Liens and subrogations: What they mean in Texas medical malpractice cases

Any time there’s a settlement in a Texas medical malpractice suit, one thing’s for certain: Everyone and their brother will show up with their hand out wanting a piece of the recovery.

An experienced Texas medical malpractice lawyer begins the research and investigation into potential liens and subrogation interests long before mediation or settlement. It takes time to obtain the amounts that have been paid for medical bills, verify whether liens or subrogations are enforceable, and set up communications to negotiate a reduction upon settlement.

Super liens

In any medical malpractice case where the plaintiff was a Medicare or Medicaid beneficiary, there will be a super lien that must be satisfied. They’re called super liens because these government programs don’t have to provide any notice to the plaintiff or plaintiff’s attorney to trigger enforceability and satisfaction of the lien.

Medicare is a behemoth federal agency that’s also slow-moving and rigid. Communications must be in writing and submitted by mail or fax. Medicare routinely quotes a turnaround time of 45 days to respond to any request. The first step that we take to interact with Medicare is to submit a notice of representation and request a conditional payment summary, or list of the charges that Medicare contends are related to the claim.

Medicaid is a combined federal-state program. In Texas, Medicaid typically responds more quickly than Medicare when we provide notice of our representation and request a conditional payment summary.

Once we have the list of Medicare or Medicaid conditional payments, we review them carefully to determine if some of them are unrelated to the alleged medical negligence. In many cases, plaintiffs already had pre-existing medical conditions that required care; thus, those charges should be removed from the conditional payment summary. This can be done long before mediation or settlement.

The initial conditional payment summaries provided by Medicare and Medicaid aren’t necessarily the final numbers. If the plaintiff continues to receive medical treatment or healthcare, the number is a moving target. A few months before mediation or the potential resolution of the case, we request an updated conditional payment summary from both of these agencies.

After the case settles, the process for negotiating with Medicare and Medicaid is different.

Medicare’s negotiation is essentially the application of a formula to reduce the lien based on the amount of the settlement and so-called acquisition costs, which include attorney’s fees and expenses.

Negotiating with Medicaid has changed dramatically following the 2006 U.S. Supreme Court decision in Arkansas Department of Human Services v. Ahlborn. This opinion allows plaintiffs to negotiate more substantial reductions of Medicaid liens in most cases.


Subrogations are a contractual right to reimbursement owned by a plaintiff’s health insurance plan. Most people simply think of subrogations as another type of lien. Legally, a plaintiff’s attorney may not have to satisfy a subrogation interest unless the plaintiff or attorney is put on notice by the potential subrogation holder.

There are numerous issues that need investigated in potential subrogations, including whether the health plan is employer-based (ERISA) and whether it is truly insurance or self-funded.

Once there is a determination that there is a legally enforceable subrogation, the process of obtaining a list of claims, analyzing them for unrelated charges, and negotiating a payoff is largely similar to dealing with Medicare or Medicaid. One difference is that these companies are typically more responsive, because they are private entities looking forward to the windfall of the payment.

Medicare Advantage Plans

Part C of the Medicare statute allows private companies to enter into contracts with Medicare to provide all Part A and Part B benefits.

It follows, then, that a person must be entitled to coverage under Medicare Parts A and B in order to enroll in a Medicare Advantage Plan. When accepted into a Medicare Advantage Plan, most or all of the person’s medical expenses will be paid by that plan, instead of the original Medicare.

Medicare Advantage Plans are popular, with nearly one-third of all Medicare beneficiaries participating in one.

There are currently all kinds of Medicare Advantage Plans, which look and behave a lot like private insurance companies. Options include preferred provider organizations (PPOs), health maintenance organizations (HMOs), Medicare health savings account (HSA) plans, and others.

The current state of the law is that Medicare Advantage Plan companies enjoy the same super lien rights to be repaid that Medicare has.

Sorting it all out

There is no doubt that dealing with lien and subrogation resolution is an unwelcome and discouraging process for medical malpractice plaintiffs. It would be even worse, though, if the lengthy process only starts after a settlement, because that can lead to months of delays before funds can be distributed.

Hiring a skilled, top-rated Houston, Texas medical malpractice lawyer to handle your claim will help avoid these pitfalls. Experienced attorneys efficiently handle Medicare, Medicaid, and third-party insurance liens and subrogations in a way that protects plaintiffs.

Robert Painter
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Robert Painter

Robert Painter is an award-winning medical malpractice attorney at Painter Law Firm Medical Malpractice Attorneys in Houston, Texas. He is a former hospital administrator who represents patients and family members in medical negligence and wrongful death lawsuits all over Texas. Contact him for a free consultation and strategy session by calling 281-580-8800 or emailing him right now.