Medicaid and its Effect on your Workers Compensation Settlement

Submitted by New Jersey Workers Compensation Lawyer, Jeffrey Hark.

For many New Jersey residents Medicaid and its brother Medicare is a last resort for health insurance which has drastic effects on how workers compensation and third party cases must be resolved in the current climate of settlements.

Medicaid was established by federal law, 42 U.S.C 1396 et. seq. (the Act.)  The intent of this Act was to provide medical coverage for people unable to afford their own coverage. It is essentially Obamacare/ what the Affordable Care Act looks like when the rubber hits the road!  Like other federally-established health coverage such as Medicare and Veterans Administration benefits, Medicaid (and as the title indicates, NJ Family Care – hereinafter NJFC) is intended to pay health care costs for illnesses, injuries, etc., where no other coverage is legally obligated to pay. These federal programs are “payors of last resort.” This is seen in N.J.A.C. 10:49-7.3(1)(b), “Medicaid and NJFC program benefits are last-payment benefits. All [third party liability medical benefits]…shall, if available, be used first and to the fullest extent in meeting the cost of the medical needs of the Medicaid or NJ Family Care beneficiary…” Often may of my clients are entitled to these benefits, and do use them REGULARLY!

These programs contains federally mandated sections which requirement that the states establish a mechanism to pursue the recovery of any payments made by Medicaid/NJFC for which a third-party source should be legally liable. These sources include, but are not limited to, workers’ compensation coverage and casualty insurance in tort recoveries. In New Jersey, recovery of improper payments is contracted to HMS.

HMS, a statutory body, also has a provision in mandate that is contained at N.J.S.A. 30:4D-7.1(b) which reads “…every recipient or his legal representative shall promptly notify the division (Division of Medical Assistance and Health Services) of any recovery from a third party and shall immediately reimburse the division in full from the proceeds of any settlement, judgement, or other recovery in any action or claim initiated against any such third party…” Clearly, this places a duty to report such recoveries on the injured party’s attorney. However, respondents take note. The Statute on the Code speak of recovery from a third party. And, in Hedgebeth v. Medford, 74 N.J. 360, (1977), the New Jersey Supreme Court recognized the “…unmistakable intent to afford the State every opportunity to recoup its payments from third parties.” Thus, both petitioners and respondents have an interest in the outcome of petitions involving such liens. In the event that a petitioner fails to give notice where Medicaid/Family Care clearly provided treatment, a respondent could likely give notice or file a motion to compel petitioner to give notice. This statutory requirement also includes a provision that places the burden on the petitioner’s attorney, and if said payment is not made out of third party (car crash cases) then the attorney him/her self shall be responsible.

I, as your “claimant’s attorney” must then protect you and me and honor the law! This process begins with the initial interview with a new client. As your attorney I will be asking directly what is the nature of any medical coverage you possess whether it is through your employer or Medicaid.  Remember,  Medicaid increasingly the coverage for many people, even those who work for employers which provide excellent coverage. Traditionally, Medicaid/NJFC covered people who were very poor, disabled or both, but no more!

Accordingly, at this first meeting with a new client the workers’ compensation attorney must ask whether the client is covered by Medicaid/NJFC. If so, notice must be immediately given to HMS of the claim in question. This has always been done by mail; however, HMS now has a Web-Portal for submission of the necessary documents. The mailing address/portal information can be obtained on the HMS website for New Jersey Medicaid. Once that is done, HMS will send the attorney a set of questions to be answered concerning the happening of the accident, is it workers’ compensation or tort, what body parts were involved, etc. These questions are designed to allow HMS to determine what payments, if any, have been made for which a third party is legally liable. HMS will then send the attorney an initial Statement of Aid Paid, if in fact payments were made. Later, after a settlement has been agreed to but PRIOR to seeking approval of the settlement by a Judge of Workers’ Compensation, the petitioner’s attorney MUST provide HMS a copy of the proposed Order Approving Settlement or Section 20 Order, inclusive of fees and costs. Thereafter, HMS will issue a Final Statement of Aid Paid.


Criminal Civil Lawyer

Jeffrey Hark is a New Jersey Civil and Criminal Lawyer.

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