions. The rules regarding its administration vary greatly from state to state. Adding to the confusion is when a Medicaid beneficiary enrolls in a Managed Care Organization (MCO).

Private Options

Private insurers have no single formulized private hierarchy, and the regulations for recovery are extremely complex. The intricacies of private recovery become evident when examining the difference between the Federal Employee Health Benefits (FEHB) and the Employee Retirement Income Security Act (ERISA). FEHB is governed by federal regulations, whereas ERISA is specified within its own plan documents.

This highlights the fundamental issue: Too many entities are asserting their recovery rights from the same gross settlement amounts, leaving no incentive for claimants to seek their right to justice.  

These entities, whether operating internally or through external partners, are increasingly assertive in exercising their third-party rights of recovery rights. Many have dedicated subrogation divisions equipped with investigative, medical, and negotiation teams that specialize in maximizing recovery in ways that benefit their organizations.  

With this complex web of multilayered and often overlapping federal and state statutes and regulations, and all entities asserting rights to the same settlement and competing for priority, what solutions are available?

Once the attorneys have fulfilled their responsibilities toward their clients and secured settlements, the best suited party to fight or defend against subrogation rights of recovery is a lien resolution administrator with specialized expertise in this area. Partnering with an administrator whose team maintains strong relationships with these agencies can significantly improve the likelihood of negotiating favorable outcomes rather than facing aggressive recovery efforts.

In such cases, claimants are more likely to maximize their fair share of a settlement, which enhances their satisfaction with the entire process.  

Conclusions

The bottom line: Engaging a lien resolution administrator from the outset who understands the complex regulatory landscape, helps ensure attorney compliance and, more importantly, maximizes outcomes for the injured claimants.

Debra Forsythe is a senior director of business execution at Epiq, providing expert consultative guidance to plaintiff and defense counsel for their clients' mass tort, class action and/or single-event settlements.