Liens also are problematic for defendants, defense counsel and plaintiffs counsel because, under the 2007 Medicare, Medicaid and State Children's Health Insurance Program Extension Act, they can face penalties of $1,000 per day if they do not notify the federal government of liability settlements for claimants who received governmental health benefits.
If Medicare is forced into litigation to recover a lien, the government is owed double damages and interest.
Plaintiffs and defendants also are now facing the threat of litigation from private health insurers who are increasingly asserting liens themselves.
Before plaintiffs get Paid
Eric F. Gladbach, a partner in Reed Smith's New York office whose practice includes defending products liability actions, said he is seeing greater requests for reimbursements out of settlements from the government, quasi-governmental insurers and private insurers.
The process of resolving governmental liens also is taking longer, Gladbach said.
"We're seeing it take much, much longer than it used to take," Gladbach said. "It may be because government employees are overworked. It may be they're leveling greater scrutiny on individual claims. It may be more that there is more data for them to sort through. It may be that there is state budgetary issues."
U.S. District Judge Cynthia M. Rufe of the Eastern District of Pennsylvania, who is presiding over the Avandia multidistrict litigation as it draws to a close and who is presiding over the growing Zoloft multidistrict litigation, said that Medicare liens are not holding up settlement but holding up payments.
Michael M. Weinkowitz, a plaintiffs attorney and member of Levin, Fishbein, Sedran & Berman, said communication is key with clients.
"If you communicate with your clients and you set reasonable expectations as to when you'll be legally able to distribute money, most clients are quite good with that," Weinkowitz said. "The key for plaintiffs lawyers is setting expectations and explaining in detail why it is you can't make a distribution until a lien is satisfied."
Because of the existence of liens, defense clients sometimes may end up paying over what the cases are worth just to resolve cases because the plaintiffs will not settle for less because of outstanding liens, Le Gower said, or clients end up overpaying on discovery and motion practice because cases continue on due to liens.But in the mass torts world where inventory settlements are common, the issue of overpaying for liens does not come up as much for defendants, Le Gower said. The issue of how much recovery a plaintiff will get above and beyond any liens they owe then is between the claimants represented by the same firm and how they fall into a grid based upon their level of injury, Le Gower said.
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