Medicare and Medicaid Liens on an Illinois Injury Settlement

By the FigureMyTax Editorial Team · How we calculate

The Illinois Department of Healthcare and Family Services has a charge on your claim for the medical assistance it provided. It ranks ahead of other Illinois liens except your attorney's, pays a pro rata share of attorney fees and may be reduced by a court. Medicare recovers under federal rules.

The charge

305 ILCS 5/11-22 gives the Department a charge on all claims, demands and causes of action for injuries to a recipient, for the total medical assistance provided from the time of injury to the date of recovery. It attaches from service of a notice by certified or registered mail, or by fax or electronic messaging when requested, on the party against whom you have the claim. It does not apply to workers' compensation, occupational disease or wrongful death claims.

Priority and fees

The charge takes priority over all other Illinois liens except the attorney's lien, and it cannot be satisfied until your attorney's fees are paid. The Department pays its pro rata share of attorney fees, based on its lien compared to the total settlement.

Court reduction

On petition, the court may adjudicate and reduce the charge. After an evidentiary hearing, it considers the charge as a percentage of the gross recovery and of the recovery net of fees and costs, whether the Department should bear its proportionate share of fees, whether the recovery is less than substantially full recompense, your age and needs, and your ability to repay. The party seeking the reduction carries the burden of producing evidence.

Federal limit

In Arkansas Department of Health and Human Services v. Ahlborn (2006), the U.S. Supreme Court held that Medicaid may reach only the portion of a settlement that represents medical costs. How your settlement is allocated can therefore matter.

Medicare

Under the Medicare Secondary Payer statute, 42 U.S.C. 1395y(b)(2), the United States may recover conditional payments and collect double damages from responsible entities; 42 CFR 411.24 governs recovery, and 42 CFR 411.37(c) reduces Medicare's recovery by its procurement-cost share. On a $100,000 settlement with $36,333 of fees and costs, $15,000 of Medicare payments would shrink to about $9,550.

Next steps

See how provider liens work and what Illinois law says about insurer reimbursement, then enter every claim in the Illinois medical lien calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Illinois's rules apply to your specific case with a licensed Illinois attorney.