Medicare and Medicaid Liens on a Pennsylvania Injury Settlement

By the FigureMyTax Editorial Team · How we calculate

The Pennsylvania department may recover the reasonable value of Medicaid benefits from the person or insurer liable for your injury. When recovery is limited to the medical portion, the court first pays litigation expenses and attorney fees, allocates the rest between medical and other damages, and gives the department a first lien on the medical portion. Medicare recovers under federal rules.

The right of recovery

62 P.S. 1409(b) gives the department the right to recover the reasonable value of benefits from the person or insurer liable for the injury. It may compromise, settle or waive a claim in whole or in part, including where collection would cause undue hardship, and it may sue in its own name or yours.

The medical portion

Section 1409.1 applies where federal law limits recovery to the medical portion. If you prosecute the claim alone, the court first orders paid the reasonable litigation expenses and reasonable attorney fees, then allocates the remainder between the medical portion and other damages and allows the department a first lien against the medical portion up to its expenditures. The department gets reasonable advance notice before any allocation.

Fees and notice

If the beneficiary alone brings the claim and owes attorney fees and costs, the department's claim is limited to the amount of the medical expenditures. Either side must give the other written notice within 30 days after filing an action, and a third party or insurer that knows of Medical Assistance benefits must notify the department. The department's own suit must be brought within seven years, or later if it was not given adequate notice.

Federal limit and Medicare

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. 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 bills differ from liens and why health plans are barred from car-accident recoveries, then enter every claim in the Pennsylvania medical lien calculator.

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