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Miscellaneous Lien Issues

Authorizations and Assignment

The effect of an authorization and assignment is to transfer all interest in the property from the assignor to the assignee. See Roberts v. Total Health Care, Inc., 349 MD 499 (1998). If the assignment is disregarded, the attorney may be personally liable for the amount of the bill. In addition, Rule 1.15 would suggest that disciplinary trouble may also apply. See Advanced Finance Company v. Trustees of the Client Security Trust Fund, 337 MD. (1995). If there is no assignment, the provider would simply be a creditor of the client and the attorney represents the client, not the client’s creditors. There would be no obligation to pay the provider’s bill any more than the attorney would have to pay a credit card bill, car payment, bar tab, etc… for a client. The attorney should not sign the assignment and authorization prior to the client signing it.

Liens/Workers’ Compensation

See Labor and Employment Article Section 9-902 E 2. An injured employee must fully reimburse his employer for insurer workers’ compensation award where employee recovers money from a third party tortfeasor in an amount equal to or greater than the comp benefits paid. Podgurski v. One Beacon Insurance Company, 374 MD 133 (2003). Worker’s Compensation Liens. See Ann Code Labor and Employment, Title 9. Worker’s Compensation, Subtitle 9. Liability of Third Parties § 9-902(f) which provides that the carrier shall pay court costs and attorney fees in proportion that the amount received by each bears to the whole amount paid in any settlement of any claim or satisfaction of judgment obtained in the case (See Metz v. Fireman’s Fund Insurance Company, 289 A. 2d 830). In the District of Columbia there is no similar statute or case law to support this claim.

A Worker’s Compensation insurer is not entitled to assert a statutory lien for compensation paid to an injured worker against that worker’s recovery of uninsured motorist benefits regardless of whether worker’s uninsured motorist coverage is provided under a policy issued to the worker or is one issued to his employer. Erie Insurance v. Curtis 623 A. 2d 184. The uninsured motorist carrier is allowed to reduce the amount paid to the insured by the amount of worker’s compensation benefits paid.

Workers Compensation/Collateral Source

Maryland Courts have not yet ruled on whether a patient must pay a healthcare provider the full amount of their bill,(above and beyond the amount paid by the fee guide for workers compensation) if the plaintiff recovers damages from a third party and then reimburses the workers compensation insurer for the amount that the insurer paid for medical expenses. In Plank v. Summers, 203 MD 552, it was held that the plaintiff is entitled to recover the reasonable value of medical services, regardless of what, if anything, the plaintiff actually owes to the provider of the services. Under Labor and Employment Article, Section 9-731(a)(1)(ii), unless approved by the Commission, a person may not charge or collect a fee for medical services, supplies or equipment provided under Subtitle 6 Part IX of this Title. In Queen v. Ager, 287 MD 342. the Court of Appeals held that the statute prohibited a healthcare provider from charging a workers’ compensation claimant an amount greater than that which was paid pursuant to the fee schedule unless the Commission approved the greater amount. This prohibition exists for balance billing even if the claimant had signed a contract with the provider in which the claimant promised to pay the full amount of the bill. The concern, however, is that this Article only applies if medical services were provided under Subtitle 6 Part IX of the Maryland Workers’ Compensation Act. If the patient recovers damages from a third party, and the patient then reimburses the employer or insurer for the amounts paid for medical expenses because of their subrogation claim, the issue becomes was the medical care provided by the employer or insurer under the workers’ compensation act or was it provided by the third party defendant. The medical provider will argue that once medical bills were recovered from a third party, the care was not provided under the workers’ compensation act and therefore, the healthcare provider may balance bill the plaintiff or the proportionate reduction of the balance for the plaintiff’s attorney fees and litigation expenses pursuant to the common fund doctrine. See Garcia v. Foulger Pratt Development, Inc. 155 MD App. 634.

Federal Worker’s Compensation Liens

The Federal Employee’s Compensation Act guarantees a claimant a minimum recovery of 1/5 of the third party settlement, regardless of how much the lien or settlement is. See The formula is incorporated in a form that provides the amount of the claimant’s recovery and the amount that needs to be paid to the government. The form can be obtained from the Department of Labor.

Workers’ Compensation Lien Or Credit Under Uninsured Motorist Coverage

The amount of workers’ compensation benefits paid would be a set-off for any UM coverage. See Maryland Code, Insurance Article Section 19-513 (e).

Underinsured Motorist Carrier Credit For Workers’ Compensation Benefits

It is important to read the UIM policy carefully. There are cases which state that the UIM carrier may not get full credit for workers’ compensation benefits or any credit. For example, workers’ compensation provides no benefits for pain and suffering or loss of consortium and only pays two-thirds for wage loss. Thus, there is no “match-up” when looking to offset certain benefits. These principles apply when the uninsured motorist policy uses language denying benefits in the event of payment of elements of damage or loss by a workers’ compensation or other payer.

Hospital Liens

Ann. Code, Commercial Law Article § 16-601 indicates a hospital can only claim a maximum of 50% of any settlement.

Hospitals Giving Reductions for Medical Bills or Attorneys Fees

See COMAR Section and (A).

Health Insurance Liens in General

In Maryland there can be a reduction of a subrogation claim for medical payments made by a health insurance carrier for a pro rata share of attorney fees. The statute allows a 1/3 reduction (See Ann Code Courts and Judicial Proceedings Title 11 Judgments Subtitle 1 §11-112). Virginia does not allow subrogation for health insurance payments (see Title 38.2. § 38.2-3405) in personal injury actions.

Lien Reductions in DC

The District of Columbia does not have a statutory provision like Maryland concerning lien reductions. However, one can argue for reduction under the Common Fund Doctrine. This is the Common Law basis for statutory reduction laws.

Employee Retirement Income Security Act (Erisa) Health Insurance Liens

Congress enacted ERISA to protect the interest of employees in employee benefit plans. ERISA pre-empts the field, including state law, in the regulation of employee third party claims and subrogation rights. The issue of private employer health insurance plans is governed by the Employee Retirement Security Act of 1974 (ERISA). Almost all private employer plans are governed by ERISA. The only exceptions to ERISA coverage are for self employed individuals that pay for their own health insurance premiums, religious and other charitable institutions offering health insurance, or governmental entities or agencies (federal, state and local) and instrumentalities of governmental agencies such as Medicaid and Medicare. In Great Western v. Knudson, 122 S. Ct. 708(2002) the Supreme court decided that the health insurance plan could not bring a claim seeking to recoup its lien under ERISA because the proceeds were not in her possession. Rather, the funds were being held in a special needs trust. If required by the health insurance contract the ERISA lien may be required to be paid back before any other payments are made, including attorney fees. Thus, a discussion of attorney fees may be necessary with the health insurance carrier.

An attorney must confirm whether a health insurance plan is ERISA. For example, some health insurers indicate they are ERISA but they may not be. The federal employee program may not be ERISA (See 29 U.S.C. 1003(d). ERISA preempts any state laws regarding subrogation. The Supreme Court in Sereboff v. MAMSI, 547 U.S. __ in a unanimous decision upheld MAMSI’s right to recoup a subrogated lien under ERISA Section 502(a)(3).

There is a case that suggests that an ERISA plan is entitled to an equitable reimbursement, and not one at law. Great West Life Annuity Insurance Company v. Knudson, 534 US 204 (2002).


The statute that requires reduction for attorneys fees is a piece of “insurance regulation.” Both the Connecticut General case written by Judge Eldridge in approximately 2002 and Singh v. Prudential, 4th Circuit, say that the insurance regulation by the state is “saved” by the savings clause in ERISA so long as it is not contradictory to any portion of ERISA. ERISA is silent as to reduction for attorneys fees. Sing holds as such laws are incorporated into the ERISA plan as a “plan term.” To the extent that the plan has a contradictory term, the state law applies and modifies or eliminates the plan term. Use this argument to obtain lien reductions. Remember the power of having the funds based on (also 4th Circuit). ERISA restricts the remedies available to both parties.

ERISA restricts the remedies available to both parties. If one holds money in escrow for months or longer the subrogation unit may negotiate. ERISA subrogation folks try to suggest that ERISA is a magic bullet. There does not seem to be a case to indicate that just because the coverage is ERISA based that the reduction statute does not apply.

Argue that the Singh case says that all state law that is not repugnant to ERISA, and therefore not pre-empted, is incorporated as a plan term. Since ERISA is silent as to reduction for reimbursement argue that it is saved by the savings clause as pure state insurance regulation and becomes part of the plan and therefore they must adhere to it. Remember that ERISA is a federal statute that pre-empts contrary state law but saves non-repugnant state law. It confers federal jurisdiction over disputes between a plan and its members. It limits remedies for both parties, not just the Plaintiff.

Tri-Care Health Insurance Liens

Tri-care liens are branch specific. For the Navy, one should contact Eve Doptis at Navy JAG in Norfolk, Virginia at 757-440-6308. For the Coast Guard, one should contact Eric Young in Norfolk at 757-444-4424. Under federal law where Tricare has paid amounts that the attorney is reimbursing Tricare, the attorney is not allowed to collect a fee from the portion paid to Tricare. The attorney can only collect a fee from the balance after the Tricare lien is paid.

Some have been successful by e-mailing One will need to provide the client’s birth date and sponsor’s social security number and an itemized lien will be forwarded. A new person is Angela Hunter-Coppedge 301-677-9099 is also often involved. Her address is Department of the Army, US Army Installation Management Command, Office of the Staff Judge Advocate, Attn: IMNE-MEA-LE C. 4217 Roberts Avenue, Fort Meade, MD 20755-9099.

Doctors Trying to Obtain Third Party Proceeds Rather Than Medicare/ Medicaid Payments for Their Bills

A doctor who is a Medicare/Medicaid provider cannot pick and choose whether they submit the bill to Medicaid once they learn there is a third party case. They must submit their bill to Medicaid. Liability insurance is secondary to Medicare. Just because a bill is not submitted to Medicare or Medicaid does not mean that the doctor is free to bill the full fee and not the Medicare scheduled fee for their services.

Medicare and Medicaid Liens

Federal Statute:

The Centers for Medicare and Medicaid Services (CMS) administers Medicare., the nation’s largest health insurance program. Medicare is a health insurance program for people 65 years of age or older, some disabled persons under 65 years of age, and people with End Stage Renal Disease. Medicare has two parts, Part A and Part B.

Part A helps pay for care in hospitals as an inpatient, critical access hospitals, skilled nursing facilities, hospice care, and some home health care. Most people get Part A when they turn 65 years of age. They do not have to pay a monthly payment or premium for Part A because they paid Medicare taxes while working. If someone did not pay Medicare taxes while working they may still be eligible for Part A upon reaching 65.

Part B is commonly referred to as medical insurance. Most people pay for Part B coverage. It helps pay for doctor’s services, outpatient hospital care, and some other medical services that Part A does not cover such as services for physical and occupational therapy and some home health care.

The federal government has a right of subrogation for medical care payments made under the Medicare Act as set out in 42 U.S.C. § 1395y(b)(2)(ii). This is commonly called a “Super Lien”. This lien applies if the parties are aware of Medicare interests or should be aware of those interests. The lien can be collected from Medicare recipients, their representatives, attorneys or third party payers. Medicare liens may not be subordinated to attorney liens.

Procedure to Determine Lien Amount:

The only agency with authority to communicate with persons regarding these liens is the Center for Medicare Services-Coordination of Benefits Office in New York City. The contact number is 800-999-1118. The mailing address is P.O. Box 1041, New York, New York 10274. The letter should identify the name of the client, date of birth, social security number, sex, type of case, nature of injury. When settlement takes place the attorney needs to mail them a letter and inform them of the date of the settlement, the amount of the settlement, the attorney fees and additional costs. Any payment of the lien must be made within 60 days of the date of the demand letter from Medicare or interest will accrue and be charged. The attorney can ask for a waiver of lien under certain circumstances. Medicare is expected to respond to a lien inquiry letter within 30-45 days. They have 140 days to provide a final lien notice after the initial notice of lien.

As of 10/1/06 the Medicare Secondary Payer Recovery Contractor (MSPRC) is in Detroit Michigan and can be contacted at 866-677-7720, fax 734-957-0988. Their address is P.O. Box 33847, Detroit Michigan 48232-5847. After the first contact in New York gets the ball rolling, they send an electronic file to Detroit and the attorney will get the itemized lien from the Medicare Secondary Payer Recovery Contractor. An attorney needs to fax or send Medicare a form medical authorization before the Contractor will even talk to the attorney or staff member. Once a final lien notice is received an appeal can be filed within a certain time.

Liens-Maryland Medicaid

If Medicaid has a lien it is against the recovery and not against the tortfeasor (unlike Medicare who can pursue the tortfeasor post settlement of a claim). See Cleveland v. Chesapeake & Potomac telephone Co. of Maryland, 225 Md. 47 and Section 15-120(d) of the Health General Article of Md. Code Ann. Discussions with Medicaid should include the Alhborn case which limits their interest and the Tristani case which calls into question their ability to collect anything.

Medicare Liens/Medicaid Liens

Arkansas v. Ahlborn does not necessarily stand for the proposition that Medicaid has a lien on proceeds of a settlement to the extent the settlement or verdict represents past medical expenses pain by Medicaid. In that case the Plaintiff stipulated that Arkansas had a lien and was just questioning the amount. A new opinion (Tristani v. Richman, 2009 U.S. Dist. Lexis 24493 (WD PA 2009) )provides that federal law preempts state law and that the liens are impermissible. It held that the application of section 1409(b)(7)(i) to the settlement proceeds secured by Tristani and Valenta was unconstitutional under the Supremacy clause.

General Contact Information:

All of the information below can be found at:

Telephone: (866) 677-7220 Monday - Friday, 8:00 a.m. - 8:00 p.m., Eastern time.
Fax: (734) 957-0998

MSPRC Auto/Liability

PO Box 33828
Detroit, MI 48232-5828

Workers' Compensation MSP recovery

PO Box 33831
Detroit, MI 48232-5831

Group Health Plan insurance MSP recovery

PO Box 33829
Detroit, MI 48232-5829

Special Project MSP recovery

PO Box 33834
Detroit, MI 48232-5834

Attorney Responsibility and Liability:

Whenever a lawyer sends a letter of inquiry (or verbal inquiry) from that time forward the lien is going to be in the lawyer’s name and tax i.d. number. The collection office is apparently authorized to collect the lien from the lawyer’s accounts which can be a nightmare, especially if it is taken from the escrow accounts.

Medicare Liens on Wrongful Death and Survival Action claims:

Medicare cannot assert a lien on a wrongful death claim because the defendant will not pay “with respect to any item or service” for which Medicare paid. Medical bills are paid under a survival action claim (see 42 U.S.C. § 1395y(b)(2)(A). and are sites to review.

There is no question that the Medicare Secondary Payer Statute applies in the liability context. Under the MSP, a primary plan includes an automobile or liability insurance policy or plan, including a self-insured plan or no-fault insurance. The general rule is that Medicare will not make payment for medical services if payment has been made or can reasonably be expected to be made under a workers’ compensation law or plan of the United States or state or under an automobile or liability policy or plan including self-insurance plan or under no-fault insurance. However, Medicare may make a conditional payment if the primary plan has not made or cannot reasonably be expected to make payment promptly. Any such payment shall be conditioned on reimbursement to the appropriate trust fund. Thus, a conditional payment is defined as a payment made by Medicare for services for which another payer is responsible. Under 42 U.S.C., section 1395 Y (b) (2) (B) (ii), primary payers and an entity that receives payment from a primary plan are obligated to reimburse Medicare for conditional payments when it has been demonstrated that a primary plan has or had a responsibility to make payment. Thus, if there is a judgment, compromise, waiver, release or settlement or contractual obligation to make payment, it is clear this comes under the responsibility clause if MSP pays. Medicare also has a subrogation right as well as rights of joinder and intervention.

Reductions, Amounts Due and Penalties:

The amount recoverable for a conditional payment is the lesser of either the Medicare primary payment or the amount of the full primary payment that the primary payer is obligated to pay. If it is necessary for CMS to take legal action, Medicare may recover twice the amount of the Medicare primary payment. Medicare’s claim may be reduced by procurement costs. See 42 C.F.R., section 411.37. Under the new law, Medicare has a direct right against all primary payers responsible for making payment and any entity that received a primary payment including a beneficiary, provider, supplier, physician, attorney, state agency or private insurer. Regulations specify that Medicare will follow the “fund doctrine” and reduce its recovery to allow for costs of procuring the judgment or settlement.

With respect to Medicare liens, CMS will generally reduce its lien by a pro-rata portion of litigation expenses, whether the case goes trial or not. This is in addition to a reduction for the attorney’s fee. The pro-rata reduction does not correspond with a percentage of the contingent fee. It is based upon the actual litigation expenses. The current procedure applicable for Medicare intermediary carriers, includes attorney’s fees and expenses in the procurement cost so that recovery will be reduced by that amount provided that attorney’s fees and costs provided they do not appear to exceed the prevailing standards in the area. However, the claimant, attorney’s fees and expenses are not free of the Medicare lien in the event that Medicare is not notified or paid its interest from a settlement or judgment.

Medicare Payments Where There is Malpractice:

New rules and regulations from Medicare indicate if the staff of a hospital is responsible for an error in the treatment of a patient, Medicare will not pay the hospital and the hospital may not bill the patient. In other words, the hospital will suffer the entire loss because of their own negligence. It remains unresolved whether Medicare will go back after a resolution of a malpractice claim to obtain a refund of Medicare payments where malpractice may have occurred. This could help Plaintiff’s attorneys obtain a larger net recovery for their clients.

Insurance Company Responsibilities:

Primary payers are also currently required to place Medicare on notice of claims implicating its interests. According to 42 C.F.R., 411.25 (a), primary payers are obligated to place Medicare on notice if it is demonstrated to a primary payer that CMS has made a Medicare primary payment for services for which the primary payer has made or should have made primary payment. Senate bill 2499 impacts the current obligations of all primary payers to protect Medicare’s interests. This amendment becomes effective July 1, 2009 for all primary payers, except for group health plans for which the effective date is January 1, 2009. All primary payers will thereafter be required to determine if a claimant is entitled to Medicare and notify Medicare of said entitlement. If it is determined that the claimant is entitled to Medicare, then the primary payer must put Medicare on notice within a time specified by the Secretary after the claim is resolved through settlement, judgment, award or other payment regardless of whether or not there is a termination or admission of liability. See Senate Bill 2499, section 111, (a) (8) (C). The penalty for noncompliance is one thousand dollars per day per claim which is in addition to any other penalties available at law. Federal law requires the states to assert and collect Medicare and Medicaid liens as a condition of future receipt of funds. See 42 USC, section 1396 (a): 42 CFR section 443.136 (3) (1980). With the recent passage of Senate bill 2499, entitled the “Medicare, Medicaid, and SCHIP extension act of 2007” there has been heightened areas of Medicare compliance. This amendment to the Medicare secondary payer statute (MSP) is the strongest salvo yet in Medicare’s campaign to strengthen its rights against all primary payers.

Protecting Medicare’s Future Interests:

Presently it is unclear whether CMS will require that notice be provided only with respect to resolved cases as the legislative text would suggest or whether it will also require notice in relation to unresolved cases. Therefore, another consideration for primary payers might be to protect Medicare’s future interests, assuring that parties to a settlement are not improperly shifting the burden of an injured party’s medical care to Medicare. Per CMS policy directors, primary payers in the workers’ compensation area are obligated to protect Medicare’s future interest in certain settlements through a Medicare Set Aside Trust. It is unresolved whether a Medicare Set Aside Trust is applicable in liability cases. In some cases it might be important for the attorney to consider a Medicare Set Aside trust if a client is a current Medicare beneficiary or there is a reasonable expectation that client will be within 30 months, This is particularly true if any settlement is more than a threshold of $ 250,000. A Medicare Set Aside trust requires Medicare approval.

The Medicare Set Aside Trust concept in the workers’ compensation context is derived principally from 42 C.F.R., section 411.46. In this context, a lump sum payment is set aside for future medical payments and Medicare will not make any such payments until that set aside is exhausted. The thresholds that CMS considers for Set-Aside Trusts apply when a total settlement amount is greater than twenty-five thousand dollars if the claimant is a Medicare beneficiary or if the claimant is not a Medicare beneficiary at the time of the settlement but has a reasonable expectation of Medicare enrollment within thirty months of the settlement date and the total settlement amount is greater than two hundred and fifty thousand dollars. Reasonable expectation includes having applied for social security disability, has been denied SSD but anticipates appealing the decision or re-filing, is sixty-two years and six months old or has end-stage renal disease. CMS takes the position that these thresholds are not “safe harbors” because Medicare’s interest must always be protected.

Medicare Set-Aside amount is the actual projection of the claimant’s anticipated future medical treatment and services related to the claim that would otherwise be covered by Medicare. The projection is typically calculated at the workers’ compensation reimbursement rate for the applicable state. Usually the funding is done either by lump sum funding or a structured annuity arrangement. The claimant can only use a Medicare Set-Aside account to pay for post-settlement medical services and items related to the claim that would otherwise be covered by Medicare. Annual reporting is required regarding expenditures issued from a Medicare Set-Aside trust.

Considering Medicare’s future interest in liability cases becomes very problematical. The MSP does not appear to contain any specific provisions directly addressing future medicals in liability cases. Specifically, the liability equivalent of 42 C.F.R., section 411.46 does not seem to exist under the liability provisions of the MSP. Some might suggest that the new legislation requires liability Medicare Set-Aside Trusts. However, standing alone, Senate Bill 2499, does not appear to require such Medicare Set-Aside Trusts. Some would argue that there is an obligation to inform CMS when past or future medical expenses were a consideration in reaching the liability settlement, judgment or award, whether or not specifically provided for in the settlement, judgment or award in cases involving a Medicare beneficiary. In addition, CMS would probably argue that they expect any settlement funds that were intended to compensate for future medicals to be spent for that purpose before any claims related to the settlement, judgment or award are submitted to Medicare for payment.

In the future, if Medicare Set-Aside Trusts are used in liability cases and if the consideration is to protect Medicare’s future interest as part of the settlement process, there would need to be some determination made as to which settlements would be implicated since there are no guidelines or thresholds like there are in workers’ compensation cases. Thereafter, if a liability Medicare Set-Aside is used, it must be decided whether to request formal approval of the Medicare Set-Aside from CMS, even though CMS does not have a formal approval process for liability claims. Finally, there would have to be some assurance that future medicals are clearly identified in the settlement agreement and that plaintiff is placed on notice of the intended purpose of said funds. The plaintiff should maintain receipts and other documentations related to his or her treatment in the event that CMS requests same at a later date. Settlement agreements should probably contain provisions reflecting that the parties have taken Medicare’s interests into account. The agreement should include language showing that the parties reached the underlying settlement in compliance with MSP. More specifically, provisions addressing the issues of future medicals, conditional payments and indemnification should be included.

Medicare Liens on PIP Payments:

Medicare does have super-lien on PIP. See 42, U.S.C., section 1395 Y (b) (2) (A). Similarly, Medicare has a subrogation claim against uninsured motorist benefits.

Under the provisions of the Medical Care Recovery Act, the federal government is entitled to subrogation in cases where the government is authorized or required to provide medical care to persons injured, killed or given a disease by a third party tortfeasor.

Veteran’s Care and Military Care:

Under this statute, the Veteran’s Administration and the Military Services may recover for medical care provided to eligible personnel. Dependent’s care and treatment would also be covered. Veteran’s Administration subrogation rights are specifically addressed in 38 U.S.C., section 629 (a) (1) and are similar to government rights under the medical care recovery act.

Medicare Lien on Uninsured Motorist Benefits for Veteran or Military Person:

It has been held that the United States was not entitled, under the Medical Care Recovery Act, to proceeds of an automobile victim’s uninsured motorist benefits, for reasonable value of medical service provided to the victim where neither the victim nor his insurer was liable in tort. The Federal District Court held that the uninsured motorist driving the other vehicle was the tortfeasor rather than the victim or his insurance company. See Government Employees Insurance Company v. Andujar 773 F. Supp. 282, (D.KAN. 1991). The Medical Care Recovery Act establishes the right of government to recover against a third party tortfeasor and such right depends on the actual definition of insured in the policy in question. Therefore, the government could not recover under the act against a serviceman’s automobile insurer for medical care and treatment furnished to the serviceman as a result of an automobile accident since the insurer was not liable to the serviceman or to the government in tort, nor was the government an insured under the terms of the policy. See US v. Government Employees Insurance Company, 330 F. Supp. 1097 (E.D.N.C. 1971).

Maryland Statute:

Maryland Health General Code, Annotated, Section 15-120 provides that if a recipient of medical or pharmacy assistance programs has a cause of action against a person, the Department shall be subrogated to that cause of action to the extent of any payments made by the Department on behalf of the program recipient that result from the occurrence that gave rise to the cause of action. Section 15-120 (b) provides that an attorney representing a program recipient in a cause of action to which the Department has a right of subrogation, shall notify the Department prior to filing a claim, commencing an action, or negotiating a settlement. The attorney shall notify the Department in advance of the resolution of a cause of action and shall allow the Department three business days from the receipt of the notice to establish its subrogated interests. The Statute requires the attorney, after receiving notice of the subrogation claim, to hold the money for the benefit of the Department to the extent required for the subrogation claim after deducting an applicable attorney’s fee and litigation costs. If after written notice of a subrogation claim and possible liability under the Statute, a person disposes of the money without written approval of the Department, the person is liable to the Department for any amount that, because of the disposition, is not recoverable by the Department.

District of Columbia:

The DC Code Annotated, Section 4-602 (a) gives the District of Columbia an independent, direct cause of action against a third party tortfeasor for the unreimbursed value or cost of the healthcare assistance provided by the District of Columbia. DC Code Annotated, Section 4-602 (b) provides for the subrogation rights of the District that the beneficiary has against any third party for the care and treatment it has undertaken to provide or pay for healthcare assistance. It can also require the beneficiary to execute a written assignment of that claim. The District’s lien must be satisfied before the beneficiary may receive any proceeds from a judgment. DC Code Section 4-604 gives the District a number of options in enforcing its right to reimbursement. It may permit the beneficiary to proceed on behalf of the District in prosecuting the claim, it may intervene or join in the proceeding, it may institute and prosecute a proceeding alone in its own or the beneficiary’s name, or it may compromise or settle and execute a release of its lien against a third party. If private counsel is retained, counsel shall be responsible for giving all notices required by Section 4-606. If the District or the beneficiary files suit or opens settlement negotiations with a third party tortfeasor, Section 4-606 (b) requires notice to be given to the other party within twenty calendar days. Section 406 (c) imposes a notification obligation on a third party tortfeasor who is aware that the District may have a claim against a judgment or settlement in favor of the beneficiary. Section 4-607 gives the District a lien upon any judgment or settlement awarded or executed in favor of a beneficiary against a third party. To perfect the lien, the mayor shall record a written notice of the lien in the office of the Recorded of Deeds and send copies of the notice to the beneficiary, the third party and any insurer of the tortfeasor. After such a lien is perfected, if the District is not paid out of a judgment or settlement, the beneficiary, third party or insurer shall for a period of one year from the date the funds were improperly disposed of, be liable to the District for any amount that, because of the disposition, it is unable to recover.

See the case of Mosey v. USA, 3 F. Supp 2d 1133 (D Nev 1998); Sereboff v. Mid Atlantic medical Services, Inc., 126 Sup. Ct. 1869 (2006) for a discussion of these liens.

See also Greenwood v. Mills, inc. v. Burris, 130 f. Supp 2d 949 (M.D. Tenn. 2001); Great West Life & Annuity Insurance Company v. Bullock, 202 F. Supp 2d 461 (2002) and Great West Life & Annuity Insurance Company v. Smith, 180 F.Supp 2d 1311 (M.D. Fla 2002) for a discussion about the liability of the attorney failing to protect the lien.


Medicaid is a joint and voluntary program between the federal government and state governments, with the mission to provide health insurance to the nation’s poor., disabled, and the impoverished elderly people. The federal government sets minimum eligibility standards and coverage requirements for Medicaid. Because Medicaid is an entitlement program, states choosing to participate must provide specified care to everyone who is eligible under guidelines developed by the federal government. Currently a matching program is in effect with the federal government using a formula measuring per capita income in each state relative to the national average. Medicaid is facing a funding crisis because of the costs of the program, especially prescription drug costs, and the growing population that needs long term care.

Many critical health programs are being reduced or eliminated because of the funding crisis. To be eligible for Medicaid, an individual must meet financial criteria or may be a member of a group that is categorically eligible such as low income children, pregnant women, the elderly, people with disabilities and parents. Federal law mandates coverage for certain groups below specified minimum income levels. States can vary with their own standards for eligibility provided they follow the federally mandated minimums at least. State Medicaid programs must cover inpatient and outpatient hospital services, physician, midwife and nurse practitioner services, laboratory and x-ray fees, nursing home and health care, family planning, rural health clinics, early and periodic screening, diagnosis and treatment for children under 21.

The case of Arkansas v. Ahlborn, 126 S. Ct. 1752 where the court discusses these liens. There is an anti lien provision in the Arkansas statute that was helpful when dealing with Medicaid liens. However, one needs to be careful because other states, such as Virginia, have taken the position that their statute is different from Arkansas’ statute and therefore they claim they are entitled to collect a lien. The Supreme Court affirmed a decision by the Eighth Circuit Court of Appeals and held the state could only collect that portion of a settlement that represents payments for medical care.

Maryland Medicaid Liens:

In Maryland, the attorney can call 410 797 1764 or 410 767 1719 to determine the amount of the Medicaid lien. Although one should notify Medical Assistance / Medicaid of a pending action, there is no applicable statute in Maryland that is construed to give a cause of action by the State for failing to notify the lienholder. (See Ann Code Health General §15-120(b)

Notice to Medicaid as to Change in Ciircumstances

A participant in Medicaid must report any change in financial circumstances within 10 days of the change. It could otherwise be considered Medicaid fraud. See COMAR

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