Dirk Derrick (00:00):
Welcome to The Legal Truth, the podcast created to provide you general legal information about South Carolina law, lawyers, and the legal process, and hopefully prevent you from being surprised by the unexpected.
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We will answer many of the questions I've been asked during the past 35 years about South Carolina personal injury claims and workers' compensation claims. We will also discuss existing laws and proposed changes in the law and how they affect you. My name is Dirk Derrick. I'm the founder of the Derrick Law Firm and I'm your host.
Voiceover (00:35):
Please see required ethics disclaimers in show notes.
Pearl Carey (00:41):
Hi everyone and welcome back to The Legal Truth Podcast. Today, we're discussing the truth about the impact of medical liens on a personal injury case. And I'm here with my co-host, Dirk Derrick. Thank you for being here with me.
Dirk Derrick (00:53):
Glad to be here.
Pearl Carey (00:53):
And my first question for you is, what is a medical lien?
Dirk Derrick (00:57):
A medical lien is a right for someone who paid for some medical bills in a claim to be reimbursed. Medical lien is kind of like, it affects what goes to the client at the end of the day. It doesn't affect what you collect, but it affects what the client can end up with at the end of the day. It's like my daddy used to say, "No matter how much money you bring in the front door, it's how much money is going out the back door."
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In South Carolina, if you have a claim, if somebody pays for your medical bills, they usually have a right to subrogate or get paid back some of their money. So, you have medical on liens from health insurance, Medicare, anybody who pays your bills and each of them are different by how much you have to pay them back. They all have a right of subrogation that we pay back out of the proceeds of the recovery.
Pearl Carey (01:42):
And how does a Medicare lien work?
Dirk Derrick (01:44):
Basically, they pay a bill. The laws say they are secondary to whoever calls the need for the bill. Often, Medicare will pay a lien, and when the case is over we have to pay them back. And you have to let them know, acknowledge there's a lien, acknowledge that Medicare has paid some of these bills, request them to give you a statement of what they think is related to this incident.
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If it contains things that are not related, you send back a request, so something to be taken off their list. And then when the case is over, you'll request a reduction in what you have to pay them back. They usually reduce the attorney fee rate that you're charging the client and a share of the cost that's been incurred in getting reimbursed.
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So it's basically, at that point in time, you're representing your client but you're also doing legal work for Medicare because you're recovering money for the government that they need help in recovering. So, they will reduce what your client has to pay by fees and costs.
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In the real world what happens, you have a medical bill, Medicare may pay a portion of it and the hospital has to write off a portion of it. At the end of the case, you have to pay Medicare back a portion of the portion they pay. So, in the long run, it helps our clients 'cause it reduces the amount of bills they have to pay in recovery.
Pearl Carey (03:01):
And how does Medicare apply to UM and UIM settlements?
Dirk Derrick (03:04):
Same thing. Medicare is a federal regulated plan, so they have liens against liability coverage, UM, UIM, no fault. If they've paid anything, you need to get straight with them before you start paying out any money, no matter what the coverage.
Pearl Carey (03:19):
What about South Carolina Medicaid?
Dirk Derrick (03:21):
They have a subrogation right too by statute. You have to pay them back. Again, somebody has Medicaid, there's a bill, Medicaid pays, they'll pay a portion, then you got to pay them back a portion of what they paid. They usually reduce their liens by about 25% to account for the attorney recovering that money for them.
Pearl Carey (03:37):
That makes sense. And so, are medical liens negotiable?
Dirk Derrick (03:40):
Yes. Medicaid will reduce a certain level. Health insurance has it reduced at a certain level. Under South Carolina law, if health insurance has this huge lien against your case, and you can do the same thing with Medicare, if they've got a huge lien, there's only so much coverage.
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And that coverage is to pay medical bills, pain and suffering, loss of enjoyment of life, future medicals and all that. Not just medical bills. And if the medical lien is higher than all your coverages, you can address it to get them to reduce it because it's not fair for your client. Client’s getting nothing, because if you had to pay back all the lien, they wouldn't get anything.
Pearl Carey (04:20):
Nothing's left.
Dirk Derrick (04:20):
So, you can request reductions with Medicare. Same thing with health insurance companies, you request it and they will usually work with it. They usually will reduce it to where they're getting a portion of a third of.
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If they don't, if they played hardball, you can go through the South Carolina Department of Insurance and try to get it reduced. Hardest group to work with probably is an ERISA plan. ERISA is a health plan that you'll get through your employer. Like at the Derrick Law Firm, we have a plan that gives you disability and 401k and health insurance, we would be an ERISA plan.
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An ERISA plan would have a plan and a plan summary. And if that plan says that they're entitled to reimbursement for anything, they pay for medical bills no matter where it comes from or no matter what the outcome is, they're harder to negotiate with. There's some ways to negotiate with them, but they are harder to deal with because of how the plan is written up often.
Pearl Carey (05:18):
So what are the current minimum auto limits and why do they matter for liens?
Dirk Derrick (05:22):
Well, right now, in South Carolina it's 25/50 and that means 25,000 per person, 50 per accident. So, you’ve got to have insurance in South Carolina to drive on the roads. The minimum limits is 25/50. And what that means is if you're driving down the road and you've got minimum limits and you hit a car load of people, the most you have to pay, your limits have to pay, is 25,000 per person, no matter how bad they are.
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So, let's say someone's got $100,000 worth of medical bills because of it, and the other three people got 5,000, so you got somebody really hurt and then three people are not hurt real bad. With 25/50, the most that has to be paid to the one that's got bad injuries is $25,000, no matter how bad the injuries are. And the other three could make claims against the other 25, because the most that insurance company has to pay with this accident is $50,000.
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So when we evaluate cases, you look at liability, whose fault it was, whether or not there's any recklessness. You look at the damages. But the third leg of that stool that we talk about, three-legged stool, is collectability. So what's the insurance coverage? Most people are judgment-proof. So most of the time, insurance is all you're going to get. So you look at the liability policy and if it's 25/50, you can't get blood out of a turnip, and sometimes you can run out of insurance when your claim's worth a lot more.
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So what we do in our process is we're investigating the insurance coverage. You have to look at what's the coverage on the car? Was the person who owned that car driving or was maybe somebody else driving? If somebody else is driving, you can look at the driver's insurance on their own car.Was the person working at the time, it may be covered by an employer's insurance policy.
Pearl Carey (07:03):
You could stack those coverages, too. Right?
Dirk Derrick (07:05):
Yeah, you can. The liability's not stacked, but yeah, you can get off the car they was driving and then if there's an excess, or if the employer is liable for them, you can look at that liability policy. Also, look at umbrella policy going up the line. Most umbrella policies require that they have at least 250 on their individual policy. So if you see a 200, 300 policy, you always check in to see if they got umbrella coverage on top of it, and that's just another liability policy to cover if you eat up the first coverage.
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So the amount of coverage is important because between the liability and any underinsured motorist coverage that our client may have on their cars, most of the time that's on the limit of what you can recover. So if you have a medical lien against the case, they're limited by the same thing. So if you’ve got 25/50 and no UIM coverage, and no excess liability, and 25,000 per person is all there is, and a health insurance or Medicare is paid $300,000 worth of medical bills, they've got to reduce.
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We don't have a $25,000 to collect. And that's when you'd have to go to them and say, "Hey, I only have $25,000. They’ve got these terrible injuries, they’ve got these future limitations, they’ve got this permanent injury, will you waive it or at least reduce it drastically 'cause of this limitation of funds?"
Pearl Carey (08:24):
Can a hospital file a lien against my settlement in South Carolina?
Dirk Derrick (08:28):
There's not a lien statute like in some states. North Carolina has a lien statute where they have a lien against your proceeds, but they do have assignments. If you go to a hospital, you'll sign something called the right for them to give you a treatment. A lot of times, one of the things you're initialing in that document is giving them a lien or an assignment of your right to recover against third parties for the amount they pay.
(08:53):
So basically, you're assigning them the right to collect money for the medical bills they're incurring in treating you. So, if they put us on notice of that lien, or if a health insurance company has a lien because of a contract, once they put us on notice of those liens or assignments, then we have to pay them or reach an agreement with them before we can pay the money out.
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So, there's no formal lien statute, but once your lawyer's put on notice of an assignment, we cannot pay your money out until we deal with that assignment. From an ethical standpoint, from a legal standpoint, we've been put on notice that you've given somebody a right to collect this money. Once we know that you and this other person have a claim for this money, we can't pay it out.
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What happens is we get these assignments, we look at them. If they're valid, they can either be valid, signed by you, the person who incurred it. Sometimes the hospitals in the past have gotten cousins and friends to sign it. That's not a proper assignment. Let's say it is a proper assignment. We contact the hospital and say, "If we have unlimited insurance and got this great award, we can give them their money back minus percentage for the fees for their attorney to go get the money for." I wouldn't geta lot of the money back.
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If there's limited money, we will negotiate with them. They will usually take their pro rata share, a third of the recovery, recognizing that you got attorney fees and some money for the client. So those are usually negotiated and taken care of it. There's not a formal lien. There's something we have to deal with. The other situation is when a hospital sends you an assignment and it's not valid, it's signed by a cousin or a friend.
Pearl Carey (10:26):
How is that legal?
Dirk Derrick (10:28):
Well, it's not legal, but unless you're unconscious or out of it for a long time, then a next of kin could do it. But in those situations, somebody's in the ER, an assignment signed by a friend or somebody other than you doesn't apply. But then, understand that you still owe that hospital the money. They can still sue you and get a judgment against you for that money. So we still tell our client they don't have a valid assignment that I have to hold money out and give it to them, but understand if I don't, they can sue you and get a judgment against you.
(10:59):
What I can do, if you want me to, I can negotiate with them and get them to take a small portion or a portion of the recovery for their pro rata share of one third of the total recovery and pay your bill in total, and it's gone. You don't have to worry about them suing you, but I can't make you do that. You tell me what you want to do. If you say, "Give me my money, Dirk," I've got to give you the money and not pay the hospital anything.
(11:21):
Our fiduciary duty is to our client and our fiduciary duty is to explain the law and whether or not that's a valid assignment. My fiduciary duty does not allow me to pretend I'm their parent and tell them, "You should pay that," or, "You should do that." It's up to the client. But we just explain that if they don't pay it, that they could be sued.
Pearl Carey (11:41):
So what would you say in conclusion are the top three lien mistakes clients can make?
Dirk Derrick (11:46):
Well, three mistakes number one is not looking into whether somebody has a lien in the first place, and not crossing the T's and dotting the I's with Medicare and Medicaid and health insurance. Find out who's paid on this claim. That's the first mistake, not knowing.
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Number two would be, some situations you need to separate what you have recovered from the third party. What part of it's been recovered for past medical bills versus what's been covered for pain and suffering, loss of enjoyment of life and future stuff. So, if you make that allocation, you can negotiate with some lien holders based on what portion of the recovery is actually for medical bills. Try to reduce the liability or the amount you have to pay back.
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The third is just somebody's put you on notice of an assignment, or they have paid these bills and you know they have a lien by a matter of law and you ignore that. So, just understand that part of our job when we're hired is to identify all these liens, make sure we got them, who you owe money to legally out of the proceeds.
Pearl Carey (12:52):
As it pertains to medical liens, is there anything else that you'd like to add for the general public to know?
Dirk Derrick (12:57):
Something that the general public may find interesting is that you will never hear about any of this in a courtroom. The jury never hears who's paid what. It is actually inadmissible for a jury if the driver has insurance, if there's any auto insurance, if there's any health insurance, if it's Medicare, if there's Medicaid, you'll hear none of that.
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You decide the case as far as whether or not the defendant is negligent, and what he or she should have to pay the plaintiff from the facts of the case, but not based on whether or not they have insurance to pay it.
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You decide the actual damages and how much the case is worth based on the harms and losses and the total medical bills, not on whether or not some third party has paid it. All this lien assignment talk all occurs behind the scenes and the jury never sees it.
Pearl Carey (13:44):
That's wild. I didn't know that. Well, thank you so much, Dirk, for joining me on this episode of The Legal Truth. And thank you so much to our listeners for tuning in, and we hope to see you next time on our next episode.
Voiceover (14:01):
Thank you for joining us on The Legal Truth Podcast. If you have questions that you would like answered on a future episode, please send them to thelegaltruth@derricklawfirm.com. If you would like to speak to us directly, call us at 843-248-7486. If you find the podcast valuable, please leave us a five-star review and share The Legal Truth with your neighbor, friend, or family member who is seeking reliable information about a South Carolina personal injury or workers' compensation claim.
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Dirk J. Derrick of The Derrick Law Firm Injury Lawyers is responsible for the production of this podcast, located at 901 North Main Street, Conway, South Carolina. Derrick Law Firm Injury Lawyers has included the information on this podcast as a service to the general public. The use of this podcast and any related materials does not in any manner constitute an attorney-client relationship between Derrick Law Firm Injury Lawyers and the user.
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While the information on this podcast is about legal issues, it is not intended as legal advice and should not be used as a substitute for competent legal advice from a licensed professional attorney in your particular state. Anyone seeking specific legal advice or assistance should retain an attorney. Any prior results mentioned do not guarantee a similar outcome. The content reflects the personal views and opinions of the participants in the podcast and are not intended as endorsements of any views or products.
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This podcast could contain inaccuracies. The information contained in this podcast does not constitute legal advice, and is not guaranteed to be correct, complete, or up-to-date as laws continue to change. In this podcast, you'll hear information about focus groups. Please note that not all of the firm's cases are presented to a focus group. Additionally, when speaking about juries or jurors in relation to a focus group, we are speaking of focus group participants and not actual trial juries or jurors.
