Understanding Health Insurance Liens and Their Importance to Anyone New to Personal Injury Law

Anyone new to the personal injury law practice must understand health insurance liens. In a personal injury case, a lien claims arises when an insurance company or government agency pays the medical bills of an injured plaintiff, who later makes a recovery against the negligence person’s insurance company.  

A good way to learn about liens is to understand the history of lien recovery.  Prior to 1988, health insurance lien claims were relatively uncommon. That all changed in 1988 when Patrick B. McGinnis left his job at a large health insurance company and started Healthcare Recoveries in Louisville, Kentucky.

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Healthcare Recoveries attempts to recover money paid out in claims for health insurance companies they represent.  A personal injury plaintiff, with health insurance, will have their medical bills paid by their health insurance company post accident.  Healthcare Recoveries researches the accident and uses, right to recovery language in the fine print of the health insurance contracts, in an attempt to recover the money the plaintiff and her attorney, which they received from the negligent defendant.  This 1996 article details the early story of Healthcare Recoveries, it’s success, and growth.

Fast forward to 2015 and you can see where Healthcare Recoveries stands today. This article shows what Mr. McGinnis’s original idea has become today.  Reading these articles will help you understand why you, the new personal injury lawyer, may be receiving letters from Equian, which has a web page called “got-a-letter.”

Here are three important legal decisions that will help new personal injury lawyers begin to understand the world of personal injury liens.

1. The United States Supreme Court’s decision in Arkansas Department of Health and Social Services v. Ahlborn, 547 U.S. 268 (2006) (“Ahlborn”) provides a framework to determine what portion of a settlement, judgment, or award represents payment for medical expenses or medical care, provided to an injured individual by their insurance company.  The key question to determine is what is the appropriate reimbursement amount for the insurance company that Equian represents.

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2. The California Supreme Court in Fitch v. Select Products (2005) 36 Cal.4th 812, explains the effect of a pure wrongful death claim on MediCal’s attempt to assert a recovery against a wrongful death only recovery.  Fitch is a good case to read for its discussion of the types of damages that are available in a “survival action” survival action C.C.P. 377.62 and a wrongful death claim, C.C.P. 377.60.

3. Montanile v. Board of Trustees of Nat. Elevator Industry Health Benefit Plan (2016) 136 S.Ct. 651, introduces you to how the ERISA law applies to health insurance liens in the context of a personal injury recovery.  Montanile, involved a health insurance plan that was attempting to reach the plaintiff’s portion of a $500,000 settlement secured against a drunk driver defendant.

In Signup to Settlement: A Personal Injury Bootcamp, we help you understand how to learn to respond to letters from Equian and reduce the amount of Equian’s claim, which means your client gets more money in their pocket.