February, 2015, Friedman Law

Archive for February, 2015

Personal Injury Settlements Can Avoid Health Insurer Liens

Posted on: February 24th, 2015 by Lawrence A. Friedman

On Feb. 23, 2015, the Supreme Court declined to review a key decision by the U.S. Court of Appeals for the Second Circuit Wurtz v. Rawlings Co., LLC , — F.3d —, 2014 WL 3746801 (2nd Cir. 2014). The Second Circuit’s July 2014 decision held that New York personal injury settlements are not required to reimburse health insurers for accident related treatments under fully insured employer health plans. By rejecting the certiorari application, the Supreme Court allowed the Second Circuit ruling to stand.

The Second Circuit’s reasoning turns on the interplay between the Employee Retirement Income Security Act (“ERISA”) and state insurance law. Essentially, ERISA is designed to make the laws governing employer plans uniform throughout the United States allowing employers to provide similar benefits in various locations without running afoul of different state employment laws. At the same time, however, ERISA isn’t intended to preempt state laws that regulate insurance.

The Second Circuit held that a New York law precluding health insurers from recouping accident related care costs from personal injury settlements is sufficiently directed at insurance to avoid preemption by ERISA. While Wurtz turns on arcane issues of federalism, ERISA, and insurance law, its effect is crystal clear. At least in New York State, personal injury plaintiffs who are employees need not repay fully insured employer health plans for accident related care.

The holding in Wurtz applies only to employer health plans that are fully covered by insurance and to personal injury settlements in a New York or another Second Circuit state with an anti-subrogation law similar to New York’s. This raises two issues. Wurtz doesn’t preclude self insured employer health plans from claiming against personal injury settlements and it doesn’t foreclose such claims where state law doesn’t prohibit them. It also isn’t binding outside the Second Circuit. Thus, the practical effect of Wurtz will be to provide different repayment obligations depending where and by whom a personal injury plaintiff is employed.

Typically, small and medium size companies buy health coverage from insurers. These kinds of plans would be covered by Wurtz if brought in New York or another state in the Second Circuit with similar law. (Since Wurtz is a Second Circuit, it doesn’t automatically apply in other states.)

Plaintiffs who work for major corporations are not likely to benefit from Wurtz because large companies typically self insure their health plans. In other words, the employer funds care costs covered by the plan. However, this isn’t always obvious because self insured plans often contract with insurers like Aetna and Blue Cross to administer their plans. For a plan to be subject to Wurtz, the insurer must be liable to pay for benefits, not just administer the plan with the employer funding care costs.

Where does that leave New Jersey plaintiffs? While Wurtz may be persuasive, it isn’t precedential because we aren’t in the Second Circuit. In addition, New Jersey doesn’t have an anti-subrogation law similar to New York’s.

Medicaid should Cover Advance Care Planning

Posted on: February 23rd, 2015 by Mark R. Friedman

New Jersey State Senator (and former Governor) Richard Codey has proposed that NJ Medicaid reimburse doctors and nurses for advanced care planning. That is, meeting with a patient to discuss what sort of medical treatment she wants at the end of her life, and setting forth those preferences in legal and medical documents like advanced healthcare directives and POLST orders.

Sen. Codey also introduced a resolution urging the federal government to allow Medicare to reimburse medical professionals nation-wide for advanced care planning. That idea was initially proposed in 2010 as part of the Affordable Care Act, but was nixed when political figures began heralding the creation of “death panels.”

In my opinion, this proposal should be welcome to anyone who thinks that Americans should have more control over how they die. Most people say they want to die peaceful and comfortable deaths, in their homes surrounded by family. Yet far too many people die protracted deaths in hospitals, hooked up to life support, after undergoing multiple surgeries with little chance of success. And despite medical advances and a push for hospice, a recent study by the Institute of Medicine shows that end-of-life suffering has become more common in the past decade, not less.

Healthcare directives, POLST orders and other advanced care planning allow patients to state whether they would want artificial life support, heroic surgeries, palliative care, etc., so that medical professionals can follow these instructions if the patient cannot communicate. Hopefully by putting more control into patients’ hands, the reality of end-of-life care will become more in line with what people say they want for themselves.

It is hard to imagine a moment in life more intimate than its end. Patients should be able to set forth their wishes for end of life care, and know that those wishes will be honored.

White House proposes Same-Sex Social Security Spousal Benefits

Posted on: February 16th, 2015 by Mark R. Friedman

President Obama’s 2016 budget proposes extending Social Security spousal benefits to married same-sex couples, regardless of whether same-sex marriage is recognized in the state in which they live.

Under current law, same-sex couples can only obtain spousal benefits if they live in a state that recognizes their marriage. “This means that for a couple that marries in one state where same-sex marriage is recognized and then moves to another state where it is not, the protection that Social Security spousal benefits provides to families is unavailable,” says the budget proposal. “Under this proposal, such married couples would have access to these benefits.”

While same-sex marriage is recognized in New Jersey, New York, Pennsylvania and 36 other states, it remains illegal in 14 more. Extending spousal benefits to same-sex couples in these states would provide greater financial security to thousands of Americans.

This proposal must still be approved by Congress to take effect. However the issue could become moot soon. The U.S. Supreme Court is set to take up same-sex marriage later this year, and if the Court approves nation-wide same-sex marriage, then presumably Social Security spousal benefits would be available to all regardless of what Congress does.

With Social Security spousal benefits, your spouse may be able to receive Social Security or a higher payment based on your work history. Your spouse can also get survivors benefits if you pass away, which potentially includes monthly income or a lump sum.

For more information on Social Security or same-sex estate planning, call or email us today.

NJ Miller Trusts leave little room for Trustee Fees

Posted on: February 9th, 2015 by Mark R. Friedman

New Jersey Medicaid recently began permitting the use of Miller trusts (aka Qualified Income Trusts). People with incomes above the Medicaid income limit (currently $2,199) can use a Miller trust to qualify for Medicaid in a nursing home, assisted living facility or in the community with home care aides.

While Miller trusts are an excellent development that will help a lot of New Jerseyans afford long term care, there are still some significant flaws to work out in the State’s plan. One of the biggest is that Medicaid’s rules effectively do not allow a trustee to take a fee.

New Jersey’s Miller Trust template lists on page 4 the order of permitted trust disbursements. In theory, the trustee (the person managing the trust) is permitted to take a fee of 6% of monthly trust income. E.g., if the beneficiary (the person who needs long term care) assigned $1,000 of income the trust each month, the trustee is entitled to a fee of 6%, or $60 per month.

However, the trustee can only take a fee after the beneficiary’s other required monthly expenses are paid, including the beneficiary’s share of the long term care cost. For people in a nursing home or assisted living facility, the share of cost will almost always exceed the monthly income, leaving no money to pay the trustee. This means that in practice, if the beneficiary is in a facility, the trustee will not be paid a trustee fee.

That’s fine for people who have family members willing to serve as trustee. A child or spouse can usually be expected to serve without taking a fee. But what about people who don’t have family members available to serve? A Miller trust must be managed by a trustee, but if you don’t have close family members and can’t hire someone, who would take on that responsibility for free?

It’s certainly a gap in the Miller trust rules. Banks and businesses won’t serve as trustee without a fee, and I don’t think non-profits will be willing to take on that role for free either. The only answer in this situation may be that facilities (nursing homes and assisted living facilities) will have to serve as trustee. They certainly have a vested interest in seeing the beneficiary’s income get paid out, since the bulk of it will go to them. There exists some inherent conflict of interest, but the Miller trust rules are very rigid. Administering the trust should be pretty mechanical, which minimizes the conflict. In cases where no one else is available to serve as trustee, I think facilities will have to fill that role.

For more information on Medicaid and Miller trusts, call or email us today.