Increasingly, personal injury attorneys are presented with the realization that the ultimate prize of settling or winning a case may not be enough. In fact, when dealing with a disabled or minor plaintiff, the settlement may be just the beginning.

Disabled and minor plaintiffs present a whole additional set of issues, some of which should be addressed at the outset of the case and some which must be addressed before the case is finished. Allowing these issues to lay dormant as the case progresses can cause them to rear their ugly heads just as the attorney is about to settle the case. This outline is a guide to personal injury attorneys of related issues that may come up in the representation of a minor or disabled client.

PUBLIC BENEFITS ASSISTANCE

 SSI ( Supplemental Security Income) also known as Title XVI provides funds for needy, aged (over 65), blind and disabled persons. It is part of Title XVI of the Social Security Act (42 U.S.C.1381 et seq.). SSI is paid to anyone who has an income below a certain level . It is therefore a needs based program Qualification for SSI also entitles the recipient to Medicaid and other public benefits. In 2005, the maximum pay rate is $579 per month.

Medicaid is a joint federal and state government program covering extraordinary health care costs. The federal agency that oversees Medicaid is the Center for Medicare and Medicaid Services of the US Department of Health and Human Services. Medicaid can be found in Title XIX of the Social Security Act ( 42 U.S.C.1396 et seq.). Medicaid is a "needs based" program requiring qualification based on medical, income and resource criteria. In Florida, the Medicaid program is administered by the Department of Children and Families (DCAF), formally HRS. Since public benefits can be worth a tremendous amount of money depending on the medical treatment required by the person with disabilities, even a very large settlement or recovery can vanish if planning to retain these benefits is not properly considered.

Applying for or Advising Client on Public Benefits:  It is the responsibility of the personal injury attorney not only to preserve public benefits but to counsel or seek counsel on eligibility as well. This may be the first time the client or the family member may be confronted with this issue. Simply because the client has not been on public benefits previously, does not mean it is not now an issue to address. For example, a minor child may not be eligible during minority because his parent's income is 'deemed' to him but would want them available at age 18. In order to make an informed settlement decision, the client must know all benefits to which he/she may be entitled, now and in the future, and how to preserve them. Generally, public benefits should be applied for at the earliest possible time because qualifying can take an extensive period of time. Take caution that a simple question to the family member as to whether or not they will need SSI or Medicaid in the future is not enough to protect yourself in the future unless you are confident that the family has adequately addressed this issue with a public benefits expert.

SPECIAL NEEDS TRUSTS 

What is a Special Needs Trust?  The Special Needs Trust, found in 42 U.S.C. 1396p(d)(4)(A), was created by OBRA 93 and is used for disabled clients who receive settlement proceeds from personal injury cases. Funds placed in this 'self settled' special needs trust can be used to supplement the client's public benefits. For a self settled special needs trust to qualify, the client must be under age 65; the trust must be established by a parent, grandparent, legal guardian or the court, and must contain a "payback" provision at death for benefits paid by Medicaid. A SNT is created for the disabled person to allow the person with disabilities to preserve public benefits, typically Medicaid and Supplemental Security Income. Otherwise, the funds from the settlement of a lawsuit would jeopardize the recipient's public benefits.  The funds of the client placed in a SNT are used to "supplement but not supplant" the public assistance that may be or is available for the injured party.  In this way, the assets, once placed in the irrevocable trust, are not "available" to the beneficiary according to law and will not compromise their ability to receive these benefits, which are generally determined based on income and asset levels. The principal of the trust is not an available resource since the beneficiary (plaintiff) has no power to revoke the trust and use the principal for support or maintenance. The trustee must have sole discretion over the trust income and corpus.

Sometimes a Special Needs Trust is a good vehicle even without consideration of preserving public benefits. A trust provides continuity of financial management over a long period of time and dispenses with the necessity of maintaining an ongoing guardianship proceeding. Also, the personal injury attorney is protected from later disgruntled clients who may be unhappy that they were not advised on protecting their money for the long run.

The primary disadvantage to establishing a Special Needs Trust is that the individual, or the family, cannot have unrestricted use of the money to spend irresponsibly. However, with good planning and under the appropriate circumstances, the settlement proceeds can be used to substantially improve the life of the disabled person and his family, provide for future security, protect access to Medicaid, and manage the money in an efficient and secure manner.

LIENS ON THE RECOVERY

 Frequently, the decedent or injured party will have incurred medical expenses for treatment of the injury giving rise the claim.  A variety of sources including, but no limited to, Medicaid, Medicare, health insurance policies, and auto insurance policies may have made payments to medical providers on behalf of the injured or decedent.  Medical payments from these sources may result in liens that attach to the recovery.  These liens may attach regardless of whether there has been compliance with creditors' claim requirements. The legal basis and method for calculating the lien differs depending on the identity of the payor.

Florida Medicaid Third-Party Liability:  In Florida the statutory authority for Medicaid to recover moneys advanced is found at Florida Statutes Section 409.910. The policy is set forth in Section 409.910 (1) as follows:

 It is the intent of the Legislature that Medicaid be the payor of last resort for medically necessary goods and services furnished to Medicaid recipients.  All other sources of payment for medical care are primary to medical assistance provided by Medicaid.  If benefits of a liable third party are discovered or become available after medical assistance has been provided by Medicaid, it is the intent of the Legislature that Medicaid be repaid in full from, and to the extent of, any third-party benefits, regardless of whether a recipient is made whole or other creditors paid.  Principles of common law and equity as to assignment, lien, and subrogation are abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources.  It is intended that if the resources of a liable third party become available at any time, the public treasury should not bear the burden of medical assistance to the extent of such resources.

It is the responsibility of the Medicaid recipient, his or her legal representative, or any person representing or acting as agent for Medicaid recipient, to pay the Agency for Health Care Administration, within 60 days after receipt of settlement proceeds, the full amount of any third-party benefits, not in excess of the total medical assistance provided by Medicaid.

The function has recently been privatized and all Medicaid third-party liability files are now being by an outside concern:

Health Management Systems, Inc.
2002 Old St. Augustine Rd., Suite E42
Tallahassee, FL 32301
Ph: 805-656-8870 - Fax: 805-656-9272

Neither the use of a Special Needs Trust, nor the use of a structured settlement avoids the obligation to discharge Medicaid liens, which accrued prior to the settlement of the case.  If however, the recovery for the settlement relates in whole or part to a medical condition other than that represented by the Medicaid lien, some allocation of the Medicaid lien is usually possible. In the case of a wrongful death claim, the Medicaid recipient, or the recipient's legal representative, must notify the agency of the wrongful death action within 30 days of the filing suit. The notice must provide all information specified by the statute.  F.S.409.910(11)(a). The agency may file suit on its own behalf, or intervene in or join an existing proceeding in order to enforce its lien rights.

The Medicaid lien is only for benefits resulting from the injury for which the beneficiary received recovery. It is possible, but difficult, to argue that a portion of the recovery is for other injuries for which the beneficiary did not receive Medicaid benefits. A more successful argument can often be made where there are multiple plaintiffs, that a portion of the settlement amount should be attributed to plaintiffs who did not receive Medicaid benefits. Finally, it is important to review the Medicaid claim carefully to make sure that it is submitting claim only for benefits paid as a result of the injury that gave rise to the personal injury action.

There is another type of Medicaid lien which is mandated by Federal law and which is enforced in Florida.  It is called the Medicaid Estate Recovery Lien.  This is the lien that must be satisfied at the death of the Medicaid beneficiary. In advising the Trustee of the Special Needs Trust, you must take steps necessary to ascertain the amount of this lien. 

Health Management Systems, Inc.
2002 Old St. Augustine Road, Bldg. B, Suite B-16
Tallahassee, Florida 32301
Telephone: (850) 656-9179
Fax:: (850) 656-9271

Medicare Claims: If a tort case is settled for an injured worker who has been receiving Medicare, there is a repayment obligation to Medicare.  Medicare has an absolute statutory right of recovery based on 42 U.S.C. 1395y of Social Security Act.  The Center for Medicaid and Medicare Services (CMS, formerly, the Health Care Finance Administration (HCFA) )has a direct right of reimbursement from any  recipient of third party payments, including any attorney who has failed to protect a Medicare lien.  Repayment to Medicare is due within 60 days of receipt of the third party payment.

It is the obligation of counsel to notify the Medicare Coordinator of Benefits to ascertain the existence and amount of any repayment obligation.  Again, all parties, including plaintiff counsel, defense counsel, insurers, and any one handling the settlement funds, are personally responsible for the repayment of the Medicare claim.  Including up to 100% penalty.  There is no statute of limitations.

MEDICARE - COB Contractor
MSP Claims Investigation Project
PO Box 5041
New York, NY 10274-0124
Telephone: (800) 999-1118
Fax: (646) 458-6760 and (646) 458-6762

You can expect as much as a six-month delay from the time that the information is requested until you receive the information.

It may also be possible to seek a waiver or compromise of the Medicare claim. Procurement costs (costs of collecting the judgment) such as legal fees and expenses can be deducted against the Medicare claim on a pro rata basis. If the liens are extremely high, requesting an "equitable reduction" can be a good idea.

There are criminal penalties if Medicaid or Medicare liens are not properly satisfied and the state can and will pursue these cases. FS Section 409.910; Durie vs. State of Florida (FL 5^th DCA, 2000 get cite); ACHA vs. Wilson 4/12/2001 get cite

After settlement (or recovery), the personal representative should send to Medicare a written copy of the settlement statement or a letter indicating the total settlement amount, and an itemized statement of attorneys' fees and costs incurred to obtain the recovery. This information is used by Medicare to determine whether a reduction of the total lien is warranted.

Medicare does provide for a reduction of the lien in instances in which attorneys' fees and costs have been incurred by the personal representative to obtain the recovery.  The reduction, however, is not dollar for dollar and is calculated by Medicare after the total settlement or recovery is made known to Medicare.

No reimbursement is final unless it is calculated by Medicare or confirmed in writing as a correct balance. As a practical matter, it is best to have Medicare make the initial calculation.  If Medicare payments are less than judgment or settlement amount allocated to the estate, the lien amount is calculated as follows:

1. The cost ration is determined by taking procurement costs (attorneys' fees and costs) and dividing them by the total recovery.

2. The cost ratio is multiplied by the total Medicare payments.  The product is Medicare's share of the procurement costs.

3. Medicare's share of procurement costs is subtracted from the total Medicare payments and the remainder is the Medicare lien amount.

If Medicare payments equal or exceed the estate's award, the lien amount is the estate's award minus the total recovery coats. 

Other Liens 

If the health insurance of the plaintiff has paid for the care of the injured worker who, thereafter, recovers an award, the health contract may entitle the health insured to a dollar for dollar payback. Again, the plaintiff's attorney should examine the policy to see if such repayment is required. 

In dealing with a health insurance carrier who asserts a claim against the judgment of settlement proceeds, it is important to know whether state law affects its right of recovery.  See, for example, Florida Statutes 768.76 (4).  [Collateral sources of indemnity.] That statute limits the carrier's right of reimbursement in several ways.  First, the proportionate share in attorney's fees incurred in the tort action are deducted from the provider's claim. Second, the repayment obligation is limited in to the amount actually recovered by the plaintiff from the tort-feasor, e.g., a claimant who recovers only 70% because he was found to be contributory negligent need repay only 70% to the carrier.  Third, the health insurance carrier's claim can be barred entirely if it fails to respond within 30 days to the claimant's notice that it intends to claim damages from the tort-feasor. Even with favorable state law, if the health insurance is part of an ERISA plan, the health insurance carrier will assert that the state law is not effective because of this supervising federal law.

Private Liens and Loans. When the case is being settled, you should try to identify the amount of such debt and the validity of the debt, ask for credit card receipts and statements and bills from providers. 

APPORTIONMENT

 Closely related to the issue of satisfying liens is the matter of Apportionment of Claims.  Most personal injury attorneys are familiar with the necessity, in Wrongful Death cases, to apportion the claims between family members.  Most are also well aware that Medicaid has a lien for medical payments made as a result of the injury, which is the subject of the claim. However, it often comes to a surprise to the pi attorney that there is another Medicaid lien - that is for the payments Medicaid made during the lifetime of the decedent before the personal injury. This will often come in the form of past nursing home expenses. In cases involving an indigent decedent who was on nursing home benefits prior to death, there are two important considerations:

1)     What part of the recovery, if any, must be used to satisfy the lifetime lien that Medicaid may have for paying months or even years of benefits and

2)     Can some of those funds which are otherwise subject to Medicaid's lifetime lien be set aside so that they are not subject to Medicaid's lifetime lien.

According to case law, the personal representative, as a fiduciary,  is obligated to proportion proceeds between the estate and the survivors in a reasonable and equitable manner. (Emphasis added)  FSA 768.20. Only that portion going to the "estate" is subject to estate recovery for lifetime Medicaid payments. The balance can be used for the surviving family.

The issue of net accumulation plays into this. Net accumulation is the part of the decedent's estate that the decedent was expected, through his business or salary, to have retained as savings and left as part of his estate. The argument here is that if the personal was indigent in a nursing home prior to their death that no "net accumulation" needs to go into the estate, thereby reducing the amount that must be repaid.

The elder law/disability attorney is uniquely qualified to deal with these issues.

WRONGFUL DEATH CLAIMS

 F.S. 768.20 places an affirmative duty on the decedent's personal representative to pursue a wrongful death action on behalf of the estate and the survivors. The Personal Representative is appointed by the court in a formal administration. The Personal Representative has a duty to the estate and survivors to allocate the proceeds in an equitable manner.

Attorneys' fees and other expenses of wrongful death litigation are paid by the personal representative and deducted from the awards to the survivors (see 12.18), and the estate in proportion to the amounts rewarded to them.

"Because wrongful death actions did not exist at common law, all claims for wrongful death are created and limited by Florida's Wrongful Death Act." Cinghina v. Racik, 647 So. 2d 289, 290 (Fla. 4^th DCA 1994). A wrongful death action is brought by the decedent's personal representative.  The personal representative is obligated to recover for the benefit of the decedent's survivors and estate all damages specified in the Act. F.S. 768.20.  The personal representative is considered the real party in interest and brings the action on behalf of the estate and survivors. See Fla.R.CivP. 1.210(a).

The general statute of limitations for wrongful death claims is two years from the date of death.

Once the personal; representative has elected to pursue a wrongful death claim, the "survivors" and the damages each survivor is entitled to receive must be determined.

F.S. 768.18(1) defines "survivors" for purposes of the Act.  Each survivor may be entitled to recover different elements of damages, depending on his or her relationship with the decedent.  F.S. 768.21 specifies the damages recoverable by each survivor and the estate. First, surviving spouses and Children in Being at Death.

If there is no surviving spouse, adult children (those age 25 or older) "may also recover for lost parental companionship, instruction, and guidance and for mental pain and suffering from the date of injury." No recovery is allowed, however, if the action is based on a claim for medical malpractice as defined by F.S. 766.106(1). F.S. 768.21(8).

Parents and Other relatives may also be "survivors."

The term "survivor," for purposes of the Act, includes any blood relatives and adoptive brother and sisters when they are partly or wholly dependent on the decedent for financial support and services. F.F. 768.18(1).

Without proof of dependency there is no entitlement to wrongful death proceeds.  Guillen v. Kitching, 354 So.2d900 (Fla. 3^rd DCA 1978). 

In addition to the individual survivors recognized under the Act, in some cases the decedent's estate has a separate claim. The estate's claim consists of lost earnings, lost "net accumulations," and medical or funeral expenses.

"Net accumulations" is the part of the decedent's net income [from salary or business] after taxes, including pension benefits [but excluding income from investments continuing beyond death], which the decedent, after paying his personal expenses and monies for the support of his survivors, would have left as part of this estate if he had lived his normal life expectancy.

Under F.S. 768.21(6)(a), net accumulations are recoverable only when (1) the decedent's survivors include a surviving spouse or lineal descendants, or (2) the decedent is not a minor child as defined by the Act (i.e., under 25 years of age), there are no lost support and services recoverable, and there is a surviving parent.

Evaluating Settlement Offers: The personal representative has the duty to evaluate settlement offers and the estate may be held liable for opposing counsel's fees and costs if the personal representative unreasonably rejects a settlement offer.

F.S. 768.25 requires court approval of all settlements objected to by any "survivor" or that affect a survivor who is a "minor" or an "incompetent." As practical matter, for the protection of the personal representative it is recommended that the personal representative seek court approval of all settlements and proposed distributions of wrongful death recoveries before executing releases.

If the settlement occurs before a wrongful death action is filed, the court has the authority to approve the settlement agreement and proposed distribution of recovery. The Wrongful Death Act, not the intestacy statutes, controls the allocation of settlement proceeds. Hess v. Hess So.2nd 1203 (Fla. 4^th DCA 2000).

If the settlement occurs after a wrongful death action is filed, and a minor's claim is involved, apparently only the court in which the action is pending has jurisdiction to approve the settlement of the minor's claim. Maugeri v. Plourde, 396 So.2nd 1215 (Fla. 3d DCA 1981).

If the case proceeds to trial, there will be no need to obtain an order allocating the recovery, because the jury will be asked to allocate damages between the estate and each specific survivor. 

GUARDIANSHIP 

A minor is unable to bring or settle a personal injury claim or other action in his or her own right. A minor may settle or sue only by a duly appointed representative, such as a guardian.

The settlement of claims on behalf of minors is governed by F.S. 744.301 and 744.387.  These statutes establish a different standard for the settlement of claims that do not exceed $15,000 from those that do exceed $15,000. An exception exists regarding settlements of wrongful death actions once a lawsuit has been filed: All settlements affecting a minor must be approved by the court to be effective. F.S. 768.25.

The natural guardians are authorized on behalf of their minor child to settle any claim accruing to the minor child for damages and to receive, manage, and dispose of the proceeds of the settlement when the amount involved does not exceed $15,000.

Court approval is required to settle a lawsuit on behalf of a minor in which the gross settlement exceeds $15,000. F.S. 744.387 (3)(a). The court must approve the settlement offer before the entry of judgment by the clerk. Bodek v. Gulliver Academy, Inc, 702 So.2d 1331 (Fla. 33d DCA 1997).  Pre suit settlements exceeding $15,000, circuit court approval is required. Sullivan v. Dept. of Transportation, 595 So.2d 219 (Fla. 2d DCA 1992).

Failure to obtain court approval under F.S. 744.387 (3)(a) of a pre suit structured settlement exceeding $15,000, however, could result in the settlement being disaffirmed by the minor on reaching majority or within a reasonable time thereafter.

Fla.Prob.R. 5.63(d) and F.S. 744.301 (4)(a) make it mandatory that a guardian ad litem be appointed if the gross settlement is more than $25,000.

The qualifications necessary to independently and thoroughly review a settlement offer include the ability to evaluate theories of liability, damages, comparative negligence, elements of damage, possible jury issues affecting the verdict, insurance coverage and stacking concepts, rules of The Florida Bar governing attorneys' fee agreements, and the intricacies of the Wrongful Death Act.

The requirements of the petition for appointment of a guardian ad litem are set forth in Rule 5.120(b).

Fla.Pro.R.5.636(f) delineates specific requirements for the guardian ad litem's report.  The report shall contain:

•  a statement of the facts of the minor's claim and the terms of the proposed settlement, including any benefits to any persons or parties with related claims;

• a list of the persons interviewed and documents reviewed by the guardian ad litem in evaluating the minor's claim and proposed settlement; and

• the guardian ad litem's analysis of whether the proposed settlement will bin the best interest of the minor.

In reviewing a minor's settlement, a guardian ad litem should consider the following:

1.  Is the settlement properly apportioned?

2. After reducing a structured settlement to present value, is it a fair settlement?

3. The guardian ad litem should address whether the minor had reached maximum medical improvement, the degree to any permanent impairment or disability, and whether the net proceeds available after the fees and costs, in light of liability and damage issues, fairly compensate the ward for loss.

Guardianship Cases of Interest To Personal Injury Attorneys

Auerback v. McKinney, 549 So.2d 1022 (Fla. 3d DCA 1989).
Sullivan v. Dept. of Transportation, 595 So.2d 219 (Fla. 2d DCA 1992).
Crotts, Minor Settlements - Do It Right the First Time or You May Pay Twice! 15 Trial Advoc. Q. 26 (Fall 1996). 

Proposed legislation that would increase the threshold fro the requirement of a guardianship of a minor pursuant to F.S. 744.301 to $10,000.

GUARDIAN AD LITEMS

 A guardian ad litem is a fiduciary appointed to protect the rights of vulnerable persons. In the context of a personal injury matter, the vulnerable person is likely to be either a minor or disabled person. Because elder lawyers have unique experience with protecting the rights or minors and disabled persons, and because of the elder lawyers familiarity with the guardianship and probate processes, elder lawyers are excellent candidates for Gals. They are also familiar with the procedures necessary for appointing the GAL and when the GAL is needed.

In civil matters, a court must appoint a guardian ad litem for an infant or an incompetent person not otherwise represented in an action...Fla R. Civ. Proc 1.210(b). This issue may come up in the context of a wrongful death case where one of the survivors is a minor child.  In this case a GAL must be appointed to approve the overall settlement and report its findings to the trial court. Similarly, a GAL may be appointed in a personal injury matter to approve the settlement for a disabled recipient.  Although this may be in the context of a traditional guardianship action, sometimes if the settlement is one that will pay out an automatic sum over a time certain (eg: a structured settlement), guardianship may be avoided. It would be the GAL's responsibility to protect the interests of the injured party. GAL's may also be appointed in traditional estates to protect...FS 731.303(5)

FS 744.301 (4)(a) requires that a GAL be appointed to approve a settlement for a minor in excess of $25,000. The court may appoint a GAL in any claim in excess of $10,000.

The elder law attorney can assist in reviewing the settlement options, determining the future need, if any, for public benefits, and uniquely report to the court it's findings.

Since timely failure to appoint a GAL can hold up settlement and since outright failure can render the proceedings voidable, (In re Estate of Verdier, 281 So.2d 543 (Fla. 2d DCA 1973) consultation with the elder law attorney at the earliest possible opportunity in the proceedings is recommended.

SETTLEMENT CONSIDERATIONS 

Allocation of settle proceeds can be important in terms of preserving public benefits for client.  Funds going to another plaintiff will affect the injured party's continuing or future eligibility for benefits. Trusts created by a third party for the benefit of the injured individual do not come under the same restrictive rules as those created with his or her own funds. Finally, in the case of large settlements, allocation of proceeds to secondary plaintiffs can have important tax planning benefits.

In allocating proceeds among multiple beneficiaries, the attorney must follow a rule of reason so that the allocation will not be challenged.  But that can take into account the realities of the case. A loss of consortium claim by a parent of a severely injured young child will be much stronger than that of a parent on older child who was not as severely injured.