New Rules for Medicaid Liens in Maryland

Medicaid is tough to deal with when they have a subrogation lien against your case. With some wonderful exceptions, they are often inflexible about reducing your clients’ lien, which is to say that they won’t unless the lien is greater than 50% of the net recovery to the client after attorney’s fees. But since you don’t know who will handle your request, you really have no idea how it will play out.

New and easier rules might be on tap for reducing Medicaid liens in Maryland. The Maryland Register has posted new regulations that would allow for the following:

• Let the jury make the call on how much of the overall award is attributable to medical expenses. This is a big deal because Medicaid should not be getting a piece of the overall recovery but only the medical cost that were attributable to the accident.
• Requires Medicaid timing requirements to be consistent with Health-General Article, §15-120,
  Annotated Code of Maryland which provides for, among other things, hardship waivers on liens in all cases, including wrongful death claims. (Not for nothing, this law also holds the plaintiff’s attorney personally liable for the subrogation claim if the attorney ignores written notice of the lien.)
• Allows for proportional reduction of Medicaid’s lien if the award is greater than available liability coverage, so Medicaid cannot claim a lien that exceeds the recovery. In other words, if the jury awards a $500,000 verdict but the plaintiff can only collect $100,000, the amount allotted for medical bills must be reduced by at least 20%.
• Limits Medicaid’s recovery to only the portion of the allocation related to past medical expenses. Shuts down the issue of potential set-asides for future medical bills expected to be incurred.
• Reduces the lien by one-third of the amount of the recipient‘s attorney‘s fees in the event that the Department, after notice, fails to intervene in the recipient‘s case. And they will never intervene. This is huge.
• Gives attorneys the ability to put disputed funds in trust so there can be a fair adjudication of what is owed and allows the plaintiff the opportunity to challenge the subrogation claim.

These are not yet law. This new regulation would be executed by Executive Order by Governor O’Malley. As I understand it, all potential new Executive Orders must first be published in the Maryland Registrar.

Personal injury lawyers in Maryland would welcome these new rules because (1) they will reduce some lien obligations many of our clients face and, (2) clear guidelines allow us to properly advise our clients what they can expect.