Massachusetts Health Plan Reimbursement: Contract, Made-Whole and Common Fund

By the FigureMyTax Editorial Team · How we calculate

Massachusetts gives HMOs and service corporations a statutory lien with notice and priority behind your attorney. For other health plans we found no statute; a secondary source reports that contractual subrogation is respected, the made-whole rule is uncertain, and the common fund rule applies when the contract is silent about fees.

What the made-whole rule is

The made-whole doctrine says an insurer that paid your bills cannot be repaid from your recovery until you have been fully compensated. Some states enact it by statute; others leave it to courts or to the insurer's contract. We found no general Massachusetts statute for a health plan.

The statutory lien

G.L. c. 111, section 70A gives health maintenance organizations and hospital, medical or dental service corporations a lien for the benefits they paid to a person injured in an accident, on the net amount payable to the injured person out of the total recovery, with your attorney's lien taking precedence. It takes effect only with certified-mail notice before the settlement (section 70B).

What a secondary source reports

A law-firm compilation of Massachusetts subrogation law reports that contractual subrogation provisions are respected, that the made-whole doctrine is "a maybe," that the common fund doctrine applies where the contract is silent about attorneys' fees, and that it does not apply where the lien arises under the medical lien statute. We did not read the decisions it cites, so treat these as leads.

A worked example

Say a health plan paid $9,000 and you settle for $100,000 with a one-third fee and $3,000 in costs. A plan claiming by contract that is silent about fees may be reduced by your fee share, to about $5,730. A plan with a valid statutory lien is shown at the full $9,000, and a self-funded or contract-override plan at the full claim. The Massachusetts medical lien calculator offers those positions.

What to do

Ask for an itemized claim and the plan document, ask whether the plan is an HMO or service corporation asserting the statutory lien, whether it is insured or self-funded, and whether it sent notice. A self-funded employer plan is governed by federal law. See the Medicare and MassHealth post and how hospital liens differ.

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