Q: How do you deal with a case that has a $50,000 policy limit and liens are in excess of $100,000?
A: Again, it depends upon the type of lien and the facts of the case.
Depending upon these factors and your client’s financial position irrespective of the primary case, there may be an opportunity to argue for a reduction of a lien amount on the grounds of financial hardship, “made whole” and other arguments. After a review of the plan docs or statutes, it could be that the insurance provider/lienholder is not entitled to any portion of recovery for past treatment.
However, there are cases where liens –specifically ERISA liens– have consumed the entirety of the proceeds, including the attorney fee (Trs. of the 1199SEIU Nat’lBen. Fund for Health & Human Serv. Emples. v. Cotto, 2020 U.S. Dist. LEXIS 178207, *17, 2020 WL 5763942, *6 (E.D.N.Y. Sept. 28, 2020).
The bottom line is you’ve got to fight for the plaintiff and indicate to the lienholder that there is no economic benefit of taking the policy limit if it is all going to go back to the lienholder.
Tell them that they either reduce the lien to an equitable figure or you will walk away from the case and they get nothing.
Since 2011, Precision Resolution has successfully reduced attorney exposure to compliance and lien issues while putting over $190 million back into the pockets of the plaintiff through successfully challenging and eliminating purported lien claims. With dedicated conditional payment, lien resolution, allocation, analysis, contract review, and research teams, all consisting of highly specialized attorneys, Precision can offer you and your client all available strategic alternatives to reach an agreeable and timely result. Reach out to us for a free consultation to see what we can do for you.
