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Law Blog

Supreme Court interjects some clarity in right to proceeds

March 23, 2013

Many people who have been injured are surprised to learn their health insurance companies, Medicare, Medicaid and TennCare (State administered Medicaid) can legally claim ownership to much of the settlement or trial proceeds that were intended to compensate victims of negligence.  State laws have been passed to entitle them to do this.

Lawyers and their clients can be personally sued if they fail to satisfy these liens and those who received Medicare or Medicaid can lose those benefits altogehter.  How these liens are satisifed has long been a big headache to lawyers, courts and injured people because the law has not provided enough clarity on how to do so.  Resolution of these liens can substantially deplete compensation to victims of negligence who are not made whole.  This occurs because many States enacted laws that dictate State-administered programs are automatically entitled to a certain portion of settlement or judgment proceeds without consideration regardless of the circumtances of each individual situation.

This past week, the United States Supreme Court issued an opinion styled Wos v. E.M.A., 468 U.S.__(2013) that holds a state lien law cannot arbitrarily designate the state can recover a fixed amount of the settlement.  It can only recover the amount of the settlement that is "designated as payments for medical care."   If injured person was compensated for and can prove compensation for things other than past medical care, the liens cannot reach these proceeds.  

This is a minor victory for injured people who live in states where these similar lien laws exist and should provide some clarity to a dysfunctional system.

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