Lawsuits and Settlements
Lawsuits and Settlements for People with Disabilities
When pursuing a personal injury, medical malpractice, or worker compensation claim, special considerations arise if you or a family member has serious disabilities such as developmental disabilities, autism, intellectual disabilities, cerebral palsy, Down syndrome, multiple sclerosis, mental illness, traumatic brain injury, ALS, etc.
If a settlement isn’t designed to satisfy program requirements, you or a loved one may lose Supplemental Security Income (SSI), Medicaid, Medicare, Division of Developmental Disabilities (DDD) aid, section eight housing, and more.
In addition, you may face government benefit liens and need a special needs trust and/or Medicare set-aside trust to protect eligibility.
Negotiating a settlement is only a first step. Our broad based disability experience helps us mold settlements to supplement rather than supplant government programs. To apply our years of experience in disability settlement planning to your case, we would welcome a call from you or the lawyer handling your claim.
Special Needs Trust
A poorly planned settlement can cause you to lose public assistance like Medicaid, Supplemental Security Income (SSI), and group home or other housing funded by New Jersey Department of Human Services Division of Developmental Disabilities (DDD). Why? Because many government benefit programs are means-tested and base eligibility on savings and income. If a settlement knocks you off SSI, Medicaid, etc., it’s as if your settlement goes to the government instead of to you.
If you almost any settlement or award, you probably will lose means-tested aid like Medicaid, SSI, etc.. Even if money is paid into a trust for you, you will be disqualified unless the trust satisfies complex and technical requirements.
So, what should you do if you participate in means-tested programs and your personal injury, medical malpractice, or worker compensation negotiates a settlement for you? Consult special needs counsel, but make sure the lawyers are experienced in settlement planning as well. With all the considerations that go into coordinating a recovery with government benefit rules, you don’t want to be a guinea pig for a lawyer new to the field!
In most cases a special needs trust (SNT) will be a great way to benefit from a recovery without losing government benefits. However, sometimes comprehensive review of a client’s circumstances and goals leads us to recommend other options.
How can a special needs trust buy goods and services for you without knocking you off government programs? Unlike an outright settlement an SNT preserves eligibility because it puts an intermediary called a trustee between you and the settlement. While an SNT can benefit only the disabled person (and in some cases immediate family), it is managed by a trustee, which can be a family member, close friend, bank, or professional. Since the trustee rather than disabled person administers the SNT, SSI, Medicaid, etc. don’t treat a correctly drafted and administered SNT as disqualifying. The trustee spends your SNT on things you need or want – healthcare, food, equipment, furniture, transportation, hobbies, vacations and other things that improve your life. This lets government programs provide for basic needs, and the SNT fund the kinds of amenities beyond food and shelter that enhance quality of life.
Special needs trusts must follow strict federal and state rules, or else the trust will fail and you will lose your benefits. At FriedmanLaw, we’ve been drafting SNT’s for decades, and Larry Friedman wrote some of the laws that govern SNT’s in New Jersey.
When resolving a personal injury, medical malpractice or worker compensation claim a person who receives Medicare or reasonably should expect to receive it soon (Medicare Participant) has legal obligations to Medicare. Ignoring these requirements can jeopardize future Medicare benefits and trigger a nasty surprise if you can’t afford essential treatment and Medicare refuses to pay.
First, a settlement must repay Medicare for pre-settlement Medicare expenditures that relate to the injury giving rise to a settlement. Second the Medicare Participant must use the settlement rather than Medicare to pay for future health care necessitated by the injury giving rise to a settlement. While the second obligation can be met on a pay as you go basis, it often is simpler to include a Medicare set-aside trust in your settlement.
We can work with you and your personal injury, malpractice, or worker’s compensation lawyer to help you understand your obligations, present your options, and create a Medicare set-aside trust when appropriate.
Medicaid, Medicare and ERISA Liens
Medicaid, Medicare and ERISA-governed health insurance plans sometimes pay for a plaintiff’s health care costs arising from an accident. If the plaintiff is ultimately compensated for those costs, then the payer (Medicaid, Medicare or the health plan) may demand repayment, and assert a lien on the settlement.
We will work with your personal injury, malpractice, or worker compensation lawyer to deal with the lien. We may review expenditures for relatedness to ensure the lien amount is correct, analyze whether defenses are available, negotiate with the payer to reduce the amount, or take other steps as appropriate.
Healthcare liens are complex and must be handled skillfully. If you have a lawsuit with a potential lien issue, FriedmanLaw is here to help.
If you are receiving a small settlement, then creating a complex SNT may not be economical. However, you still have options to use the settlement in a way that won’t disqualify you from benefits.
We can advise you whether and when to create an SNT and how to use the settlement with minimal disruption to Medicaid and other benefits. That may include spending the money in accordance with Medicaid rules, minimizing potential Medicaid expenditures, and more.
You also are required to report any change in circumstances to Medicaid, including receiving lump-sum income. We can work with you to provide notice of the settlement to Medicaid in a favorable way.