North Carolina Trial Law Blog

I've received some questions lately about the interaction of the NC Teachers' and State Employees' Health Plan Lien with other liens, such as medical providers liens (NCGS-44-49 through 50).  Here is a great question that needs to be answered:

The Question:

If the legislation limits the plan to 50% of settlement, less reasonable costs ( and I understand that the plan will decide what the attorney’s reasonable fees/costs are) does that mean that the plan gets 50%, and the other unpaid providers (copays, deductibles) have to come out of the client’s net, or does the plan in fact pro rate with other providers? Also, how likely is the plan to say the attorney’s contractual fee is not reasonable, and up the net amount they get 50% of?

If you have client with four to five times settlement amount in meds and even more in lost wages, will the plan take ALL of the money?

The million dollar question (and the $5 answer)

I have addressed this same question on this Blog in a comment section, and the post and response can be found by clicking here.  Make sure you read the question posed by David V. and my response.

SEHP may not have to pro-rate

I think SEHP has an argument that they do not have to pro-rate with unpaid providers.  The revised statute does say they have the right to "first pay" from any settlement funds, which seems to suggest that they have the highest priority in repayment.  On the other hand, I don't think they can legislatively "one up" the Federal Government, so I doubt that this rule would apply in regard to Medicare (purely Federal) or Medicaid (state run but subrogation based upon Federal statute).

Medical providers may have to pro-rate behind the SEHP

On the other hand, the other lien statutes, such as the Medical provider lien, would probably be second in line behind SEHP.  The medical provider statute (NCGS §§ 44-49 through 51) provides for proration, so you sort of get it on the back end. in the sense that the medical providers must account for SEHP's lien. (EDIT: Added on 9.5.06:  To explain further, I believe that if the SEHP lien is large enough, that medical providers will not get anything under their lien.  In other words, if the SEHP lien exceeds 1/2 of the settlement after attorney fees are deducted, then SEHP will get the money, and the medical providers will have to seek reimbursement from the client, not from the settlement disbursement.  Remember, the SEHP lien statute, when applied, pays the lien in full, but the medical provider lien only tells the lawyer what has to be paid to providers from the settlement.  Once the SEHP FINAL lien is dtermined, SEHP doesn't get anything more from the employee.  On the other hand, the medical lien statute NCGS 44-50, does not ever"extinguish" the medical provider's bill, it simply tell the lawyer what must be paid from the settlement.Also, keep in mind that SEHP doe not get paid from UM/UIM but that medical providers do.)

Ahlborn may help

Hindsight is 20/20

I guess (in retrospect) that we should have tried to put some sort of pro-ration in the amended legislation, but we were already trying to convince SEHP (the State) to give away money they did not have to "give up.