Medical Liens and What They Mean – Part I

Posted on January 27, 2012 by Scott

Clients are not happy to hear that money their health insurance company paid for treatment of accident related injuries must be paid back to the insurance company out of their settlement.  However, more and more insurers are aggressively seeking to recover medical expenses through health care liens in Pennsylvania.

The tangled web of medical expense reimbursement is enough to send lawyers to full-day seminars which may still leave them with more questions than answers.  In the next couple of blogs, I will try to give a layman’s overview of key points so that when a client hears “lien” related to his or her accident lawsuit, the client will understand that the attorney is simply complying with the law.

A lien is simply a right of one party to be paid back out of money received by another party.  Liens may arise for a variety of reasons from civil judgments to unpaid taxes.  Most people are more familiar with liens placed on property which are collected when the property is sold.  However, money a health insurer pays for medical treatment may become a lien against money the accident victim receives from the defendant through a lawsuit.

The right to recover medical expenses breaks down into two categories:  automobile accidents and everything else.  In any accident other than an automobile accident, your insurance company will always have the right to recover money it paid on your behalf.  It may try to recover the money directly from the defendant (what we lawyers call “subrogation”) or it may have a right to get the money from your settlement (a “lien”) depending on the language in the insurance policy.  But they always have a right to get the money back from someone.

With automobile accidents, however, automobile insurance companies are prohibited by law from recovering medical expenses paid because of an accident (a good reason to carry as high a medical expense benefit on your automobile policy as you can afford!).  If your accident treatment is significant enough to exhaust your automobile insurance benefits, then your health insurance kicks in.  This is where it gets interesting.

In Pennsylvania, the courts have held that HMOs and certain employer provided health plans have the right to recover money paid on behalf of an accident victim.  Therefore, expect your lawyer to ask you about your health insurance.  Your lawyer must investigate the health insurer’s right to enforce a lien.  If a lien is enforceable, the attorney must keep track of the current amount of a lien and include it in any settlement discussions.  The attorney must review the lien to make sure it includes only expenses for medical treatment and not fees for examinations requested by the insurance company or administrative expenses.  The attorney must also determine whether the insurance company will pay a fair share of the attorney fee and legal expenses.  Some insurance companies insist on receiving 100% reimbursement leaving the client to pay the full fee or forcing the lawyer to work for free for the insurance company to keep the client happy.  In those circumstances, the lawyer may tell the insurance company to go hire its own attorney.  Yet, the lien must still  be considered because the defendant is unlikely to settle with a claim for medical expenses still unresolved.  All these factors unfortunately go into the calculus of what money the client will ultimately receive and often increase the length of time it takes the lawyer to settle a case. 

Sound confusing?  Your attorney isn’t any happier than you are, but better you both know the calculus at the beginning of the case than have an unexpected claim for medical expenses arise after the case has settled.  Your settlement will not extinguish the insurance company’s rights and they will come after you.

In the next blog, I will cover Medicare liens which add yet another level of complexity for a lawyer trying to settle an accident case.

Law Offices of Scott I. Fegley, P.C.
301 Oxford Valley Rd, Suite 402 A Yardley, PA, 19067-7710 USA 
 • (215) 493-8287
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Ouch!# You’ve Had An Accident!

Posted on January 24, 2012 by Scott

Read the text of our most recent client newsletter and download the Personal Injury Preparedness Checklist from the clipboard to the right.  2012 Jan E-Newsletter

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Criminals Now More Employable In Philadelphia

Posted on January 14, 2012 by Scott

A Philadelphia city ordinance took effect last week which now prohibits employers from inquiring about a job applicant’s criminal record in a job application or a first interview.  A violation may result in a $2,000.00 fine.  Philadelphia’s ordinance follows similar laws in a minority of states like Massachusetts and California.  The law is designed to prevent employers from using a criminal record as a litmus test to eliminate applicants who answer truthfully without ever considering their skills. 

Supporters of the law argue if persons with criminal records cannot find employment, they will be more likely to return to crime.  Employers are allowed to inquire about a criminal record in a second interview and conduct a criminal background check upon a conditional offer of employment. 

I have mixed feelings about this ordinance.  While I am not aware of any formal study, in a time when jobs are few and applicants are many, it is probably not far from the truth to say that many employers will immediately reject an applicant with a criminal record.  But will employers be any less likely to reject an applicant when the criminal record is divulged in a second interview?  Is an employer any less likely to terminate an employee who failed to disclose a criminal record during the hiring process just because the employee has demonstrated himself or herself to be a hard worker for a period of time?

I do believe in second chances.  One mistake should not become a scarlet letter precluding an individual from gainful employment.  As in most hiring decisions, whether the candidate is employable depends on a variety of factors.  Certainly, the seriousness of the offense must be taken into consideration as well as whether the candidate is a repeat offender.  But legislation to force an employer to wait until later on in the hiring process to make these judgments strikes me as wishful thinking.  An employer who will use a criminal record as a litmus test is just as likely to use it after a second interview.  A law is not going to change the mentality of the decision maker and, certainly, no one is advocating that an employer should be prohibited from considering a job applicant’s criminal record altogether.  (For the horror such a prohibition might produce, just imagine a convicted pedophile applying for a position working with youths.). 

I suppose the Philadelphia lawmakers’ hearts are in the right place, but I am skeptical as to whether the hiring of persons with criminal records will significantly increase.  Then again, with the number of former Philadelphia officials and employees behind bars or under investigation, maybe the lawmakers are more concerned about helping their friends find new employment?

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PA Unemployment Benefits Changes Coming in January

Posted on December 23, 2011 by Scott

Important new changes to Pennsylvania unemployment compensation law will take effect January 1, 2012.  Perhaps the most significant change affects persons who are terminated and receive severance pay.  Currently, severance pay is not taken into consideration in eligibility decisions for unemployment benefits.  This has resulted in some individuals receiving more overall compensation while unemployed than when they were working.  The most infamous example was the recent award of unemployment benefits to Arlene Ackerman after she received a $900,000.00 severance from the City of Philadelphia.  Under the new law, however, severance pay will be offset against unemployment benefits to the extent it exceeds 40% of the state average annual wage.  Consequently, persons with generous severance packages may be precluded from receiving any unemployment benefits unless they are still unemployed when the severance pay runs out.

The change in the unemployment law regarding severance pay will also have the unfortunate effect of making it more difficult to resolve employment disputes.  Plaintiffs were willing to accept less cash from employers and employers were willing to include a promise not to contest unemployment eligibility in a settlement agreement knowing that government money was a part of the package providing economic security for the harmed employee.  Now employees will have to get their full pound of flesh from the employer.  The expense to employers for settling will be higher and settlements in employment lawsuits are likely to decrease as a result of the change in unemployment law.

Another important change requires benefit recipients to actively search for new employment and provide an accounting of their efforts to the unemployment office.  A failure to actively search for work may result in a termination of benefits.  Anyone intending to take an extended vacation until their benefits run out will now do so at their own risk.

Other changes include expanded availability of testifying by telephone for appeal hearings and the creation of a “shared work program.”  The shared work program will allow employers to apply to the Department of Labor for approval of a shared work plan.  Under an approved plan, the employer can reduce the hours of all employees in a unit or department instead of laying off some workers.  Each affected employee would then be entitled to receive “shared work benefits” from unemployment compensation for the percentage of their weekly benefit rate equal to the percentage by which their hours have been reduced. 

Did you know Pennsylvania has been unable to pay back loans to the federal government to cover unemployment benefits to its residents?  Because of the irresponsibility of our state government, PA employers will now pay three percent (3%) more in unemployment taxes as a penalty for the State’s failure to make good on the loans.

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Should Arlene Ackerman Receive Unemployment Benefits?

Posted on December 14, 2011 by Scott

From a viewpoint of fairness and the amazing self-interest displayed by a former public servant supposedly dedicated to the education of children, Arlene Ackerman’s decision to seek state unemployment benefits after receiving a $900,000.00 severance package leaves one wondering whether there is anyone left in the Philadelphia School District who is not looking out for themselves.  Yet, from a legal viewpoint, there is nothing improper with Ms. Ackerman’s request.  The fault must lie with the attorney for the City of Philadelphia who negotiated the severance agreement and did not preclude Ms. Ackerman from claiming any further benefits on top of the generous severance.

An employment severance agreement is simply a contract.  The parties are free to negotiate the terms and conditions and enter into a bargain they find mutually acceptable.  Typically, the employee gives up the right to sue the employer for any reason in exchange for compensation which may include money, extended healthcare benefits, retraining, and whatever else the employee’s attorney is skillful enough to wrangle for the client. 

Until a new law known as Act 6 of 2011 takes effect in Pennsylvania on January 1, 2012, it has been perfectly legal for employees to negotiate severance packages in which they reserved the right to apply for unemployment benefits and the employer agreed not to contest.  In these circumstances, the employee often received more money for the duration of the severance period than if the person remained employed.  In Ms. Ackerman’s case, her departure from the Philadelphia School District does not appear to have been strictly voluntary.  One’s acceptance of a severance package in lieu of termination does not turn a firing into a voluntary quit under the unemployment laws.  Accordingly, she may well qualify for the maximum amount of unemployment benefits given her six figure salary.  Having paid unemployment taxes to the State of Pennsylvania during her employment, one can also argue she is simply taking back what she already put in.

Starting in January 2012, someone who becomes unemployed and receives a severance package will now have the severance pay deducted from their unemployment benefits “to the extent the severance pay exceeds forty percent (40%) of the state average annual wage.”  In Ms. Ackerman’s case, it is unlikely she would have been eligible for unemployment benefits under the new law.

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Should Doctors’ Apologies Be Protected?

Posted on November 16, 2011 by Scott

Recently, the Philadelphia Inquirer reported a story involving the tragic death of a premature infant at Abington Hospital.  The doctors met with the parents afterwards and admitted a mistake during a cardiac catheterization which caused the baby’s death.  In the lawsuit that followed, the hospital’s lawyers moved to preclude the doctors’ statements made during the meeting with the parents, obviously key evidence for the parents’ lawyers in establishing liability.  The case eventually settled leaving the issue unresolved, but doctors’ lobbyists are seeking legislation to make apologies and statements made during explanatory meetings with patients and next of kin after a mistake inadmissible in court.  Doctors’ advocates argue it is necessary to make the practice of medicine more transparent.

As an attorney who has litigated and settled many cases, I believe that an early apology by the defendant and an effort to arrive at a fair resolution with the plaintiff instead of launching into litigation will achieve a quicker, less costly outcome both in dollars paid to the plaintiff and for defense.   But something is taken away from the sincerity of an apology and admission of fault when the doctors know that their words will never see the light of a courtroom and the skill of their defense attorneys can still be used to bludgeon the plaintiff into accepting less rather than risk going to trial in an era when defense verdicts are prevalent and juries are giving doctors the benefit of the doubt.  I see it every month in the reports of verdicts here in Bucks County. 

In my view, an apology should be just that.  A secret is not an apology.  Like fresh air in a stale room, it is needed to heal.

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Best Employment Practices Only As Good As The Management

Posted on November 11, 2011 by Scott

In the tragedy unfolding at Penn State, one has to believe the University had written employment policies for reporting inappropriate behavior by staff, whether directed toward co-workers or otherwise.  Yet, the scandal is just one more example of how a culture of secrecy and privilege perpetuated from the top of an organization down will render useless the best intentioned of policies.  Think the hierarchy of the Catholic Church.  Think Carl Greene and the Philadelphia Public Housing Authority.  When a high-ranking official, be it a coach, a cleric or a corporate executive, engages in illegal or immoral activity, it takes a bold person indeed to be willing to risk one’s career, name and community standing to blow the whistle.  Yet, unless an organization provides a truly independent body to whom conscientious persons can report serious allegations, few subordinates will  be courageous enough to call out a leadership that is part of the problem.

Regular training is critical to eliminating the culture of secrecy.  One wonders how many seminars on sexual harassment/misconduct prevention Penn State’s coaches attended?  All managerial personnel should be trained at least annually on anti-harrassment, anti-discrimination and codes of conduct and informed in no uncertain terms that their jobs are on the line, as well as the perpetrator’s, for failing to report the harmful conduct.  The training should reflect the organization’s commitment to preventing misconduct, and not be treated casually or derisively by managers.  Since there are often few witnesses to incidents of sexual misconduct, the victim or complainant may find themselves pitting their credibility against a highly regarded official or executive with powerful friends.  Only by assuring employees that allegations made in good faith will be taken seriously and investigated by persons without connections to the alleged perpetrator, and further that they will be protected from retaliation, will employees be emboldened to speak up.

In the end, the organization will suffer greatly for the failure of leadership.  The organization can be vicariously liable for its leaders’ personal misconduct, in the case of Penn State perhaps in the tens of millions of dollars.  Any organization, large or small, public, private or non-profit, would do well to heed the severe lessons of Penn State and the Philadelphia Housing Authority and examine their own culture before it is too late.

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Winter Already? Avoiding Ice and Snow Liability

Posted on November 1, 2011 by Scott

As if a hurricane and tropical storm back to back in September weren’t enough, Mother Nature turned Halloween into her own trick with a serious blast of ice and snow in Bucks County and elsewhere.  In Yardley, PA, rain, sleet, snow and then sleet again made for hazardous walking and driving conditions.  My wife and I had to consider cancelling our childrens’ Halloween party out of concern for the guests’ safety.  So what should you think about when a winter storm disrupts your plans?

Homeowners and businesses are not responsible for accidents caused by naturally occurring weather conditions.  Under Pennsylvania’s common law “hills and ridges” doctrine, liability can occur only if (1) the landowner altered a naturally occurring condition and made it more hazardous (for example, plowed or shoveled snow so it blocked a sidewalk) or (2) failed to take reasonable steps to remove the ice and snow accumulation within a reaonable time after bad weather ends.  What is a reasonable time depends on many factors.  It may not be the same for a commercial business as a private homeowner and it will depend on whether two inches of snow fell or ten.  If you own a business and are responsible for the ice and snow removal, you will be held to a higher standard because higher traffic is expected for businesses.

What of my childrens’ Halloween Party?  I couldn’t bear to break their little hearts so I called the parents of their guests and offered to come pick up their children in my 4-wheel drive SUV if they felt uncomfortable driving.  No one took me up on my offer so the parents who came assumed the risk.  (Only a lawyer thinks of this stuff, right?  You may not want to make such an offer and simply play it safest by cancelling a party, but that is up to you.).  I made sure I had a clear path up our driveway to the front door shovelled and salted before guests arrived.  By advising your guests to make the choice to attend in bad weather themselves, you are effectively giving them a warning and an out.  By making sure there is as clear a path as possible from their car to your door, you have done everything you can to provide for their safety.  Fun doesn’t always have to be cancelled in bad weather and a common sense approach can protect you and keep you and your kids happy!

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Is Your Insurance Company Causing A Hassle After The Flood?

Posted on September 20, 2011 by Scott

The record rains of Hurricane Irene and the remnants of the tropical storm that followed a week later left tens of thousands with water in their basements (including yours truly).  Others like those living along the Delaware River in Yardley and Morrisville, PA or those living along major streams like the Neshaminy in Langhorne experienced far more devastating damage from the flood waters.  Unfortunately, many homeowners with standard insurance policies will not be covered for these losses.  Flood insurance is typically provided through a separate policy under Federal Emergency Management Association (FEMA) guidelines and is only available to persons living in designated flood areas.  Even a wet basement will not be covered unless the homeowner purchased a separate rider for overflow of sumps.

If you did have the foresight to purchase the insurance, then your insurance company owes you a duty of good faith to settle your claim quickly and fairly.  Covered costs should include steps taken to mitigate or prevent further loss, for example, hiring a remediation company to remove soaked wallboard and carpets before mold forms.  Hopefully, you photographed the water damage before, during and after any remediation and kept receipts for all expenses incurred.  Your insurance company may ask for proof of the damage and receipts to substantiate your claim.

If the insurance company fails to respond, repeatedly asks for resubmissions or otherwise causes unreasonable delay, or denies all or part of a claim without a reasonable basis, the insurance company may be liable to the homeowner for “bad faith.”  “Bad faith” is defined as the unreasonable refusal to pay the proceeds of an insurance policy.  Damages for “bad faith” may include the policy proceeds denied, additional damages caused by failure to pay the proceeds (for example, money spent on lodging where the homeowner could not complete repairs and live in the home), attorney fees, and even punitive damages in egregious cases. 

If your insurance company is holding out on your claim, attorney review of your insurance policy and the insurer’s conduct will educate you on the merits of your claim and a letter from the attorney may very well expedite resolution.  DO NOT simply settle for the insurance company’s first offer (unless, of course, it is for the policy limits).  I guarantee you they will not willingly offer you full compensation for your damages on the first request.

Of course, the best way to be prepared for a natural disaster is to know what your policy provides before the disaster occurs.  Consult your agent and increase your coverage if necessary.  Being informed of what is and is not covered, and how to present and prove your claim to the insurance company, will save you time and money once the waters recede.

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Livengrin Foundation 45th Anniversary Gala

Posted on July 27, 2011 by Scott

I have the pleasure of serving on the Board of Livengrin Foundation in Bensalem, Bucks County, PA.  Anyone who has unfortunately been arrested for DUI or underage drinking in Lower Bucks will be familiar with Livengrin as the place they went for court ordered evaluations and alcohol awareness classes.  However, I often encounter people, even area residents, who are unfamiliar with the difference Livengrin has made in the lives of people struggling to overcome alcoholism and addiction. 

Alcohol and drug dependency is a disease recognized within our legal system as a disability for which its victims are entitled to protection from discrimination and a reasonable accommodation in employment to enable them to get their lives back together.  For people suffering from alcoholism or addiction, a leave of absence to attend a treatment program at Livengrin may be the accommodation the individual needs to break the downward spiral and become sober. 

Livengrin is now in its 45th year of providing services to people afflicted with alcoholism and addiction.  Every year, it hosts a “Ride for Recovery” in which hundreds who have been through its doors gather to celebrate the fresh start Livengrin has given them.  On September 22, 2011, Livengrin will also be celebrating its 45th anniversary at a Gala dinner to be held at the Crystal Tea Room in the Wanamaker Building.  The evening will feature the antics of comedian Richard Lewis and will include, of course, an exceptional meal.  While the evening will be filled with celebration and laughs, it is nevertheless for a serious purpose . . . to make sure Livengrin can continue saving lives.  Individual tickets are only $135.00.  A Phillies game will cost you that much, more if you take the kids.  Bring your significant other and the bill is only $250.00.  Tickets can be ordered online through www.livengrin.org. 

In my 23 years of practice, I have represented clients who have suffered from alcoholism and addiction.  I have seen them struggle to hold jobs or maintain businesses as well as witnessed the impact their disease has on their families.  Livengrin is a light at the end of the tunnel for these individuals.  Please join me in supporting Livengrin and its work by attending the Gala dinner on September 22, 2011.

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