As an Atlanta injury lawyer, I know that not all settlement liens are created equal. Each type of lien comes with its own set of rules, potential flexibility, and risks to those who choose to ignore them. Recently, the United States District Court for the Northern District of West Virginia ruled that a plaintiff's personal injury attorney who did not timely reimburse Medicare, after a case has been settled and a lien amount determined, may be held individually liable for the entire amount of the lien. See United States of America v. Paul J. Harris, Civil Action No. 5: 08CV102. The law of this Virginia case is applicable to Georgia as well.
The Harris case involved a fall from a ladder purchased from a local retailer in which James Richea was injured. Mr. Richea retained attorney Paul J. Harris to pursue a premises liability claim against the retailer for his personal injuries. Medicare had paid approximately $22,500 for Mr. Richea's medical care resulting from the fall. Settlement discussions ensued, and the case was ultimately settled for $25,000.
Once an agreement had been reached with the retailer, attorney Harris contacted Medicare and furnished the details of the proposed settlement. Based upon the amount of the settlement, the amount of the original Medicare lien, and the other costs and expenses associated with the case, Medicare determined that it was owed approximately $11,000 from the proceeds of the settlement. By statute, attorney Harris had 60 days thereafter to make the reimbursement to Medicare. When he failed to do so, suit was filed against him, personally, for the entire amount of the lien, plus interest and certain other costs.
Attorney Harris filed a Motion to Dismiss, pursuant to FRCP 12 (b) (6), asserting that a lawyer, in representing a client, cannot be held individually liable under 42 U.S.C. 1395y (b) (2) when he distributes settlement funds with the prior knowledge and consent of the government. Because he had forwarded the details of the settlement to Medicare before disbursing the money to his client, attorney Harris asserted that he could not be held individually liable for the lien amount.
The U.S. District Court disagreed, and denied attorney Harris' Motion to Dismiss. In so doing, the Court ruled that the Medicare Secondary Payer Statute ("MSPS") gives the government the right to enforce its lien against the injured party's attorney. In support of this position, the Court cited 42 C.F.R. 411.24 (g), one of the federal regulations implementing the MSPS. That section provides as follows:
"Recovery from parties that receive primary payments. CMS has a right of action to recover its payments from any entity, including a beneficiary provider, supplier, physician, attorney, State agency or private insurer that has received a primary payment." Id. (emphasis supplied).
Because the government is authorized by statute to recover such payments from any entity, including an injured party's attorney, Attorney Harris's Motion to Dismiss was denied in its entirety. The seriousness with which claimants and attorneys must treat Medicare and Medicaid liens is well known. However, this case serves as a reminder of just how few options are available to attorney's who either choose to ignore these liens, or simply become too impatient to allow the very slow lien process to run its course.