by Thomas D. Begley, Jr., CELA
Types of Liens
Prior to making distribution in the settlement of a class action or mass tort lawsuit, a number of lien issues may need to be addressed, depending on the nature of the case, the elements of the recovery, and the population of claimants. These issues may include reimbursement claims asserted by Medicaid, Medicare, Medicare Advantage and Prescription Drug Plans, ERISA Plans, Federal Employee Health Benefits, Federal Medical Care Recovery Act, Veterans Administration and TRICARE Claims, Welfare Liens, Mental Health Liens, Traumatic Brain Injury Fund, Catastrophic Illness and Children’s Relief Fund, Victims of Crime Compensation, State Worker’s Compensation Claims, Federal Employee Compensation Act, Hospital Liens, Child Support and Division of Disabilities (DDD).
Subrogation/Reimbursement
It is important to understand the differences between these two related concepts.
- Subrogation. Subrogation is the substitution of one party (an insurer) for another party (the insured) in the assertion of rights against a third party. It allows the insurer to assert the rights and claims of the insured. Subrogation rights may arise from contract (“conventional” subrogation), from legal principle or doctrine (“legal” or “equitable” subrogation), or from legislation (“statutory” subrogation).
- Reimbursement. Reimbursement allows the insurer to seek repayment from the insured when the insured receives funds from another party. Reimbursement rights arise from contract, with their scope and enforceability determined by the contract’s terms, subject to applicable limiting law.
Derivative Claims
Liens are generally enforceable against the settlement of the injured party on whose behalf benefits are paid, but it is unlikely they are enforceable against proceeds of derivative claims of others arising from the incident.[1] For example, wrongful death claims would not generally be subject to liens because they are property of persons other than the decedent; in contrast, a survival claim, as property of a decedent’s estate, may be subject to a lien.[2] Similarly, allocation of loss of consortium claims to those who do not have responsibility for medical bills, such as a spouse or child of an injured party, may in some circumstances serve to reduce the amount attachable by a health care lien.
[1] Admin. Comm. of Walmart Stores, Inc. v. Gamboa, 479 F.3d. 538 (8th Cir. 2007).
[2] Bradley v. Sebelius, 621 F.3d 1330 (11th Cir. 2010).
