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Essley: The land of (health care lien) confusion

February 12, 2014
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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.•

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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.

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  1. Good luck, but as I have documented in three Hail Mary's to the SCOTUS, two applications (2007 & 2013),a civil rights suit and my own kicked-to-the-curb prayer for mandamus. all supported in detailed affidavits with full legal briefing (never considered), the ISC knows that the BLE operates "above the law" (i.e. unconstitutionally) and does not give a damn. In fact, that is how it was designed to control the lawyers. IU Law Prof. Patrick Baude blew the whistle while he was Ind Bar Examiner President back in 1993, even he was shut down. It is a masonic system that blackballs those whom the elite disdain. Here is the basic thrust:https://en.wikipedia.org/wiki/Blackballing When I asked why I was initially denied, the court's foremost jester wrote back that the ten examiners all voted, and I did not gain the needed votes for approval (whatever that is, probably ten) and thus I was not in .. nothing written, no explanation, just go away or appeal ... and if you appeal and disagree with their system .. proof positive you lack character and fitness. It is both arbitrary and capricious by its very design. The Hoosier legal elites are monarchical minded, and rejected me for life for ostensibly failing to sufficiently respect man's law (due to my stated regard for God's law -- which they questioned me on, after remanding me for a psych eval for holding such Higher Law beliefs) while breaking their own rules, breaking federal statutory law, and violating federal and state constitutions and ancient due process standards .. all well documented as they "processed me" over many years.... yes years ... they have few standards that they will not bulldoze to get to the end desired. And the ISC knows this, and they keep it in play. So sad, And the fed courts refuse to do anything, and so the blackballing show goes on ... it is the Indy way. My final experience here: https://www.scribd.com/document/299040062/Brown-ind-Bar-memo-Pet-cert I will open my files to anyone interested in seeing justice dawn over Indy. My cases are an open book, just ask.

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  4. Hysteria? Really Ben? Tell the young lady reported on in the link below that worrying about the sexualizing of our children is mere hysteria. Such thinking is common in the Royal Order of Jesters and other running sex vacays in Thailand or Brazil ... like Indy's Jared Fogle. Those tempted to call such concerns mere histronics need to think on this: http://www.msn.com/en-us/news/us/a-12-year-old-girl-live-streamed-her-suicide-it-took-two-weeks-for-facebook-to-take-the-video-down/ar-AAlT8ka?li=AA4ZnC&ocid=spartanntp

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