By Mark Taylor
To download a PDF of this article that includes a sample case intake form, please click here.
It’s the document that opens every new case, and the one that gets you paid at closing. However, your retainer agreement should also give you the tools you need to safely navigate the increasingly complex settlement process. Recent ethics opinions – including one issued in July, 2008 by the New York County Lawyers’ Association – should prompt you to revisit your retainer agreement. The revisions to your retainer agreement discussed herein will help you stay ahead of challenges, educate your client, and protect you!
Once considered the “end of the road,” settlement of an injury claim can now feel like the beginning of a long and difficult process of healthcare lien resolution, government benefit preservation, and financial planning. If ignored until the end or handled poorly, these issues can delay disbursement, jeopardize the settlement and your client’s resources (such as Medicaid or Supplemental Security Income), and lead to client dissatisfaction. It is critical that you be prepared for these challenges from the beginning of the case.
To make the settlement process go as smoothly and quickly as possible, you will need certain information from the client upon opening your file. Moreover, if you determine that you need assistance with any settlement challenges, you will need the freedom to bring in outside expertise as advised by a growing number of ethics advisors or committees. It is obviously critical that your clients are informed of all the obligations associated with pursuing and settling a personal injury settlement. The best time to do this is at the onset, and the best instrument to disclose these issues, present them for discussion, and memorialize the client’s understanding is your retainer and fee agreement.
Beyond simply disclosing your fees, your retainer agreement should be used to inform the client of the cooperation you will need from him or her and set realistic expectations about the settlement process. A few additions to your existing agreement form will go a long way in helping you successfully navigate settlement issues that may arise and avoid client confusion.
Information: If you will need it in the end, ask for it now.
As you know, in order to navigate any case, you need information from the client. The changing nature of litigation now requires even more information that will allow you to anticipate and address settlement roadblocks before they threaten timely resolution of the case.
One of the growing challenges of settlement has been the increased aggressiveness and complexity of healthcare liens. If ignored until the time of settlement, resolution of these liens can drag a file on for many months or even years in extreme cases. Medicare, Medicaid, and ERISA lien rights and procedures have all undergone vast changes in recent years – making each more difficult and fact-specific. Medicare reimbursement claims will change again in 2009 under the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) – which places a premium on correct information for future settlements. Under the MMSEA, if you don’t provide Medicare with the proper information, the defense must – taking you out of the driver’s seat and putting your client’s settlement at risk.
Also, if your client is a recipient of government benefits, any settlement they receive may change or eliminate their eligibility for those programs. It has therefore become advisable to begin working on these issues almost as soon as you begin working the case. Getting the right infor mation f rom the client up front makes this possible. Your retainer agreement should be accompanied with a healthcare and be nefits questionnaire that enables your firm to deal with today’s demands. See the attached sample healthcare and benefit questionnaire for suggested examples that can be added to your current intake documents.
Healthcare Liens
When dealing with a healthcare lien, the information needed will depend upon the type of coverage the client receives, so this should be the first question asked after basic client information. The client’s lien obligations – and yours – turn upon whether the coverage is provided through a governmental program or a private source such as an employee health plan or insurance policy.
No longer does a simple “Yes / No” question about Medicare or Medicaid entitlement serve the plaintiff or plaintiff counsel. Details about such entitlement and injury-related care through Medicare or Medicaid are now absolutely necessary to meet requirements and address these agencies’ claims, as these programs place direct statutory liability on you. Appreciating the increased complexity and scope of coverage of these programs, we recommend digging down and asking about entitlement dates, term dates, and benefit detail including plan elections (i.e Part A, Part B, Part C, Part D).
Military healthcare programs vary and so do their recovery rights and contractors. If the client is a recipient of veterans or military benefits, find out what branch of the Armed Forces he or she serves in, and whether under active, reserve, mobilized, or retired status.
If coverage is provided through an employee benefit plan, ask who the client’s employer is and whether it is an official employee plan or supplemental insurance coverage. In all instances, ask how long they have been on the program, and their estimate of benefits paid thus far. When dealing with private health care coverage, copies of the policies should be secured.
Finally, always secure copies of the client’s insurance or coverage card(s) regardless of the program. All of this information will be critical as you address and resolve these liens and allows you to do so early rather than scramble at the end. It will also help identify and resolve situations that could otherwise threaten the viability of the settlement.
Government Benefit Preservation
If the client receives Medicaid, food stamp assistance, or Supplemental Security Income (SSI), a settlement may jeopardize his or her eligibility for those programs. The client – and perhaps you – will be obligated to inform those agencies of the settlement and risk reduced or even eliminated benefits. However, by addressing this up front, eligibility may be preserved through an informed approach and cooperation with those agencies. Again, this requires proper information from the client.
In the second half of the questionnaire mentioned above, you should inquire about any benefit programs that the client may be participating in, and their participant number (this will likely be the client’s social security number, but should be requested anyway). You will also want caseworker contact information, so that you can reach the caseworker easily to discuss eligibility issues, find out exactly which program the client is on and what requirements it may have, and cooperate on a strategy to preserve those benefits. It may seem counterintuitive, but often the best resource you will have in this endeavor is the caseworker.
You may elect not to get involved in matters of benefit eligibility. Even in that case , you should sti l l be asking if the client receives government benefits so that you can advise t hem of any potential obligations they may have. If it is your policy not to address these issues, you must clearly communicate in the agreement that assistance in this regard is not within the scope of your representation. However, before doing so, familiarize yourself with the laws and rules of the benefit your client receives, to ensure that you do not have independent responsibility or liability as counsel, regardless of your disavowal.
Ignorance Is Not Bliss
Some attorneys may feel that this knowledge only carries greater responsibility, and that if they can maintain ignorance about these issues then they have no duty to address them. Such a view is certainly tempting, but ultimately dangerous.
Model Rule 1.1 requires competent representation, which includes “thoroughness and preparation.” The o fficial commentary to the rule then says that “the required attention and preparation are determined in part by what is at stake.”
Neglect of these matters could seriously affect your client. He or she could lose eligibility for their needed government assistance or healthcare coverage, or become the subject of a lien recovery action. These are the consequences at stake, and they are directly tied to the results of your work. If the settlement ultimately places the client in a worse position than where they started due to these issues, it will certainly create problems for you. Ethical complaints to the Bar or even malpractice actions could ensue.
Also, many federal and state statutes dealing with governmental subrogation and eligibility place direct responsibility on counsel. Such statutes give you the burden to affirmatively notify the proper agencies and address these issues. Willful ignorance will not avoid liability in such situations, and may even add to it. It is therefore advisable to err on the side of caution and exercise due diligence in identifying and addressing these issues. Even in the worst of cases, you will then be able to show that you have fulfilled your duties.
Untie Your Hands: Outside Assistance as a Client Expense
It is likely that, on occasion, you will encounter a lien or a government benefits issue that demands experience and expertise not commonly available inside of a personal injury firm (such as healthcare billing and coding expertise). To ensure the proper evaluation and favorable resolution of such a matter, your client may require the consultation or retention of outside assistance to advise and address the issue. Your fee agreement should provide for this at your discretion, and stipulate that any reasonable costs may be passed along to the client.
In July, 2008, another ethics board added to the critical mass and approved the use of outside assistance for lien resolution as a client expense. In its “Ethics Opinion 739,”[1] the New York County Lawyers’ Association Ethics Committee found that charging such an expense to the client was justified so long as the client was made aware of the charge in the fee agreement and the fee was reasonable.[2] The Committee correctly observed that “lien issues are made more difficult to handle because of constantly changing regulations and protocols” and that “resolving liens is a complex area of law with many traps for the inexperienced and unwary.”
Given the increased complexity of the settlement process, even an experienced attorney focused on proving liability and da ma ges in an injury claim cannot be expecte d to have the knowledge necessary to competently represent his or her client on, fo r example, a complex matter of administrative or tax law which might arise during the settlement process. In these cases, it may be in the client’s interest for you to consult or even retain outside counsel to resolve such issues, while you focus on maximizing the tort recovery. Recent ethics opinions have held that in such cases, the expense of those services is an accepted cost to secure expertise, so long as the client gives informed consent.
Inserting clear language to this effect[3] in your retainer agreement meets these requirements, and frees you in two ways. First, you are allowed, as needed, to retain outside assistance without concern or confusion as to who must then pay for that service. Second – and most importantly – the use of outside assistance to deal with distracting issues such as lien resolution or benefits preservation allows you to focus your attention where it is needed: on your client’s injury claim.
Set Realistic Client Expectations
Most clients expect to receive a check for the full recovery, less fees, shortly after a settlement agreement is reached with the defendant. However, a difficult settlement issue can delay disbursement for months, and may significantly affect the amount your client ultimately receives. While such delay and reduction can be mitigated or avoided by exposing and addressing the issue well in advance of settlement, your retainer agreement should be altered to discuss this possibility and educate the client. The client needs to understand that if disbursement is delayed to address any of these issues or a lien must be paid, it is in his or her best interest. If potential problems arise during the case, the client should be reminded to foster realistic expectations.
While such additions aren’t guaranteed to stop a client’s frequent phone calls, you will be able to point out that the client was made aware of these potential effects due to settlement complexity. While any delays or reductions must be reasonable given the facts, such a provision in your agreement shows that you kept the client fully informed of the possibility from the start of the case.[4]
Conclusion
No matter how big the case, your retainer agreement is the most important document in the file. If it hasn’t been revised in a while, its time to dust it off and make sure it reflects the changing nature of settlement. Doing so will make your settlements run more smoothly and provide you with the tools and time needed to satisfy your obligations and ensure that the settlement ultimately does exactly what it needs to do for your client.
[1] Please click the following link to read the entire opinion: Ethics Opinion 739
[2] Other minor requirements are that the client receives a net benefit, the transaction complies with all substantive law, and the referring attorney remain responsible for the overall work product of the case.
[3] Suggested language: “We understand that current law and regulations regarding Medicare, Medicaid or private health insurance plans (Healthcare Providers) may require all parties involved in this matter (client, law firm defendant, and any insurance companies) to compromise, settle, or execute a release of Health care Providers’ separate claim for reimbursement/lien for past and future payments prior to distributing any verdict or settlement proceed s. We agree that the law firm may take all steps in th is matter deeme d advisable for the hand ling of our claim, including hir ing separate experts / case worke rs who assist with resolving any Health care Providers’ reimbursement claims or liens for past and/or future injury-related medical care. The expense of any such service shall be treated as a case expense and deducted from our net recovery and shall not be paid out of the law firm’s con tingent fee in this matter.”
[4] To receive suggested language, go to blog.garretsongroup.com to request a copy of our booklet entitled
"Medicare, Medicaid & Private Health Insurance Plans: Important Information About Healthcare Liens in Personal Injury Settlements."
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