A Failure to Communicate: Ethical Pitfalls in Negotiating Medicare Subrogation Liens

We “suspend your license to practice law with no possibility of reinstatement for thirty days from the filing of this opinion.”  This is a statement no practicing attorney wants to read or hear.   You may not believe it, but this harsh sanction actually arose as a result of an attorney failing to negotiate a Medicare subrogation lien. 

Most, if not all, practicing personal injury attorneys are intimately familiar with the strict monetary penalties for failure to reimburse Medicare.  CMS has the right to recover from any entity, including but not limited to, beneficiaries, providers and attorneys for monies it paid on behalf of injured claimants.  If Medicare is not reimbursed, the primary payer must reimburse Medicare even though it already has paid the beneficiary.  Our government takes this right very seriously.  In fact, the law allows collection of double damages and attorneys fees against any entity that fails to properly reimburse Medicare.  These considerations must always be in the forefront of an attorney’s mind when resolving Medicare subrogation liens.  Nonetheless, there are other considerations that must be taken as well. 

It is certainly no secret that delay is commonplace in resolving Medicare subrogation liens.  It is understood that resolution of these liens takes substantial patience by all involved.  That being said, an attorney’s failure to actively resolve a lien can also lead to disciplinary sanction.  This is exactly what happened to one unfortunate practitioner in Iowa Supreme Court Attorney Disciplinary Board v. Silich, 872 N.W. 2d 181 (2015).

In Silich, the client sustained injury after falling out a motorized wheelchair in 2008 and hired Attorney Silich to institute suit.  However, the client passed away before resolution of the case, and an administrator was appointed to handle the client’s estate.  In December 2011, Attorney Silich reached a settlement of the suit, whereby defendants agreed to pay $25,000 conditioned upon resolving any Medicare lien.  Unfortunately for Attorney Silich, the Medicare Secondary Payer Recovery Contractor (“MSPRC”) identified $44,687 in medical expenses attributable to his client’s accident.  Attorney Silich advised the estate’s administrator that he would communicate directly with MSRPC, and that he expected that Medicare would waive lien or reduce it.

Attorney Silich did not resolve the Medicare lien until September 2014 – two years and nine months after settlement was reached.  Attorney Silich argued that the delay was due to “bureaucratic inefficiency” that was beyond his control.  Yet he also admitted to infrequent communication with his client during this time, because “he had nothing substantial to report.”  The Iowa Supreme Court took great pains to detail Attorney Silich’s conduct in its opinion.  The Court noted that Attorney Silich waited over seven months to respond to MSPRC.  The Court also took note of the client’s multiple inquiries regarding the outstanding lien, which apparently Attorney Silich ignored.  The Silich Court ultimately ruled that Attorney’s Silich’s conduct violated the Iowa Rules of Professional Conduct relating to due diligence, client communication, and expediting litigation.  The Court found that Attorney Silich’s conduct merited a 30 day suspension of his license to practice law.

The decision in Silich is noteworthy because it demonstrates that the practitioner must give equal consideration to the rights of Medicare and the client when negotiating and finalizing Medicare liens. The Silich Court’s sanctions, while not yet widely adopted, should serve as a cautionary tale for practitioners in Pennsylvania. 

What is to be taken from Silich is that Medicare’s bureaucratic delay will not excuse our ethical duties to communicate with our clients and pursue our clients’ cases with due diligence.  Medicare subrogation liens are here to stay.  The need to consider resolution of these liens is becoming a more frequent reality as our population continues to age and becomes Medicare eligible.  Attorney Silich’s actions, while egregious, nonetheless provides an important lesson for practitioners: always communicate with your clients.  While the delays caused by the Medicare system may be out of our control, the ability to maintain consistent communication with our clients is firmly within our control. 

This article was first published in the Allegheny County Law Journal Civil Litigation Issue February 2017.