Source: https://www.advocatemagazine.com/article/2018-december/medi-cal-lien-resolution
Timestamp: 2019-04-20 06:14:34+00:00

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If you practice personal-injury law in California, it is only a matter of time before you will have to deal with a Medi-Cal lien. Over 13 million people – one of every three Californians – are covered by Medi-Cal, the state’s health plan for low-income residents. While it is virtually impossible to avoid dealing with the Medi-Cal system, navigating the system can prove difficult and time consuming. If liens are not handled properly, settlement funds can be delayed for months and you can open yourself to complaints from your clients and possible State Bar discipline. This article provides an overview and practical tips for Medi-Cal lien resolution from intake through pre-trial settlement.
Medi-Cal benefits can be administered by entities such as Kaiser Permanente or Anthem Blue Cross, so even if your client states they have what sounds like private insurance, it may not be. You may not be able to determine whether a specific plan is a Medi-Cal plan without contacting the health-care plan. Ask the client to bring in their health-benefits card and make a copy front and back. You will want to contact the health plan immediately to determine the type of plan, whether Medi-Cal, Medicare Supplement, ERISA, or private. The type of plan will affect how you deal with the lien and advise your client.
In order to notify DHCS online, you must provide your name and email, your client’s name, date of birth, and Medi-Cal number, injury information, and Medical Payment coverage information in order to submit the New Case Notification form. Online forms are found at http:// www.dhcs.ca.gov/services/Pages/TPLRD_PI_OnlineForms.aspx. Be prepared when you sit down to complete the form – there is no “save draft” function and you are timed out of the system after 15 minutes. Before you click “submit,” save a copy of your form for your file. Once the form is submitted, you cannot go back to it. Only submit this form once because multiple submissions can delay the process. DHCS should send a Notice of Lien asserting its recovery rights within 30 days. Calendar this date! If you do not receive the notification, call DHCS and follow up. It is important to be proactive with Medi-Cal liens. You do not want to wait until settling a case to realize that the notification was never received.
If your client is still treating when you are preparing your demand for settlement, you will have to put together the medical expenses by ordering the billing directly from providers. Some third-party administrators can provide the billing, while others cannot. For example, you can obtain the Medi-Cal benefits provided from Kaiser but cannot obtain them through Partnership HealthPlan of California. You may also have to work with a different department or company to obtain Medi-Cal billing. For example, if the benefits are administered by Kaiser, you will not obtain the billing information from Equian, but rather through Kaiser’s third-party billing department.
Medi-Cal is entitled to recover from both third-party and uninsured/underinsured motorist policies and required by federal law to seek recovery of payments made. (Welf. & Inst. Code, § 14124.70, subd. (a), § 14124.71, subd. (a); 42 U.S.C. § 1396a(a)(25).) While DHCS usually asserts a lien, DHCS can institute legal proceedings to recover the reasonable value of benefits provided against the liable tortfeasor or insurance carrier directly. (Welf. & Inst. Code, § 14124.71.) Thus, even if a Medi-Cal recipient decides not to pursue an action against the liable party, DHCS can still obtain reimbursement for the benefits it extended.
Medi-Cal is only entitled to collect on treatment up to the date of settlement. (Welf. & Inst. Code, § 14127.785.) Unlike with Medicare, there is no provision for recovery for future medical treatment at this time. In the right case, this can prove important with regard to timing of treatment. If a surgery can be delayed until after settlement, that amount will not be included in the lien amount. You will want to confirm that your client will still be eligible for Medi-Cal benefits at the time of the treatment. On the other hand, if no further treatment will be required and thus, Medi-Cal will not be spending additional funds on the injury, remind them of this fact, especially if pursuing a reduction under section 14124.76.
In our previous example, if settlement was in the amount of $15,000 instead of $50,000, attorneys’ fees would be $4,500, and the amount due to the client would be $10,300. DHCS would be entitled to no more than 50 percent of this amount, or $5,150. It is important to run both the 25 percent and 50 percent calculations to ensure the correct reduction is applied.
In 2013, Congress approved the Budget Act of 2013, (The Bipartisan Budget Act of 2013, Pub.L. 113-67, 2013 H.J.Res 59.) which included language overturning Ahlborn and permitting states to assert a Medicaid lien for the full amount of benefits paid without regard to other damages or comparative fault. States were supposed to pass legislation enacting these changes. However, on February 9, 2018, Congress passed and President Trump signed into law the 2018 Budget Act, (The Bipartisan Budget Act of 2018, Pub.L. 115-123, 2018 H.J.Res 1892.) which repeals the scope of state Medicaid lien expansion. (The Bipartisan Budget Act of 2018, Pub.L. 115-123, 2018 H.J.Res 1892., §53102.) In effect, this change makes Ahlborn the law of the land again and limits Medicaid recovery to the portion of a settlement that represents paid medical expenses.
In Aguilera, DHCS submitted a declaration by a collection representative stating that the plaintiff’s future care would be covered by Medi-Cal. The court found this evidence lacking because “nothing in her declaration suggested any expertise with regard to past or future benefit eligibility or benefit determinations,” and “[she] cited no statutes or regulations requiring that Medi–Cal pay for all her health care needs, showing that Medi-Cal paid for these expenses in the past or that it is reasonably probable Medi-Cal will pay all of these expenses in the future.” You should be prepared to deal with an argument from DHCS that future medical expenses are excluded from your client’s overall damages.
Once the value of overall damages is established, the settlement amount is compared to the overall damages to obtain the Ahlborn ratio and applied to DHCS’s lien. The lien amount should then be further reduced pursuant to 14124.72, subd. (d) for attorneys’ fees and costs.
You must protect Medi-Cal’s lien. Attorneys risk personal liability and State Bar discipline if they settle around or purposely disregard known valid liens. (See Sanford v. Rasnick, (2016) 246 Cal.App.4th 1121, 1131.) DHCS will require a copy of the settlement agreement, attorney fees and itemized litigation costs before reducing its lien, so it is best to provide the documents and information as soon as you are able. Settlement information can be submitted online.
A settling third party and their insurance carrier are liable to Medi-Cal directly. (Welf. & Inst. Code, § 14124.71.) As a result, you may encounter an insurance company that refuses to accept a hold-harmless clause in the settlement agreement or release and insists on including DHCS as a payee on the check. A check made payable to the Medi-Cal beneficiary and DHCS can be submitted to DHCS along with a Letter of Guarantee (Form 4204), available on the DHCS website. This does not prevent further negotiation or lien reductions. It can take up to 60 days to obtain the endorsement, but the turnaround is often much quicker.
Full payment of the lien is due when the case settles. Payment can be made online by Electronic Fund Transfer (EFT) or by mailing a check payable to Department of Health Care Services. The DHCS account number must be provided to ensure proper posting.
A client may lose eligibility for Medi-Cal depending on the settlement size and how the settlement is distributed. This is beyond the scope of this article, but you should discuss this with the client early on and consider different options to protect their eligibility, including a special-needs trust.

References: § 14124
 § 14124
 § 1396
 § 14124
 § 14127
 §53102
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 § 14124