North Carolina Trial Law Blog

Here is an update on the NC Teachers and State Employees Health lien:

I met with the folks at the SEHP along with the top brass from the NC Academy of Trial Lawyers two weeks ago.  Our meeting was designed to discuss some of the wrinkles in interpretation of the "new" lien.

LIEN FORMULA

The SEHP agrees that the lien cutting formula is essentially the same as the medical providers lien formula.  You take the settlement, subtract out "reasonable" attorney fees and costs.  Of the net, the SEHP will never take more than 50% of that to fully satisfy their lien.

"REASONABLE" ATTORNEY FEES AND COSTS

The SEHP is working with the assumption that reasonable attorney fees AND costs are 33.3%.  That means that if you want them to subtrect a 40% fee plus a lot of costs in the above formula, they won't do that without you making a special request and justifying why that should be done.  Remember, the statute leaves the definition of "reasonable" entirely in the hands of SEHP.

MEDICAL PROVIDER LIENS

The SEHP takes thew position that the statute says, quite clearly, that their lien takes priority over medical provider liens under NCGS 44-49 and 50.  Thus, if you have a SEHP lien that exceeds 50% of the NET proceeds and you have medical provider liens, the SEHP will be paid their lien (and it will be satsified) but the medical providers will get nothing based upon their formula.  Of course, the medical providers can still attempt to collect from the client, because the medical provider lien is a distribution lien, not a "satisfaction" lien.

I told the SEHP folks that medical providers may disagree. 

MEDICAID LIENS and MEDICARE LIENS

SEHP is "working with" the AG's office to figure out some sort of sharing arrangement when there are Medicaid and SEHP liens.  We were told to "be on the lookout" for some sort of update about that agreement.  The same is true for Medicare.  I don't have any suggestions at the moment for how one would divide up money between the liens, other than to say that Federal Law trumps state law, so I think that Medicaid and Medicare will get there money.

UM/UIM INSURANCE

SEHP agrees that their lien does not apply to UM/UIM coverage because those payments would not be from a "liable third party" as the lien statute requires.  That's good news.

WORKERS COMPENSATION

SEHP agrees that the SEHP lien does not apply to workers compensation settlements.  More good news.

That's the sum and substance of our meeting.  The folks at SEHP were very nice, and understood our concersn and seemed genuinely concerned with the welfare and well being of their policy holders (our clients).  SEHP is balancing the Plan's interests in keeping the plan funded with the plan member's interests in being made whole after an accident.

Stay tuned for updates on Medicare and Medicaid.

Chris Nichols:  Nichols Law Firm