A Medicare Nightmare- “Can’t You Understand What I’m Telling You?”
This is a true story.

You think Medicare is your ‘friend’? You’re wrong. Let me tell you why.

A 75 year old man fell out of a hospital bed when he was supposed to be restrained. He wasn’t restrained and fell on his head suffering massive head trauma. He remained conscious for 5 days before lapsing into a coma where he ‘lived’ for the next 2 weeks on a ventilator while his body slowly died. Since he was 75 years old, Medicare paid for his 3 week hospital bill. A huge bill considering he was in the ICU the entire time. Not thousands of dollars, but hundreds of thousands of dollars that Medicare paid. You know where this is going right?

Family brings a lawsuit against the hospital. Family agrees to settle case against hospital during lawsuit. This was a wrongful death lawsuit. In New York, the Surrogate’s court is responsible for overseeing all death cases. The family cannot settle the case on their own. Instead, they must get the approval of the Court in order to formally settle a death case. Sounds simple, right? Wrong.

When papers are submitted to the Court for settlement approval, we must explain why the case should be settled. We must explain why the amount being offered is desirable and what would happen if the case went to trial. In addition, we must support our explanations with documents that include who gets the money and how much each person receives. We have to show detailed calculations such as how our attorney’s fee is calculated, what our detailed expenses were to prosecute the case and what expenses the family must pay back to doctors, hospitals or even the funeral home.

When someone in New York is receiving Medicare benefits and the injured victim or their family brings a lawsuit for injuries or death caused by someone else’s wrongdoing, Medicare turns around and says “Pay us back now.” That’s known as a “lien.” Medicare is a federal agency with federal guidelines and rules. (This is a foreshadowing of what’s about to come.)

A lawyer in NY is obligated to assume that anyone over the age of 65 is receiving Medicare, until proven otherwise. Why does this matter? If the lawyer settles a case without determining if Medicare must be reimbursed for the money they paid and then Medicare determines that they are owed money, guess what happens? (It’s only bad things from that point forward.) Medicare can sue the lawyer for treble damages. That means they can sue the lawyer for three times the amount they were owed. The lawyer had a legal and ethical obligation (according to most attorneys) to confirm if Medicare had a lien and then try to negotiate that lien down. Ok, enough of the procedural stuff...let’s get to the nightmare.

Once the lawyer knows that Medicare is owed money, the Surrogate’s court wants to know how much money is owed and what is the final negotiated amount that Medicare will accept to close out their demand to be repaid. Again, a simple request. We send a letter to Medicare saying the following:

“Hey Medicare...we’ve tentatively settled this wrongful death case. You claim you’re owed $350,000. Well, we only settled the case for “X” dollars and our expenses are “Y” dollars, so please reduce your claim to “Z” dollars.” They plug our numbers into their formula and send us a letter that says:

“Hey Mr. Lawyer, we’ve reduced the amount you must repay us to “ZZ” dollars. Make sure you send us your check within 60 days from the date of this letter, otherwise we’re going to penalize the hell out of you with interest and big penalties.” The word “You” refers to the lawyer, not the client.

Here’s where an explanation is needed.

When lawyers and the parties to a lawsuit agree to tentatively settle a wrongful death lawsuit, it’s done knowing that the family’s attorney must now submit papers to the Surrogate’s court to formally settle the case. That’s known as a “Wrongful death compromise order.” It can take weeks to months to accumulate all the necessary papers to submit to the Court for approval. Once the papers are submitted, it’s quite possible that the papers will be rejected because of a clerical or typographical error or some document is missing. If that happens, the problem must be corrected and re-submitted to the Court.

“So, what’s the big deal and what’s this nightmare you mentioned?”

Medicare will not give us a final number that we can provide to the court until we tell them that we have received the money and are ready to distribute it to the family. Why not? Simple. Because that’s what their guidelines say.

Yes, I asked that same question.

Medicare wants to know that the settlement has been approved, and that we have obtained the settlement check. Only then will they tell us what the reduced amount will be to repay to Medicare.

Well, what’s the big deal? The big deal is that the Surrogate’s court will NOT allow us to settle the case unless they know exactly where every penny is going to be distributed. If they know that Medicare has to be repaid, they want to know how much have they agreed to accept to resolve their lien. Well...Medicare won’t tell us because we don’t have a final settlement approved by the Court. Hence, we go around in circles.

Let me make this very clear for you.

My secretary was on the phone with Medicare for an entire hour trying to explain this to a representative and then a supervisor. The response she got was “Our guidelines require us not to negotiate until your settlement is final and then you must pay us back within 60 days or we’re going to cut off your ba**s.” (They didn’t use that language but that’s the essence of penalizing you for not paying them back on time.)

I then took over the conversation. “The court will not approve our settlement until YOU, MEDICARE, give us a reduced amount that you will accept. I have no authority to settle the case and do not have the settlement check in which to pay you back. The only way to do that is for you to give me the number you will accept. Then I tell the court. Then the case gets finally settled. Then I must send the judge’s order to the defense lawyers. Then the defense lawyers send the closing papers to their insurance carrier. Then the insurance carrier issues their settlement check. Then we must deposit the settlement check into our attorney trust account, known as an escrow account. Then, after the check clears can we give you, MEDICARE, your check.

That could take months. I have no control over when the judge will issue an order approving the settlement. I have no control over how long it takes the defense lawyer to process and forward the settlement papers to the insurance company. I have no control over most of these events. And you are DEMANDING to be paid within 60 days? Impossible.”

The reply: “These are the guidelines we must follow.”
My reply: “Your guidelines are not workable. I’m trying to get you paid back. You’re trying to do everything possible to make it IMPOSSIBLE for me to get your money. You throw roadblocks up. Why can’t you work WITH me? Why can’t you create a solution that will solve this bottleneck that you’ve created?”

Supervisor’s reply: “These are the guidelines we must follow.”
My reply: “How can we change these guidelines? Surely I’m not the only lawyer in New York who runs into this problem. In fact, every lawyer in NY who handles death cases and has a Medicare lien has this problem. So what can you do to help me solve this and get you your money; get my client her money and allow us to move on?”

Supervisor’s reply: “These are the guidelines we must follow. There’s nothing I can do to change them.”
My reply: “Yes there is. Put me in touch with someone who is not a robot who simply repeats the same nonsense.”

Supervisor’s reply: “I’ll have a manager speak to you tomorrow.”
My reply: Will the manager be able to help me change the guidelines?”
Supervisor’s reply: “No, but they’ll explain why we must follow the guidelines.”
My reply: “I don’t want an explanation. I want to change the guidelines and explain to someone who has a brain that your guidelines create roadblocks to getting a case settled and resolving your lien.”
Supervisor’s reply: “I’m sorry, but these are the guidelines we must follow.”


After spending 30 minutes pleasantly trying to explain to this federal employee why their guidelines stink and make absolutely no sense, I got off the phone with a feeling of utter frustration. One and a half hours on the telephone between my secretary and I trying to finish a case that the parties have agreed to settle. Time wasted away ARGUING with a Medicare agent and supervisor because they have no ability to make any independent decisions or even recognize that their guidelines impede the ability to get repaid.

I couldn’t help but think that if they followed the model that internet information-marketers use to get paid, they would be paid within days instead of months or years. Instead, they don’t want to get paid. They just want to create delays, create frustration and create an inefficient system that does not work. If a business created these roadblocks they’d be out of business very quickly. Why? They have horrible customer service and their reps and supervisors have zero ability to make ground-level decisions to solve the problem. From a marketing standpoint I give them a total zero.

How to fix this nightmare? I can only speak to this highly focused area of Medicare. Get the trial lawyers to sit down with Medicare and eliminate these ridiculous guidelines. Create a realistic framework of providing attorneys with the information they need to get Medicare reimbursed. Do not penalize the lawyers who are at the forefront trying to get them repaid. Instead, give them incentives to get things done early. Then create incentives for the Courts to expedite their decisions. That’s the only workable way to get this done.

So, if you’re a litigant in New York in a wrongful death case, beware of the horrible delays you can expect if your family member was a Medicare recipient and you have tentatively settled your case.