ILNews

Essley: The land of (health care lien) confusion

February 12, 2014
Back to TopCommentsE-mailPrintBookmark and Share
Indiana Lawyer Focus
By Eric Essley

essley-eric.jpg Essley
In 1986, the British rock band Genesis wrote of the troubling times the world faced. While practitioners might not be quite as anxious as the writers of “Land of Confusion,” there is likely some misunderstanding surrounding the various Indiana lien statutes attorneys face when trying to settle health care related claims. This is even truer given the Legislature’s recent revisions to the Hospital Lien Statute (see I.C. 32-33-4). Accordingly, this article will provide a high-level review of the few health care-related lien statutes often encountered and/or cited by the plaintiff’s bar and their in-house/defense counterparts.

Initially, attorneys frequently cite the Comparative Fault Statute (see I.C. 34-51-2-19(2)) in an effort to secure a lien reduction. This statute requires lienholders to diminish their recovery in the “same proportion as the claimant’s recovery is diminished.” Id. It also obligates the lienholder to pay “a pro rata share of the claimant’s attorney’s fees and litigation expenses.” Id. While it is sensible to expect a lien reduction and to be asked to compensate an attorney for her services, a few concerns jump off the page.

First, lienholders rarely ever see a detailed report describing the basis for the valuation of the pre-settlement/judgment case. Thus, a request to accept a substantial discount solely on an adverse party’s word might be hard to swallow, especially if the lien is significant. Second, because there is no rule as to what attorney rates can be charged in any given case, the fees and costs generated by different counsel are typically quite varied. Although I.C. 34-53-1-2 might work to offer some additional guidance to both parties in certain cases, counsel should naturally expect added scrutiny where the fees statement is considerable and, thus, where more insurer/provider dollars are at play.

The final concern is that the reduction request rarely acknowledges the first part of the statute, which calls for plaintiff’s own culpability to be measured. See I.C. 34-51-2-19(1). The insurer/provider will necessarily want to discuss the facts and evidence of the case as those aspects relate to plaintiff’s conduct. Privacy and ethical concerns must be respected, but these conversations should be pursued and anticipated. Notwithstanding the above, the resulting lien reduction process is often a standard negotiation between two parties who have an interest in maximizing their respective positions.

Next, practitioners should be aware of the lien statutes that specifically apply to Medicaid recipients. See I.C. 12-15-8 and I.C. 12-15-8.5. Ind. Code 12-15-8-1 unequivocally asserts that the state of Indiana (through the Office of Medicaid Policy and Planning) will have a lien on any recoveries where the office has paid medical expenses related to the underlying claim at issue. See I.C. 12-15-8-1. In practice, the “office” could include any health plan, provider network or individual provider that is contracted with the state directly or indirectly to provide approved Medicaid-related services to Indiana residents.

Given the scope of the office’s jurisdictional statement, the Medicaid lien statutes arguably occupy the field with respect to recoveries tied to Medicaid recipients. Further, they are different from the Comparative Fault Statute in a couple of critical ways.

First, there is no required lien reduction specifically due to a recipient’s comparative fault or in the event that the ultimate recovery does not achieve the projected value level. Though again, parties often negotiate reductions in order to efficiently close files. Next, this statute provides the office with the discretion to waive any rights to a lien it might otherwise have. See I.C. 12-15-8-9. The frequency of such benevolence by any one of the entities that might qualify as the “office” is unknown. Similar to the Comparative Fault Statute however, this chapter does contain a provision requiring the office to compensate plaintiff’s counsel for certain costs and expenses and for attorney fees. See I.C. 12-15-8-7 and -8.

Where I.C. 12-15-8 relates to Medicaid liens on the pecuniary proceeds of a recipient’s recovery, I.C. 12-15-8.5 addresses potential attachments to real property held by the recipient. Likely due to very reasonable public policy considerations, this chapter is much more restrictive and will allow the office to move forward with a property-based lien satisfaction only in limited circumstances. Nevertheless, it is not without teeth and should be considered when attempting to understand all potential lien hurdles.

Finally, Indiana’s Legislature recently passed a revised version of the Hospital Lien Statute. See I.C. 32-33-4. In Indiana, hospitals have the legal authority to pursue a recovery where the services rendered originate from an illness or injury that is the subject of a cause of action, lawsuit or claim. See I.C 32-33-4-3. This authority, however, is not unlimited. To begin, a hospital may not seek recoupment of its charges until the underlying injury claim has been resolved by settlement or judgment. See I.C 32-33-4-3.5(e).

Next, the hospital’s lien must now be reduced to reflect amounts to which the plaintiff is entitled, regardless of whether such a recovery is realized. See I.C 32-33-4-3(b)(5). This section represents a departure from the previous iteration of the statute, which did not require hospitals to apply the reductions and/or credits against a patient’s bill unless the hospital actually received payment from an alternate source. Now, hospitals cannot casually avoid the often cumbersome legwork required to collect recoveries from these other sources. Third, the new statute contains another lien reduction provision aimed at addressing the scenario where the patient’s recovery is disproportionally low as compared to the hospital bills. See I.C 32-33-4-3(c). Lastly, the new Hospital Lien Statute has added a number of carve-out populations. Most notably, the statute will not apply to persons covered by state and/or federal workers’ compensation laws, to Medicare recipients or to individuals whose claims are subject to a disability insurance policy or an automobile policy that includes medical payment benefits. See I.C 32-33-4-3(b)(3) and (d).

Attorneys must navigate many lien challenges as they work to close files on behalf of their clients. The health care lien statutes addressed in this article represent just one small corner of that complex world.•

--------

Eric Essley is an associate general counsel at MDwise Inc., an Indiana-based HMO. Eric’s practice focuses on a diverse set of in-house and state and federal health care matters. The opinions expressed in this article are those of the author.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
2015 Distinguished Barrister &
Up and Coming Lawyer Reception

Tuesday, May 5, 2015 • 4:30 - 7:00 pm
Learn More


ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

ADVERTISEMENT