Money IS an object

Medicare liens can block
even strong legal claims

Of the $125,000 paid by Samaritan Hospital to settle the MacKenzie lawsuit, $13,000 went to reimburse the insurance company that had paid for his medical care from the time his was injured to his death.

That’s because federal law says any money obtained in a liability lawsuit must first go to reimburse the health insurer for the cost of treating injuries resulting from the negligence.

In both Alec MacKenzie’s and Lisa’s Baker’s case, it was Medicare.

This law can often be an obstacle to settling a lawsuit, even when there is clear evidence of liability. In Lisa’s case, the cost of her medical care from the time she was found with – according to the hospital’s own records - a glucose level of just 2 mg/dL to when she died three weeks later was $81,078, most of which – $73,851 – went to Samaritan Hospital.

At one point, the hospital’s lawyers tried to settle Lisa’s claim for $25,000. But they refused to accept that they also would have to reimburse Medicare for the almost $82,000 paid to the hospital and the dozen or so specialists who treated Lisa in the ICU. Despite a lower settlement demand, they flatly rejected attempts to negotiate a resolution of the case

Meanwhile, Medicare refused to discuss a possible settlement of its claim for a lower amount until after the lawsuit settlement had been approved. And even if it had then agreed to accept as little as a third of the settlement amount after legal fees and costs had been paid, that would have left only about $7,300 for the estate – not enough to cover even the funeral costs, which had been paid years earlier.

By contrast, in a remarkably similar case, after all deductions the MacKenzie estate received $84,700. And according to a settlement document, Mackenzie, unlike Lisa, was totally unaware of what had happened to him. None of the settlement was for his pain and suffering. It all was for the wrongful death.

Also, a legal document filed in the case notes that the total amount was high given MacKenzie’s age and that he had no dependents. “I [the plaintiff’s attorney] recommend the settlement of the wrongful death claim for the sum of $125,000 as it represents in my judgment and experience and under established precedent a very substantial recovery if not a maximum allowable recovery for the death of an 81 year old man who was a widower, retired from the workforce and had multiple underlying and predisposing health risk factors,” it says.

Both Lisa Baker and Alec MacKenzie died before a change in the law that would probably have prevented Samaritan Hospital from receiving the $13,000 and the $74,000 in the first place. In 2008 Medicare stopped paying for treatment resulting from what are called "never events.”

One of these ‘never events’ is “… death or serious injury arising from hypoglycemia, the onset of which occurs while the patient is in the care of a healthcare facility.”

-- David Baker

Lisa in Samaritan Hospital: A day by day account