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June 2011 Lien Update

Judge Herbert Kramer of Supreme Court, Kings County has ruled in his decision in the matter of Trezza v. Trezza that so called Medicare replacement health plans cannot place a lien on, or subrogate against, a personal injury case in New York. Subrogation commonly occurs when a health insurance company that has paid for an injured persons medical treatment attempts to “stand in the injured persons shoes” and recoup the money it paid for the injured persons treatment out of the money secured in the personal injury case. The most simple way to describe subrogation is that the insurance company substitutes itself in place of the injured person. The decision affirms what many plaintiffs’ have contended for some time, that only Medicare, and not a Medicare replacement, choice or advantage plan, has a lien that supersedes Section 5-335 of New York’s General Obligations Law.

As many personal injury practitioners know, a group of health insurance companies have argued that their health plans, which are commonly known as Medicare Replacement, Medicare Choice or Medicare Advantage plans, have the same lien rights as Medicare.  hese health insurers, and more particularly their collection companies (Rawlings, Socrates, Healthcare Recoveries, etc.), have alleged that they are entitled to recoup their payments from a plaintiff’s personal injury settlement even in the face of GOL § 5-335 due to their “Medicare status”. Judge Kramer’s decision makes it clear that in New York, GOL § 5-335 is the controlling law and that these companies have no such entitlement. To read the full opinion, click here.