Palm Coast Injury Law Blog : Florida Personal Injury Lawyer & Attorney : Philip J. Chanfrau

When a client has  a settlement offer on the table and has to take it or leave it, and knows that it is likely the maximum amount he will be offered to settle, he needs to consider the adverse consequences of turning it down.  This is a critical stage in the claim, like filing suit, or when the Verdict comes back.  It is the proverbial point of no return. 

 I handle most of my cases on a contingency fee basis and do not charge clients for fees or expenses unless they recover.  So, some think that if he gets  a bad verdict it will only mean the loss of a few dollars that were left on the table.  But that is not the whole story. 

Modern trial law can and often does end up with a large judgment against the losing party.  How large?  Depends on each case, but it should include all of the defense court costs, expert fees, deposition charges, witness subpoenas, and the attorneys fees for the defense firm.  That could be $50,000 or more! Then there is the Bob Dylan argument that you should risk losing the offer: "When you got nothing, you got nothing to lose."  That argument is a bad one, because you would be losing the money on the table if you lost at court.

Finally, the Statement of Clients rights gives you, the Client, absolute and final authority to decide whether to take the settlement or not.  A good lawyer can provide you with a recommendation, but should let you make the final decision:  it's your case. You know more about your needs, and risk tolerance than anyone else!

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Medicare pays doctor's bills, hospital bills and nursing home care.  If the Medicare patient needs these types of medical care because of an accident, Medicare pays on the expectation that at the end of the case, Medicare will be reimbursed out of the settlement.

One of my clients is a Medicare recipient.  He was injured about 18 months ago and all of his medical bills, including his hospital, emergency room, nursing home charges and doctors bills were submitted to Medicare.  They totaled over $250,000.  Medicare paid them at a reduced rate, and has a lien on the settlement for close to $100,000.

So how does medicare's lien get paid off?

Medicare has contracted with MSRPC to handle its worker's compensation liens, and third party liability cases.  When the case settles, MSRPC reviews the final settlement paperwork, and then reduces its lien pro-rata for the costs of collection paid by the Medicare recipient. In other words, if the Medicare patient paid 33 1/3% to his attorneys, then medicare will reduce its lien by 1/3rd.  MSRPC will send a letter within 65 days after the case settles to advise what the exact lien amount is, and that amount must be paid within 60 days.

There is no federal statute requiring that Medicare's name be included on the check.  Medicare law requires the insurance company to notify medicare (MSRPC) of the claim, and if it does so, the insurance company has satisfied its obligations.  The patient's obligation is to pay the lien.  If the patient does not do so, Medicare can deduct the cost of the lien from his future Social Security checks or deny future medicare benefits. 

Right now only Worker's Compensation benefits are included in the statute.  But, attorneys handling liability claims in general are following the same settlement procedure model that is required in all worker's comp cases.  Also, MSRPC wants people who are almost 65 to advise Medicare of a liability claim so that Medicare can be aware of it.

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When a child gets injured and someone else is responsible, it is up to the child’s parents (or the one with legal custody if they are divorced) to protect the child’s legal rights. Any settlement for a child under 18 is governed by certain statutes. If the gross amount of the settlement, before any attorneys fees and costs is $15,000 or less, the parents have the right as the child’s natural guardians, to settle the case without court supervision.

If the gross amount is more than $15,000 up to $50,000, the Court may appoint a disinterested expert, usually a lawyer who is skilled in settling injury cases, to advise the court about the settlement. And, if the gross amount is above $50,000 the Court must appoint the expert to review the settlement. The experts are called Guardian ad Litems, meaning they are just temporary until the case is over. The guardian may charge a fee for their time and advice to the court. 

Why all the fuss about settling a child’s claim? Because years of experience has taught us that some parents are not to be trusted with their child’s settlement money. For example, in some of the bigger cases where a child is a paraplegic or quadriplegic, blinded or clearly going to have major issues with self care, a multi- million dollar settlement has been too tempting for parents to keep their hands off. Because of the past sins of other parents, the Florida legislature and the courts have decided they will not risk the loss of a child’s precious settlement by handing it over to the child’s parents, as loving as they may be.

Courts have come up with ingenious ways to safeguard the settlement. Some of the ways are to put the money into an annuity which starts making payments after the child reaches a certain age, like 18, or starts college, or gets married. This is called a structured settlement.   When it is locked away, the IRS permits the earnings in a structured settlement to grow tax free over the years until it is withdrawn. Other ways are to require a court order for every withdrawal from a child’s custodial account. Once the court feels the money is safely locked away, it will approve the terms of the settlement. This is an important milestone. When that happens, the Legal Guardian and the parents are given permission by the Court to sign a release and drop any of the child’s claims in exchange for the agreed upon settlement. 

If a seventeen year old child has a case, it might be wise to wait until the child reaches the age of “legal majority” (18 years old), and then a Court does not have to be consulted about the wisdom of the settlement, a guardian does not need to be appointed and the settlement can be turned over to the child after he or she reaches their 18th birthday. Other issues come up: is the child mature enough to use this money wisely? Can the child resist the temptation to spend the settlement on a new car?

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Historically when a settlement involving a client with medicare occured, the plaintiff's attorney would negotiate the amount of the payback due medicare.  It took months of  haggling with a bureaucrat about  whether the bills paid by Medicare were related to the injury settlement.  The process may have recently become much more complex and harder to navigate..

Since January 1, 2010 a new  law has gone into effect.  The law is intended to make sure Medicare is the payor of last resort, and that medicare gets paid off the top, if it has been billed for accident related medicals. The new reporting requirements, passed as part of the Medicare, Medicaid and SCHIP Extension Act of 2007, require insurance companies to provide information on settlements, including the name, address and phone number of the plaintiff and his or her attorney.

There are a lot of questions to be answered by this legislation.  What about future medicare payments for treatment of accident related injuries?  What about the client who was not a medicare patient when the settlement occured, but will be entering Medicare later on?  There is a good overview of this issue in the Wisconsin law Journal here.  In the interview, plaintiff's attorney Robert Janssen is quoted as saying:

“The prudent course of action is to keep Medicare’s interest protected by creating a bank account for accident related, future medical bills that would typically be paid by Medicare,” said Janssen. “This would be the case even though no formal Medicare set-aside is in place.”

I think plaintiffs attorneys representing medicare clients and those who are likely to start getting Medicare benefits before the case is settled ought to provide the insurance adjusters with a heads up as soon as possible  so they can timely notify Medicare of  the pending action.  Or, Plaintiff's counsel can do it just to make sure it is done. 

We sure don't want to get a case settled and then belatedly find out Medicare has not been notified yet. Based on this article, the client's rights to future medicare may be cut off unless this is handled properly, and that would be a nightmare for them and the attorney who handled their claim.

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