One of the attorneys at our firm has prepared a “practice tip” sheet for updating your client fee agreement. Among other topics, Mark’s article incorporates the points addressed in NY Professional Ethics Committee Opinion (#739, July 7, 2008), which contains logic that I believe is instructive no matter what state(s) you practice in.
Mark states: No matter how big the case, your retainer agreement is the most important document in the file. If it hasn’t been revised in a while, its time to dust it off and make sure it reflects the changing nature of settlement. Doing so will make your settlements run more smoothly and provide you with the tools and time needed to satisfy your obligations and ensure that the settlement ultimately does exactly what it needs to do for your client.”
See below:
It’s the document that opens every new case, and the one that gets you paid at closing.
However, your retainer agreement should also give you the tools you need to safely navigate
the increasingly complex settlement process. Recent ethics opinions – including one issued in
July, 2008 by the New York County Lawyers’ Association – should prompt you to revisit your
retainer agreement. The revisions to your retainer agreement discussed herein will help you
stay ahead of challenges, educate your client, and protect you!
Once considered the “end of the road,” settlement of an injury claim can now feel like the
beginning of a long and difficult process of healthcare lien resolution, government benefit
preservation, and financial planning. If ignored until the end or handled poorly, these issues can
delay disbursement, jeopardize the settlement and your client’s resources (such as Medicaid or
Supplemental Security Income), and lead to client dissatisfaction. It is critical that you be
prepared for these challenges from the beginning of the case.
To make the settlement process go as smoothly and quickly as possible, you will need certain
information from the client upon opening your file. Moreover, if you determine that you need
assistance with any settlement challenges, you will need the freedom to bring in outside
expertise as advised by a growing number of ethics advisors or committees. It is obviously
critical that your clients are informed of all the obligations associated with pursuing and settling
a personal injury settlement. The best time to do this is at the onset, and the best instrument to
disclose these issues, present them for discussion, and memorialize the client’s understanding
is your retainer and fee agreement.
Beyond simply disclosing your fees, your retainer agreement should be used to inform the client
of the cooperation you will need from him or her and set realistic expectations about the
settlement process. A few additions to your existing agreement form will go a long way in
helping you successfully navigate settlement issues that may arise and avoid client confusion.
Information: If you will need it in the end, ask for it now.
As you know, in order to navigate any case, you need information from the client. The changing
nature of litigation now requires even more information that will allow you to anticipate and
address settlement roadblocks before they threaten timely resolution of the case.
One of the growing challenges of settlement has been the increased aggressiveness and
complexity of healthcare liens. If ignored until the time of settlement, resolution of these liens
can drag a file on for many months or even years in extreme cases. Medicare, Medicaid, and
ERISA lien rights and procedures have all undergone vast changes in recent years – making
each more difficult and fact-specific. Medicare reimbursement claims will change again in 2009
under the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) – which places a premium
on correct information for future settlements. Under the MMSEA, if you don’t provide Medicare
with the proper information, the defense must – taking you out of the driver’s seat and putting
your client’s settlement at risk.
Also, if your client is a recipient of government benefits, any settlement they receive may
change or eliminate their eligibility for those programs. It has therefore become advisable to
begin working on these issues almost as soon as you begin working the case. Getting the right
information from the client up front makes this possible. Your retainer agreement should be
accompanied with a healthcare and benefits questionnaire that enables your firm to deal with
today’s demands. See the attached sample healthcare and benefit questionnaire for suggested
examples that can be added to your current intake documents.
Healthcare Liens
When dealing with a healthcare lien, the information needed will depend upon the type of
coverage the client receives, so this should be the first question asked after basic client
information. The client’s lien obligations – and yours – turn upon whether the coverage is
provided through a governmental program or a private source such as an employee health plan
or insurance policy.
No longer does a simple “Yes / No” question about Medicare or Medicaid entitlement serve the
plaintiff or plaintiff counsel. Details about such entitlement and injury-related care through
Medicare or Medicaid are now absolutely necessary to meet requirements and address these
agencies’ claims, as these programs place direct statutory liability on you. Appreciating the
increased complexity and scope of coverage of these programs, we recommend digging down
and asking about entitlement dates, term dates, and benefit detail including plan elections (i.e
Part A, Part B, Part C, Part D).
Military healthcare programs vary and so do their recovery rights and contractors. If the client is
a recipient of veterans or military benefits, find out what branch of the Armed Forces he or she
serves in, and whether under active, reserve, mobilized, or retired status.
If coverage is provided through an employee benefit plan, ask who the client’s employer is and
whether it is an official employee plan or supplemental insurance coverage. In all instances,
ask how long they have been on the program, and their estimate of benefits paid thus far.
When dealing with private health care coverage, copies of the policies should be secured.
Finally, always secure copies of the client’s insurance or coverage card(s) regardless of the
program. All of this information will be critical as you address and resolve these liens and
allows you to do so early rather than scramble at the end. It will also help identify and resolve
situations that could otherwise threaten the viability of the settlement.
Government Benefit Preservation
If the client receives Medicaid, food stamp assistance, or Supplemental Security Income (SSI),
a settlement may jeopardize his or her eligibility for those programs. The client – and perhaps
you – will be obligated to inform those agencies of the settlement and risk reduced or even
eliminated benefits. However, by addressing this up front, eligibility may be preserved through
an informed approach and cooperation with those agencies. Again, this requires proper
information from the client.
In the second half of the questionnaire mentioned above, you should inquire about any benefit
programs that the client may be participating in, and their participant number (this will likely be
the client’s social security number, but should be requested anyway). You will also want
caseworker contact information, so that you can reach the caseworker easily to discuss
eligibility issues, find out exactly which program the client is on and what requirements it may
have, and cooperate on a strategy to preserve those benefits. It may seem counterintuitive, but
often the best resource you will have in this endeavor is the caseworker.
You may elect not to get involved in matters of benefit eligibility. Even in that case, you should
still be asking if the client receives government benefits so that you can advise them of any
potential obligations they may have. If it is your policy not to address these issues, you must
clearly communicate in the agreement that assistance in this regard is not within the scope of
your representation. However, before doing so, familiarize yourself with the laws and rules of
the benefit your client receives, to ensure that you do not have independent responsibility or
liability as counsel, regardless of your disavowal.
Ignorance Is Not Bliss
Some attorneys may feel that this knowledge only carries greater responsibility, and that if they
can maintain ignorance about these issues then they have no duty to address them. Such a
view is certainly tempting, but ultimately dangerous.
Model Rule 1.1 requires competent representation, which includes “thoroughness and
preparation.” The official commentary to the rule then says that “the required attention and
preparation are determined in part by what is at stake.”
Neglect of these matters could seriously affect your client. He or she could lose eligibility for
their needed government assistance or healthcare coverage, or become the subject of a lien
recovery action. These are the consequences at stake, and they are directly tied to the results
of your work. If the settlement ultimately places the client in a worse position than where they
started due to these issues, it will certainly create problems for you. Ethical complaints to the
Bar or even malpractice actions could ensue.
Also, many federal and state statutes dealing with governmental subrogation and eligibility place
direct responsibility on counsel. Such statutes give you the burden to affirmatively notify the
proper agencies and address these issues. Willful ignorance will not avoid liability in such
situations, and may even add to it. It is therefore advisable to err on the side of caution and
exercise due diligence in identifying and addressing these issues. Even in the worst of cases,
you will then be able to show that you have fulfilled your duties.
Untie Your Hands: Outside Assistance as a Client Expense
It is likely that, on occasion, you will encounter a lien or a government benefits issue that
demands experience and expertise not commonly available inside of a personal injury firm
(such as healthcare billing and coding expertise). To ensure the proper evaluation and
favorable resolution of such a matter, your client may require the consultation or retention of
outside assistance to advise and address the issue. Your fee agreement should provide for this
at your discretion, and stipulate that any reasonable costs may be passed along to the client.
In July, 2008, another ethics board added to the critical mass and approved the use of outside
assistance for lien resolution as a client expense. In its “Ethics Opinion 739,”1 the New York
County Lawyers’ Association Ethics Committee found that charging such an expense to the
client was justified so long as the client was made aware of the charge in the fee agreement and
the fee was reasonable.2 The Committee correctly observed that “lien issues are made more
difficult to handle because of constantly changing regulations and protocols” and that “resolving
liens is a complex area of law with many traps for the inexperienced and unwary.”
Given the increased complexity of the settlement process, even an experienced attorney
focused on proving liability and damages in an injury claim cannot be expected to have the
knowledge necessary to competently represent his or her client on, for example, a complex
matter of administrative or tax law which might arise during the settlement process. In these
cases, it may be in the client’s interest for you to consult or even retain outside counsel to
resolve such issues, while you focus on maximizing the tort recovery. Recent ethics opinions
have held that in such cases, the expense of those services is an accepted cost to secure
expertise, so long as the client gives informed consent.
Inserting clear language to this effect3 in your retainer agreement meets these requirements,
and frees you in two ways. First, you are allowed, as needed, to retain outside assistance
without concern or confusion as to who must then pay for that service. Second – and most
importantly – the use of outside assistance to deal with distracting issues such as lien resolution
or benefits preservation allows you to focus your attention where it is needed: on your client’s
injury claim.
Set Realistic Client Expectations
Most clients expect to receive a check for the full recovery, less fees, shortly after a settlement
agreement is reached with the defendant. However, a difficult settlement issue can delay
disbursement for months, and may significantly affect the amount your client ultimately receives.
While such delay and reduction can be mitigated or avoided by exposing and addressing the
issue well in advance of settlement, your retainer agreement should be altered to discuss this
possibility and educate the client. The client needs to understand that if disbursement is
delayed to address any of these issues or a lien must be paid, it is in his or her best interest. If
potential problems arise during the case, the client should be reminded to foster realistic
expectations.
1 Please click the following link to read the entire opinion: Ethics Opinion 739
2 Other minor requirements are that the client receives a net benefit, the transaction complies with all substantive law, and the
referring attorney remain responsible for the overall work product of the case.
3 Suggested language: “We understand that current law and regulations regarding Medicare, Medicaid or private health insurance plans (Healthcare Providers) may require all parties involved in this matter (client, law firm defendant, and any insurance companies) to compromise, settle, or execute a release of Health care Providers’ separate claim for reimbursement/lien for past and future payments prior to distributing any verdict or settlement proceeds. We
agree that the law firm may take all steps in this matter deemed advisable for the handling of our claim, including hiring separate experts / case workers who assist with resolving any Health care Providers’ reimbursement claims or liens for past and/or future injury-related medical care. The expense of any such service shall be treated as a case expense and deducted from our net recovery and shall not be paid out of the law firm’s contingent fee in this matter.”
While such additions aren’t guaranteed to stop a client’s frequent phone calls, you will be able to
point out that the client was made aware of these potential effects due to settlement complexity.
While any delays or reductions must be reasonable given the facts, such a provision in your
agreement shows that you kept the client fully informed of the possibility from the start of the
case.
Conclusion
No matter how big the case, your retainer agreement is the most important document in the file.
If it hasn’t been revised in a while, its time to dust it off and make sure it reflects the changing
nature of settlement. Doing so will make your settlements run more smoothly and provide you
with the tools and time needed to satisfy your obligations and ensure that the settlement
ultimately does exactly what it needs to do for your client.
To receive suggested language, go to www.garretsonfirm.com to request a copy of our booklet entitled “Medicare, Medicaid & Private Health Insurance Plans: Important Information About Healthcare Liens in Personal Injury Settlements.”
