Latest / Coopers' Code / Lien Reduction Strategy, Plan Language, and UM/UIM Pushback, with Tim Michael

Transcript

Lien Reduction Strategy, Plan Language, and UM/UIM Pushback, with Tim Michael · Coopers' Code

0:00
If a plan says, you know, we have recovery from any
0:04
automobile policy, that does not mean that automobile policy
0:08
includes UMUIM. Now, where it gets tricky is
0:12
sometimes these plans will say underinsured or uninsured
0:16
motorists. They'll they'll say that very
0:18
clearly. And so they'll say, hey, you
0:21
know, no, our language, plain language says we can recover
0:23
from that. And so because it says that we
0:26
can't. And that's where we often push
0:28
back and say, listen, just because you put in your contract
0:33
does not mean it's true. You have to review the plain
0:36
language through also all of this case law and there is
0:39
nothing out there very clearly that says you can recover from
0:42
UMUIM supplements. So because it's not we're
0:46
oftentimes using bits and pieces of different cases to try to at
0:50
least sew enough doubt that they might realize, OK, they might be
0:55
right here or it's not worth pursuing this beyond this
0:58
negotiation phase because attempts that we could lose and
1:02
we could create settled law that says, Oh no, you can't recover
1:05
from UMUIM even if your contracts that's.
1:08
Howdy and welcome to the show. Cooper's Code focuses on legal
1:12
issues and nipple practitioners. This stolen wisdom so we all
1:16
achieve the best results for our clients.
1:18
I'm Miles Cooper and I'm very excited for this lean reduction
1:21
strategy episode with Tim Michael, Pre litigation manager
1:24
at Coopers and Lean Jedi Master. Some folks do crossword puzzles
1:28
or Wordle. Tim seems to have found his
1:30
happy place in finding inconsistencies between health
1:33
insurance contracts and the statutes they seek to avoid when
1:37
claiming an interest in our clients recoveries.
1:40
We discussed some ways to tackle liens as well as private
1:42
equities consolidation of the lean recovery industry and what
1:45
that might mean going forward. So please sit back and enjoy
1:49
this deep dive. The deletes.
1:50
Welcome back to the show, Tim. Thanks for having me.
1:53
I appreciate you being here and and for those who who don't
1:55
remember because, because it's been quite a while since Tim was
1:57
was last on. Tim is our pre litigation
1:59
manager at Cooper's, but Tim also is, is, is quite the lean
2:04
guru. And because we covered some
2:07
material recently in an article that was well received, I, I
2:10
suggested Tim that you, you, you come back on the show and kind
2:13
of help walk us through some of the things that you've learned
2:16
doing all the the lean research that you've done.
2:19
Is that fair? Yep, no, that sounds good.
2:22
It's a it's a fascinating area that often time it does doesn't
2:26
get enough coverage. In my mind so.
2:28
And to be fair, I think and, and I, I, I made the joke with, with
2:32
the read in, in terms of, you know, the types of people who
2:34
are attracted to this. Often times the same people like
2:36
crossword puzzles and Wordle and complicated knitting patterns.
2:43
It is interesting, but it's also in certain respects somewhat
2:47
technical. Is that fair?
2:49
Absolutely, yeah. I mean, it, it's very technical,
2:51
but eventually you start putting the elements together and you
2:55
realize it's, it's fairly formulaic, right.
2:57
And so when you're just kind of getting into it, it, it can be
3:01
kind of daunting. And there's different types of
3:04
plans and different, you know, things to consider.
3:07
But then eventually it it does become pretty formulaic and you
3:09
start just seeing the same things over and over and just
3:14
have to address them. That specific way for the
3:17
various different requirements since we have a variety of
3:21
listeners who TuneIn from from the very sophisticated to the
3:25
very novice can let's just touch quickly on on what liens are.
3:32
And here we're primarily discussing health insurance
3:35
liens and why they are so important in terms of being
3:40
negotiated in a case. You know, most people who are
3:43
injured, they have health insurance and their health
3:46
insurance covers their medical treatment.
3:48
And what people generally don't realize is that if you are
3:53
injured by somebody else and you receive an insurance settlement
3:57
for that injury, then your health insurance company often
4:01
times has a right to be reimbursed for the amount they
4:05
paid for your medical treatment. And so again, I, I referenced
4:09
that most people are unaware because that is something we
4:12
find over and over again with clients is when we're walking
4:15
them through the process. And one of the first things we
4:18
tell clients is you're going to have to pay back Kaiser or Blue
4:22
Shield of California for the medical treatment they paid for.
4:26
They sometimes are like, whoa, whoa, whoa, why do I have to do
4:28
that? I pay my insurance premiums.
4:30
I do all of this. Why, why do they get paid back?
4:33
And so then there's a long conversation that comes from
4:36
that, but it's fascinating because we also use that that
4:40
limited knowledge that people have about health insurance
4:42
liens sometimes to our benefit when we're negotiating the lien.
4:46
And I'm sure we'll get into that a little bit later.
4:48
So, you know, that generally is what a lien is and the reason at
4:54
least we find them so important and is that often times they
4:59
take up a, a large chunk of a client's recovery, especially
5:03
the they when they health insurance company asserts the
5:07
lien is generally a large number that will be a significant
5:12
portion of of a settlement. And so after you account for
5:16
fees and costs, you then take the lien off of the the net
5:20
after fees and costs. And sometimes the IT could leave
5:25
the client with, you know. A.
5:26
A. Small share of the total
5:28
settlement So what we find is negotiating those liens is
5:32
really important because if you can get a huge reduction for
5:35
your client, every single dollar you get reduced goes to the
5:38
client. But that also causes a little
5:40
bit of tension between the firm and, you know, representing the
5:46
client's best interest because if if you're going to spend a
5:49
ton of time negotiating this lien, it's not going to increase
5:54
your firm's recovery, but it will ultimately increase your
5:56
client's recovery. And so, you know, finding that
6:00
time and being willing to put in that effort is something we find
6:05
valuable, But I'm not sure all firms necessarily see that
6:08
value. There are two tracks I'm going
6:10
to go down here with this. I want to come come back to the
6:13
value and and the firms that do this versus the firms who may
6:16
not push it as hard. I'm going to set that aside for
6:20
a moment. I do want to talk about
6:22
expectations setting. Do you find that it's helpful to
6:25
bring this up initially with a new client or potential client
6:30
so that they're aware that this thing is lingering out there?
6:33
Because I, I think a lot of people when they arrive at a
6:35
firm, they've got this, if they've never had a personal
6:39
injury case before, they've got this idea in their mind that
6:42
people get millions of dollars for a hangnail.
6:45
And, and, and you have to kind of educate them on it's not as
6:49
much as you think and the money goes in different places.
6:52
Is that fair? Totally fair.
6:54
And we, we bring up health insurance liens very early on in
6:58
the process. So generally when a client is
7:02
still going through the intake process, so they haven't even
7:05
signed with the firm, we make sure that they are aware that
7:09
this is going to potentially, you know, eat up a large portion
7:14
of the settlement, but also make them aware that we, you know, we
7:18
will do our best to reduce that lien.
7:20
But we think that's important because, you know, if you, if
7:23
you don't share that information with them, sometimes you end up
7:25
with a client who is already signed and then they're like,
7:29
wait a minute. So now I have to reimburse my
7:30
health insurance and I have to go through this whole process.
7:33
Maybe that client would rather just not even, you know, pursue
7:36
the case anyways because they don't want to have to just deal
7:38
with the process just to reimburse their health
7:41
insurance. But you can also settle those,
7:43
you know, concerns with the client early on.
7:46
So that way their expectations are properly set.
7:49
You don't run into an issue where they've gone through the
7:51
process for 18 months and suddenly when you're sending
7:55
them the, you know, the final settlement breakdown and they're
7:59
like, whoa, whoa, whoa, where's that money going?
8:02
That is when you really have yourself propped.
8:04
So we make sure to talk about the health insurance lien, not
8:06
just that intake, but also first client call with the case
8:10
manager or attorney and then, you know, every, you know, month
8:14
or two from there, just keeping them updated on the amount of
8:17
the lien, things of that sort. With that said, I want to return
8:21
to the the fiduciary duty to the client and what I would describe
8:26
as as the more global duty to our trade and, and, and, and
8:33
here's what I mean by that. As lawyers, we have a fiduciary
8:37
duty to our clients to do the best possible job for them.
8:42
And so and I, I think you outlined this already, but, but
8:45
it, it bears repeating the, the lien money comes out of the
8:49
client's net. So if it's a, a $20,000 lien and
8:53
the client is client's net is 66,000, that 20 comes out of the
8:59
66. And every dollar you save for
9:01
the dollar that they get, we have a duty to try and reduce it
9:05
as much as possible. But but on on the the trade, the
9:11
brethren, whatever you want to to call it.
9:14
Have you run into challenges with health insurance recovery
9:20
companies? Because there are some firms who
9:25
who do not push for their clients and and and just take.
9:29
Whatever the number is, I've not necessarily heard from an
9:33
analyst at, at Rawlings or an equine, the, the, the large lien
9:37
holders that are recovery agencies that pursue these liens
9:40
on behalf of the health insurance ones.
9:42
I I've not heard from the analysts specifically like, Oh
9:46
no, all of these firms just would pay this whole amount.
9:49
You know, they don't say it, but you can tell based on the way
9:53
they handle the negotiation that often times they're surprised to
9:58
get pushed back. And so when you do push back,
10:02
they'll they'll sometimes say, you know, I've, I've never heard
10:04
this before or something along those lines.
10:07
And So what you can't help but eventually feel is that there
10:12
are firms out there who just, for example, certain plans have
10:18
a standard reduction. Maybe the lien holder says,
10:21
listen, yeah, you know, you have a $30,000 settlement.
10:25
We have a $20,000 lien. We'll only take a third of the
10:28
settlement. We'll just split the settlement
10:29
three ways, one third, one third, one third.
10:32
And so they'll accept 10,000. And those firms will just say,
10:36
you know what, yes, all right, we'll take that and we'll be
10:38
done. And it feels maybe like a bit of
10:41
a win because they are getting a reduction, but they're they're
10:44
getting a reduction that they're entitled to under the law that's
10:47
very clearly laid out. But sometimes you can push
10:52
harder than that and get a further reduction, but you can
10:56
tell they're resistant to give it because probably more often
11:00
than not, the firms are just accepting that standard
11:03
production and not trying to take a a unique angle to to get
11:08
a better recovery. To be clear, when you're talking
11:11
about pushing, pushing is being creative.
11:13
It's looking at contract language, it's looking at
11:15
statutes, it's looking at, at various ways that one can
11:22
legitimately point to the the health care recovery entity that
11:30
no, you're, you're not entitled to all of that.
11:32
And This is why. Exactly.
11:34
And, you know, so that's why when you're evaluating the lien
11:38
for potential, you know, reduction angles, one of the
11:41
things you ask for is the the plan language, because that is
11:45
one of the most important things when considering, you know,
11:49
avenues for a reduction. And going back to that previous
11:53
comment, one of the ways you can tell that, you know, these lien
11:59
holders are used to law firms just accepting like a standard
12:03
reduction of something of that sort is we asked for the plain
12:06
language in every single case. And it's, it's critical that you
12:10
get the full plan language. You don't just want the the
12:13
section that says subrogation and reimbursement.
12:16
You need the entire thing so you can evaluate where that section
12:19
is in the plan, how they call the insured's attention to that
12:25
section, all of that. But often times, probably over
12:29
75% of the time when you ask for the full plan language, they'll
12:33
still just send you that little excerpt.
12:35
And, you know, I'm sure there are plenty of firms out there
12:38
that are like, OK, great, thanks for that excerpt.
12:40
But you need to see the entire thing if you're going to, you
12:43
know, properly attack, you know, the plan language.
12:46
And so, you know, just by them often times not providing that
12:51
whole thing, even when you ask for it, you have to sometimes
12:53
ask a second time, No, I don't want just that subsection.
12:55
I want the entire plan. You can tell that the that's not
13:00
always a common request from. Other firms, when you ask for
13:04
that, are there various ways that you ask, are you asking for
13:08
it from Rawlings or Equian or do you have the the client
13:12
sometimes go to their their benefit administrator to to to
13:15
get the plan? So that, you know, there are
13:17
various ways. I usually start with, you know,
13:20
the analysts at Rawlings, Aquian, whatever may be, they
13:24
are supposed to have everything. They're supposed to have plan
13:26
language. There's this thing called Form
13:28
5500. They often carry that and
13:32
there's also, you know, a lot of people when they think of their
13:34
health insurance, they think of the summary of benefits and
13:38
covers the SBC, which is that little like 8 page that just
13:41
clearly outlines here's what you'll pay for different types
13:44
of things that it can also be useful.
13:47
And sometimes they'll just try to provide that.
13:49
But what you really the most important in our view is the
13:52
full plan language, which is either called an evidence of
13:55
coverage. It's called an evidence of
13:56
coverage of it's, you know, fully funded, fully insured
13:59
plan. It's called a summary plan
14:02
description or an SPD if it, it usually that's the title of it.
14:06
If it is a self funded ERISA plan.
14:09
And so you know, usually if I know it's self funded ERISA,
14:12
I'll say provide a copy of the summary plan description.
14:15
If you don't yet know what it is, I'll say please provide
14:17
either the evidence of coverage or the summary summary plan
14:20
description and they'll provide it often times.
14:23
Sometimes they'll say, oh, we have to get it from the plan
14:26
1st. And then, yeah, that can take
14:29
weeks, sometimes months. Sometimes you have to keep
14:31
pushing back. I need this plan language.
14:33
We're not going to be able to, you know, resolve this lien
14:36
until we have it. And in those situations,
14:39
sometimes we will go to the client and say, listen, you have
14:42
Blue Shield and, you know, go on to the app.
14:45
You can Scroll down to documents, click on, you know,
14:48
evidence of coverage and just download that and send it to me.
14:53
And again, it's shocking how few people realize that they have
14:57
access to that document and that that document actually will
15:01
impact their benefits under the plan.
15:04
And so oftentimes they see it and they're like, wow, I've
15:06
never seen this before. And it's 100 page document that
15:09
outlines, you know, how your health insurance functions
15:12
essentially so. We've talked a little bit about
15:16
leans, what they are, you know what they're governed in terms
15:18
of documentation. And as we worked on the, this
15:22
most recent article, I, I ended up going down a little bit of
15:24
rabbit hole. And so rather than Q&A with you
15:27
on this, I'm going to go through some of, of what I found, which
15:31
I I thought was really interesting.
15:33
So the historically these companies have been equine also
15:42
had a, a, a relational entity called sharks and associates way
15:45
back in the day, which was kind of their their litigation arm.
15:49
Then there was there was the Rawlings company, there was
15:53
Optum. And and you're hearing me say
15:55
was as in past tense. And, and the reason I'm saying
15:59
past tense is and, and, and I'm sorry I'm I'm mid thought going
16:05
to ask you a question. I know that some of these
16:07
entities were from Kentucky and, and, and those areas are all of
16:12
them from that area. Do you know, are they all kind
16:15
of the like offshoots of the same, same folks?
16:18
I do believe, you know, off the top of my head, I, I certainly
16:21
know Rawlings is in Kentucky, somewhere between Lexington and
16:25
Louisville. I'm from Kentucky originally.
16:27
So it anytime I see the address, it always sticks out to me.
16:31
But so I know Rawlings was based there and I I believe still is
16:35
based there, but even though they've moved towards more
16:37
remote, but I and I believe also Equian is there.
16:41
I don't think Optum is yeah. And I've never fully understood
16:46
why they're all in Kentucky, but it's it seems to be a place for
16:50
them. It bears stating that while you
16:52
are from Kentucky and you have granular knowledge of liens, you
16:56
are not a Rawlings hire, meaning you, you came to our firm with
16:59
no, no prior background in liens or anything.
17:02
It's just coincidental that you're from Kentucky, correct?
17:04
Yes. OK.
17:06
Well, so, so one of the things and and, and I think you were
17:09
the one who kind of got me going down this rabbit hole.
17:11
You mentioned that one of the entities was now calling itself
17:15
Catch KATCH, and that was Optum if I recall correctly.
17:20
Equine at some point became Optum, and then equine and Optum
17:24
are together under the catch umbrella now.
17:27
OK. And then Rawlings I think is now
17:31
Machinify, is that correct? Yeah.
17:34
And they unify, as you know, five other companies kind of
17:38
wrapped up into one, one of those five being Rollings.
17:42
And as you start kind of drilling down into who are these
17:45
entities, why are their names changing?
17:47
Why is Kaiser's entity that used to be Equian now Rawlings, but
17:54
actually Rawlings is Machinify. And for those who who can't
17:59
really follow the the three card Monte, what we're going to cut
18:02
to the chase, which is that a private equity company called
18:05
New Mountain Capital appears to now have controlling interests
18:10
in the majority of the lean recovery entities out there.
18:13
So that would be what were previously known as Optimum
18:16
Equine and Rawlings. Now Catch and Machinify.
18:20
And if you start digging into some of the websites for these
18:23
entities, they're talking about using AI and other tools to
18:28
start breaking down this information to be much more
18:32
thorough and granular in terms of making sure that they recover
18:37
assets for their owners. Is that fair?
18:41
That is fair, yes. And yeah, I mean you mentioned a
18:45
lot of the recovery agencies. So yeah, Optometric, Raymond
18:49
Rawlings, those are historically been the largest Rawlings is
18:51
probably the most recognized name in the in the industry.
18:57
And the few that have not gone down that path, you may
19:00
recognize it's like Carolyn, which is a a relatively small
19:04
recovery agency. And then you've also got like
19:07
Fiat Group, which is a a much lesser known entity, so.
19:12
The reason we bring this up is because this these shifts are
19:16
relatively new and the typically when private equity comes in,
19:22
they're looking to streamline industries and improve returns
19:27
on investment. So it is entirely possible that
19:30
we'll be seeing some shifts in approaches whether they'd be
19:36
more aggressive, whether they they are less people oriented,
19:41
whatever it may be expect change is is kind of what I am thinking
19:46
when I see this level of consolidation.
19:49
Absolutely. And it's going to be very
19:51
fascinating to see what that will be.
19:53
I've been thinking about it a lot and, you know, some level
19:56
you would expect maybe because they're under private equity,
19:59
they'll be a little more aggressive.
20:01
But I also feel like. There could be some benefit for,
20:06
you know, the, the plaintiff community in that maybe some of
20:09
the, the smaller, you know, less valuable liens will get less
20:14
attention, right? They'll, they'll pick and choose
20:17
their battles. You know, you know, if they're,
20:18
if you're trying to optimize, maybe don't be going after those
20:21
$2000 liens and be spent, you know, months negotiating back
20:25
and forth on those. Spend that time on those 100,200
20:29
thousand dollar liens and so then maybe, maybe we'll be
20:32
better off when it comes to negotiating those smaller liens.
20:34
Who knows, it's time will tell. But maybe that's just my
20:39
optimistic hope for how things will go.
20:43
I think one of the things that that was also interesting as we
20:46
start, we're doing this deep dive is seeing how some of the
20:50
entities are starting to use AI to scroll through social media.
20:57
And this is more of a concern for unrepresented individuals
21:01
than than represented clients. But people who may receive a
21:04
settlement, but not do anything related to the letter that they
21:07
get from their their health insurance recovery company.
21:10
Those companies are now using tools to identify people who may
21:15
have not turned over all the information.
21:17
And, and that can get dicey for them because one of the things
21:20
they can do is they can cut off benefits if you choose not to
21:25
engage with them in terms of, of the reimbursement side.
21:28
So one of the other things that's, that's interesting is
21:31
while all of these have been consolidated under 11 private
21:35
equity holding there, there are still some, I'll call it
21:40
organizational behavior differences.
21:42
And, and, and here we're starting to get into Kaiser.
21:45
As I understand it, one of the shifts is that Rawlings took
21:49
over lean recovery from Kaiser within the last year.
21:53
I believe it is January 1st, 2025.
21:56
Is OK. Yeah.
21:58
So it's now been a little over a year.
22:01
And what was one of the things that you noticed when Rawlings
22:05
took over in terms of aggressiveness and interests in
22:11
UIM? Uninsured underinsured motorist
22:13
coverage that that previously, you know, Equine had kind of
22:16
followed the law. It's funny because we
22:19
historically have thought of Kaiser as one of the the better
22:24
plants because when they are under Equian, you knew that no
22:28
matter what they were only going to seek recovery from a third
22:31
party clan. So you know, when we run into
22:34
the situation where you know the third party defendant, you know,
22:39
the defendant only has $15,000 policy, we get that.
22:43
But then our client thankfully has a 250 KUIM.
22:45
If there's $100,000 lien, they're still going to only
22:49
accept 5000. They're going to, they're going
22:51
to do the 30-40 reduction, accept the 5000 from the third
22:54
party and the lien will be done. And then you can just go after
22:59
the UIM. That was always really great.
23:02
And then we always had an issue with Rawlings because Rawlings
23:06
without fail, would seek from UIMUM recoveries and, you know,
23:14
for various different plants, you know, Blue Shield of
23:16
California is the one that comes to mind.
23:20
And so when we found out that Kaiser was moving over to
23:23
Rawlings, it was a, it was a little bit of a concern.
23:25
Oh, why are they making this change?
23:28
And then will Rawlings start seeking recovery from UMUIM or
23:33
reimbursement from UIMUIM just solely because they're handling
23:38
the Kaiser plan? And so that's where I did a
23:40
little bit of digging. I'd, I'd start talking to some
23:43
of these analysts and I'd say, hey, listen, you know, back when
23:46
this, this lien was with Equian, you know, we knew they would not
23:51
seek UMUIM recovery. What are, how are you guys going
23:53
to handle this? And they said that, you know
23:56
they intend to seek reimbursement from UMUIM.
24:01
Now fascinatingly, they are not Rawlings has not yet done that
24:07
in every single situation. So if you have a case from prior
24:11
to 2025, so if, if the date of loss was even December 30th,
24:16
2024, the Rawlings will still usually say, you're right, we
24:22
will not seek recovery from UMUIM.
24:24
Now as we kind of are getting close to that time, we're
24:28
resolving more 2025 cases. We've seen a few where they're
24:32
seeking that reimbursement from UMUIM.
24:36
We've also seen a few where they just say no, we're only seeing
24:38
third party. So it's kind of unclear.
24:41
You know it, it doesn't seem like it's a firm policy that
24:44
they're certainly doing it, but they are moving in that
24:48
direction where and there's uncertainty there where
24:51
previously you just knew if you had a Kaiser plan, it was going
24:54
to be third party, third party only.
24:56
As you work on some of these strategies are there and, and I,
25:02
I feel the need to cover this you while you are a pre
25:05
litigation manager and you're going to be going to law school,
25:11
you are not a lawyer. So you, you the conversation
25:15
we're having, I am one. The conversation we're having
25:17
is, is 1 in which you've done a lot of the the detail work.
25:21
You have a lot of granularity. We work together in terms of the
25:24
negotiations strategy and, and how we handle these things
25:28
because we are careful that you're are not playing a lawyer
25:30
on TV. But with that said, because of
25:36
your granularity, I, I think you have more knowledge of some of
25:39
some of the case law and, and some of the tools that you've
25:43
found to, to, to build letters to send to the health insurance
25:51
carriers that, that the rolling etcetera to try to negotiate
25:57
some of these. So.
25:58
So can you walk us through some of this?
26:00
Yeah. And you know, I, I don't, I
26:02
should say at the outset, I don't want to take full credit
26:05
and I think we'll kind of touch on this later, but there are
26:08
there are some other lean experts out there who are great
26:13
resources for information. And a lot of this I, I or at
26:16
least you know the foundation of this I get from from them.
26:21
And then, you know, they often provide letters Don to camera is
26:24
the one that I'm I'm most familiar with and some of his
26:29
letters that he shared at lean seminars and things of that sort
26:33
of talks. So I'm going to interrupt you
26:35
because I, I do want to give a plug and here's what I mean by
26:38
that. Sometimes some of these liens
26:41
are so complicated where really it pays to bring in a specialist
26:45
and Donda camera is 1. There are many others out there.
26:50
I'm parroting what you're saying, but but I'm going to add
26:52
on to it, which is bringing people like that in and, and
26:56
paying them for their time helps make sure that the, the, the
27:01
knowledge that they build and then share with all of us
27:04
continues to be backed. So when you have one of those
27:07
complicated cases, do do you think about reaching out to one
27:10
of those people who who do give back to the the greater good of
27:13
the community and, and Don is definitely one of those.
27:16
Absolutely. I'd seen this in some of the
27:18
papers that he gives out at his talks.
27:21
And, you know, UMUIM recovery is a, is a very interesting area
27:28
because, you know, it does not seem reasonable, just just, if
27:33
you're just thinking about it from, you know, a, a layman's
27:36
perspective, you know, it does not seem reasonable that a
27:39
health insurance company should be entitled to reimbursement
27:43
from UMUIM coverage that you pay for out of your own pocket.
27:48
So, you know, you could have two people, same injuries, same
27:52
situation, one with UMU IM1 without.
27:56
And just because I made the decision, let's say I'm the one
27:59
at the UM, just because I made the decision to pay for that,
28:03
now I owe my health insurance company more money because I was
28:06
wise enough to, to have healthy UM limits.
28:09
That seems, it just seems unreasonable and you know, at
28:13
face value. And so, you know, there's that.
28:16
But then there is some case law out there that you know, will
28:19
make you question one is Boston Mutual versus Murphree.
28:23
It's the 9th Circuit case and it essentially says, you know,
28:28
there's one part in there that I find really interesting and it's
28:32
that like no reasonable insured would expect that the plans
28:37
coordination clause, which at most implicates other first
28:40
party medical coverage could possibly apply to UIM coverage,
28:44
right? So the idea being, you know, if
28:49
a plan says, you know, we have recovery from any automobile
28:53
policy, that does not mean that automobile policy includes
28:58
UMUIM. Now, where it gets tricky is
29:01
sometimes these plans will say underinsured or uninsured
29:05
motorists, they'll they'll say that very clearly.
29:08
And so they'll say, hey, you know, no, our language, plain
29:11
language says we can recover from that.
29:13
And so because it says that we can't and that's where we often
29:17
push back and say, listen, just because you put in your contract
29:22
does not mean it's true. You know, you are, you know,
29:28
essentially you have to review the plain language through also
29:31
all of this case law. And it says that, you know,
29:34
there is nothing out there very clearly that says you can
29:37
recover from UMUIM settlements. So because it's not we're often
29:41
times using bits and pieces of different cases to try to at
29:46
least so enough doubt that they might realize, OK, you know,
29:51
they might be right here or it's it's not worth pursuing this,
29:54
you know, beyond this negotiation phase, because
29:59
potentially we could lose and we could create settled law that
30:01
says, oh, no, you can't recover from UMUIM even if your
30:05
contracts. That's so that's Boston Mutual
30:08
and then the other one being Saint Paul fire and versus
30:13
Murray Plumbing and heating. And that's just got something
30:17
like additional language related to that.
30:19
And it kind of says that insurers cannot exercise
30:23
subrogation rights against their own insurance or coinsurance.
30:26
And so again, it's maybe not exactly on point, but what you
30:31
think about is if I'm insured by my health insurance and my own
30:35
insurance, even though they're different coverages, you know,
30:38
they cannot exercise subrogation rights against, you know, their
30:43
own insured or Co insured. So in this case, it would be a
30:45
Co insured relationship. So that's the idea.
30:48
Often times it's just letters to like Blue Shield of California,
30:51
for example, just showing that you're at least aware of this,
30:54
you're thinking about this. And it does not mean they'll
30:58
just out outright waive the lien or recovery from UMUIM.
31:03
But often times you can get them to accept like pennies on the
31:05
dollar if you're very aggressive about it and continue to just
31:09
fight it until one of the size folds.
31:13
And so we just try to make sure it's the health insurance
31:15
company that folds first, so. So, So what I'm hearing multiple
31:19
rounds of letters, multiple pushing and you just kind of if,
31:23
if you, if you're firm and you hold the line, you can, you can
31:26
do a, a good job in terms of, of reducing the lean far more than
31:32
one might think. Yeah.
31:34
And that that's just lean negotiation generally, but also
31:37
related to UMUIM, what I think of is like wrongful recovery
31:43
against UMUIIII think what they're doing is just generally
31:47
saying we can do this. And they say it enough.
31:50
And then eventually people just pay it.
31:53
And so then that kind of emboldens them to think, oh, no,
31:56
yeah, no, you do owe us on this. Other people are doing it.
31:59
And so their hope is that they can just keep saying, no, you
32:03
must pay it. It says it right here.
32:04
They say the same thing over and over again.
32:06
I hope. And you'll eventually just get
32:07
so tired of this because after all, even if you get them to
32:11
agree with you, you're not going to you as the law firm are not
32:15
going to increase your, you know, fee on the case.
32:19
And so they're hoping you'll eventually fold, whereas, you
32:23
know, we're hoping they'll eventually just agree.
32:26
OK, fine. We'll, we'll take a significant
32:29
reduction just to get this wrapped up and I'll.
32:31
Since you, you mentioned the cases, I'll, I'll give the
32:33
sights, but I'll also let people know that we'll drop the actual
32:37
sights and cases into the show notes.
32:38
Boston Mutual is 242 F 3rd 899. The Saint Paul Fire and Marine
32:45
Insurance versus Murray Plumbing and Heating Corp is 65 calap 3rd
32:50
66. So those, those are the 2 cases
32:53
that that you were just referencing.
32:55
I'm going to take a little bit of a, a tangent.
32:58
And that is what gets done with this money.
33:03
While the letters are going back and forth, how do law firms,
33:10
auto insurance payers, whoever it is, handle the funds to make
33:14
sure that they are sequestered appropriately and not handed
33:19
out, say to clients And then having to turn around and say,
33:21
oh, you know that money that you would give you, we, we need it
33:24
back. Our hope generally is that an
33:27
auto insurance company will just cut a check to the law firm and
33:32
the client and leave the health insurance off the check as a
33:37
pay. Sometimes they'll, they'll try
33:39
to insist, no, we must include them.
33:41
Generally speaking, they, they only need to do that if it's a
33:43
statutory lien, something like, you know, Medicare or medical.
33:49
Sometimes they'll, they'll want to include them on there or
33:51
they'll want to send them the direct directly.
33:53
That's fine because those negotiations are very different
33:56
than kind of what we're talking about here.
33:57
Those, those have a more sorted out, you know, way of handling.
34:03
And so the, the liens where we often are going to be in this
34:06
month long negotiation process, we usually get a check without
34:11
the health insurance company listed as payee.
34:14
So then we can go ahead and put it in the attorney-client trust
34:16
account and then we'll go ahead and disperse, you know what we
34:22
can while withholding the entire health insurance like so you
34:27
know, say you have $100,000 settlement, $35,000 lien, you'll
34:32
disperse fees, costs and you know, net settlement to the
34:35
client less that 35,000. You'll hold on to that 35,000
34:39
and then keep negotiating until you get a resolution and
34:44
eventually cut a check to the health insurer and then send the
34:48
rest on to the client. And you know, we do that because
34:52
it's 1, You know, clients want to get their settlement often
34:56
times as soon as they can. So we get them what we can and
34:59
then tell them, which often times gives them, you know, a
35:04
little, it'll kind of get get them to realize, OK, it's OK,
35:08
now I can give it several months, let them take their
35:10
time. Because, you know, worst case
35:13
scenario, I'm getting nothing more.
35:14
That's a case scenario. I'm getting, you know, 10s of
35:17
thousands of dollars more depending on how this all pans
35:21
out. So that's how we handle it.
35:23
Well, it's truly only the clients money that we're
35:25
fighting over. Sometimes without that ability
35:29
to get some recovery, the clients will not have the the
35:34
the moxie for the fight I guess would be the way to put it.
35:37
Absolutely. Yeah.
35:38
So and that's that's kind of what we've learned over time is
35:41
if we say to a client, hey, you know, we can't disperse yet.
35:45
We're still wrapping up the health insurance lien.
35:47
And we're like, if you, if you, and I've had this conversation
35:51
dozens of times with clients, like if you will give us the
35:53
time, we're willing to put in the time to try to get, you
35:57
know, this reduced as far as as we can.
36:00
And if you, if you tell them that they will get some of the
36:03
settlement before we go through that process, they're much more
36:07
willing. Sometimes they'll be like, no, I
36:09
just want, I don't, I want to be done with this.
36:11
You know, I've, it already took 18 months to get to this
36:14
settlement and I just want to be done.
36:16
But when they realize, you know, you got to be done and just get
36:20
that amount or we can give you that amount and you can give us
36:24
several months and you know, it, it does not take much of your
36:27
involvement. We're not going to be following
36:29
up with you regularly. We'll send you updates and
36:32
usually the client will be like, OK, great, that sounds good.
36:35
And then they're very happy when, you know, three months
36:38
down the road you're able to send them an additional 5010
36:41
thousand dollars that you know, they admit that point.
36:45
I've already expected to just all go to the health insurance
36:48
company. So nice little surprise at the
36:50
end sometimes. I'll make a statement here since
36:52
you brought up the statutory liens that we are not covering
36:58
statutory leans things like all born reductions.
37:01
We, we did that on a prior episode that was with Hendrick
37:04
White and that was a couple of years back I believe.
37:08
But you can, you can find that. And we, we did cover some
37:11
strategies for that as well on on a different episode.
37:14
I think that may have been the second ever.
37:16
Episode The benefit of being young is that your memory is
37:19
better than mine. So you you'd think it'd be my
37:21
show. I'd remember that, but there it
37:23
is. Let's get involved in, in, in a,
37:26
an additional strategy that that you've used.
37:30
And, and this is the, the medical payments strategy.
37:32
And this involves situations where there is a a medical
37:37
payment portion on an auto insurance policy and, and and
37:40
with that just take it away. At least on our pre litigation
37:43
team, we haven't called. It is like the Med pay shuffle.
37:47
And you know, in California is it's relatively rare that a
37:53
client has medical payments coverage, but you know, you see
37:57
it on occasion. You know, I would say, you know,
37:59
maybe 25% of cases if that, but you, you see it.
38:04
And for those that don't know, medical payments is a no fault
38:07
coverage that will cover your medical expenses.
38:10
So you have it through your own auto policy and if you get
38:15
injured and you, you're, you know, your health insurance may
38:20
be covering most of the bills, but you might have a $500
38:24
deductible or a $500 co-pay your medical payments coverage will
38:29
will cover that Co payer deductible.
38:32
And because often times you have health insurance covering it,
38:36
you're, you don't always exhaust that medical payments coverage.
38:39
So, you know, I, I'd say the standard medical payments
38:42
coverage, if somebody has it is 5000.
38:45
Occasionally you'll see 10, rarely you'll see 25,000.
38:50
But you know, often times by the time you're reaching the end of
38:53
the case, you've spent only a fraction of the entire medical
38:57
payments coverage because your health insurance is covering
39:00
most of it. So then what you do is you go to
39:05
the health, the health insurance lien holder and you negotiate
39:09
that down as much as you can. Usually, you know, if we're just
39:14
doing a fairly standard reduction and it's, you know,
39:18
subject to 3040, So a fully funded, fully insured plan, you
39:22
get fees and costs taken off of the top of the health insurance
39:27
line. So let's just say 33 and 1/3,
39:30
for example, you know, a ballpark 33 and a third gets
39:33
shaved off the top. So by way of example, $10,000
39:37
lien Rawlings says, OK, we'll shave off the 33 and a third.
39:42
We'll accept 6500, we'll call it.
39:45
Now you go to your medical payments, you know adjuster so
39:52
through the auto insurance and say, listen, we're going to owe
39:55
this 6500 to Rawlings, can you cut a check, please?
40:00
And so they will then cut a check, pay them, and then often
40:04
times the. Medpay has a lien against your
40:12
settlement as well. So that's the second lien.
40:14
But, and you're sitting there thinking, OK, well now I'm, I've
40:17
increased my lien by $6500. How does that help me at all?
40:21
But they also have to reduce for fees and costs.
40:24
So now that 6500 you get another 33 and a third shaved off and
40:29
now you're looking at 4200. And so you know, that $10,000
40:34
lien which without the Medpay may have been 6600 is now like
40:38
4000 because you've had Medpay cover it and you've been able to
40:42
reduce that. Now what can really be
40:46
beneficial is generally speaking, if your recovery from
40:53
the third party is policy limits.
40:56
So if you get a policy limit recovery, the, the client was
40:58
not made whole or you can make some sort of argument that the
41:00
client was not made whole, the medical payment lien should be
41:05
waived. Now, often times they'll push
41:07
back on that. You, you know, I'll usually say,
41:10
listen, we got the third party policy, we got the limits,
41:14
client was not made whole. You guys have to waive the
41:16
medical payments lien and they'll say, no, no, we don't,
41:19
we, we, we can recover. And then you just ask them for
41:22
the, the contract language of the auto plan and you'll find
41:27
that under the, you know, subgregation reimbursement
41:29
section, they do not waive made whole.
41:32
And so whereas health insurance companies almost always wave the
41:35
made hole in their playing language, medical payments, they
41:39
have not caught on to that and they do not include it.
41:41
And almost always they'll wave it.
41:42
Fingers crossed here. I, I, I did get a text from a
41:45
lawyer friend of mine that he has an adjuster friend who has
41:49
started listening and, and, and likes, likes the show.
41:52
So I, I've just got fingers crossed that this is not going
41:55
to go up the claims levels and all of a sudden we're going to
41:57
see AAA writing this in. But you know who knows better?
42:02
Better to share the knowledge. Exactly.
42:04
Yeah, we'll have to see. And along those lines with the
42:09
the waving the medical payments lien because you were not made
42:12
whole. The if they won't do that or if
42:15
they can demonstrate that they they do, you know, wave made
42:19
whole in the plain language, whatever it may be, we'll often
42:23
use the argument. My client has been a AAA insured
42:27
for 25 years. They rarely make claims and
42:30
sometimes we do this with UMUIM negotiations too.
42:33
But it really seems to work in Med pay because you know, it's a
42:37
no fault coverage. It's supposed to be there.
42:39
My client never uses it. They've, you know, paid their
42:42
premiums on time for 25 years. Do you really need that $4000 or
42:47
can you just wait? And often times they'll say, OK,
42:50
fine, we'll waive it or they all accept 500 or something like
42:54
that. So, you know, there's various
42:56
different ways to handle the men pay lien negotiation and they
43:00
usually are much easier negotiations than the health
43:03
insurance liens. They just tend to be a little
43:06
less aggressive and you know, they seem a little less
43:10
passionate about actually recovering the full value of
43:12
their lean than the the Rawlings and equians or catches of the
43:17
world so. We'll see what happens when New
43:20
Mountain Capital acquires those segregation rights as well.
43:23
Exactly. For those who are not not on the
43:26
video version, I'm I'm now grinning because I'm I'm being a
43:29
little, little glib about that one.
43:32
Pivoting now into causation. Are there situations where you
43:36
find that the causation defense that oh, the ACL tear, the, the,
43:46
the whatever the disk degeneration, whatever it is,
43:50
was not caused by this collision?
43:53
Are there times where you find that the defense reports or the
43:58
defense efforts in the case to minimize that then become
44:02
beneficial in the lean negotiation?
44:04
And if so, how Absolutely so. You know, I'll be honest, we see
44:10
less of this on the pre litigation side in my
44:13
department, but I, I am aware that this is a, a common
44:16
strategy our, our friends on our, in our litigation
44:19
department use. And you know, it's important to
44:24
recognize that when you are about to negotiate a lien, it is
44:28
important to get the itemized statement of benefits and see
44:31
what they are claiming. So, you know, sometimes
44:34
generally speaking, when you report the lean, they'll ask
44:37
what are the injuries, what body parts?
44:38
And so that way they can code in such a way that they they only
44:41
get what they think is the incident related treatment.
44:44
You should always go through that and make sure they're not
44:46
including anything that was not related, which sometimes
44:49
happens. But then what you'll realize is
44:52
when you're, you know, litigating a case, the defense
44:55
might say, using your ACL example, Oh no, that that ACL
44:59
was, was already, you know, torn prior to this incident.
45:02
And it, it was not this incident that caused that ACL terror,
45:06
despite, you know, the plan of experts saying so.
45:09
And so as soon as you resolve the case, you then turn around,
45:16
go back to Rawlings, for example, and say, look, here is
45:20
a report from an expert that says that this injury was not
45:23
related to the incident. So you guys must take off all
45:26
treatment related to the ACL repair imaging everything.
45:29
And then they'll say, all right, we'll shave that off.
45:32
They take it off. And then often times your lien
45:34
gets cut down by a huge amount. And I, I will say, and you know,
45:40
generally speaking, if you ask the lien holder to take certain
45:46
claims off, you don't get a lot of pushback or a lot of they're,
45:49
they're generally willing to do it.
45:51
Now, you know, some of these more complex issues where, you
45:57
know, we, we actually do think it is related, but you know,
46:00
there's an argument that it is not it.
46:03
That's where it's helpful to have that sport like an expert
46:05
report from the defense experts. But yeah, we've had, we've had
46:09
good success there and have gotten some huge liens reduced
46:14
by a significant amount and obviously that totally benefits
46:18
the client. As we kind of come into the end
46:22
of things, so to speak, are are there any other major
46:26
strategies, major, major practice points that we haven't
46:31
covered that you think we should dive into?
46:34
There's not a whole lot 1 of the things that that comes to mind.
46:37
And you know, if, if you have experience with liens, you're
46:40
probably well aware of this. But we didn't really cover the
46:44
difference between a self funded and like a fully insured plan
46:47
where, you know, the self funded, they're entitled to a, a
46:51
larger portion of the full lien recovery.
46:54
They often times don't have to reduce for fees, attorneys fees
46:57
or costs. There's not some California
47:01
30-40, you know, automatic calculation.
47:06
They often times say we're entitled to the full amount of
47:09
our lien and we're, we intend to recover that amount.
47:13
And because of that, it is important to recognize that you
47:15
should be negotiating those liens early.
47:18
What I've found is it's helpful to not send in a release on so,
47:24
you know, before releasing the third party and you know,
47:28
accepting a settlement, go to the the lien holder and say
47:32
something along the lines of, look, we're being offered a
47:35
policy or, you know, they're offering the policy limits.
47:38
But I recognize you're going to try to take, you know, 60% of
47:42
that. And our client, you know,
47:44
doesn't, doesn't want to do that.
47:46
And so either they're thinking about walking away, whether
47:50
that's true or not, you say it that, you know, they, they're
47:52
thinking about walking away or, you know, if you guys aren't
47:57
willing to reduce, then the client's not going to accept
48:00
this and they're going to want to file.
48:02
And then we're going to end up spending all this time and money
48:05
seeking a personal contribution that might ultimately end up
48:08
with no additional recovery. And so you guys are going to
48:11
wait two years to get the get the money that you're looking
48:14
for right now. And you know, we'll give you 60%
48:19
of what you're looking for now, you know, this week if you're
48:22
willing to, you know, make that reduction.
48:26
So there's just certain angles that you need to take,
48:28
especially with regard to self funded wrestling because
48:32
otherwise they can be very aggressive and try to seek, you
48:34
know, the full amount. And so it's just important to
48:38
kind of negotiate early prior to resolving the case.
48:42
So that way you can have a little bit more leverage with
48:44
that. And I've seen self funded ERISA
48:49
carriers play chicken with that. And in situations where our
48:53
clients truly did not want to be a pass through, where it wasn't
48:57
until the day before the statue of limitations was running that
49:02
we were able to ink a deal, a pre filing deal as to what the
49:07
breakdown was going to be. And, and they're just, there are
49:11
a few notably aggressive self funded ERISA plans out there
49:17
that on occasion some of us have the, the misfortune of coming
49:21
across. So one other strategy that came
49:25
up and talking with another lawyer that I'll, I'll, I'll
49:27
throw out there. It's not one that we generally
49:30
employ, but it is within the arsenal.
49:33
And, and so I'm just going to list it as, as, as a
49:35
possibility. It's it can be challenging for
49:38
the bookkeeper and it can be challenging just from a duration
49:44
perspective. But there are some lawyers who
49:46
use the statute solution. And the statute's solution is
49:50
you've got somebody who's just completely pigheaded and you
49:56
park the money and you, you park the money until the statute
50:00
runs, because usually they won't do anything about it.
50:03
And, and then you release the funds to the client once the
50:05
statute has passed. But the challenge there being
50:08
you're parking a fair amount of money for a fair amount of time.
50:12
And since the, the client trust accounting rules are so precise,
50:18
it, it, it can be a challenge to keep that money in a way where
50:24
it, it is just sitting in the client trust account for four
50:27
years on end. But but that is that is a
50:29
strategy that some warriors use. You're right, we don't use it
50:32
often, but we, I can think of one situation where we've had
50:36
it, we've been doing that. And that was an interesting one
50:40
because essentially we, we tried to resolve this lien and we're
50:47
making, I thought fairly reasonable offers and they
50:53
stopped responding to us. So, you know, we kept following
50:55
up with them. They eventually stopped
50:57
responding And it's like, well, we're not going to keep
51:00
bothering them. We're just going to park the
51:02
money and hopefully they forget about it.
51:04
And I think we're, we're just over 2 years into the five year
51:10
process here, but no word from them in the whole 2 years.
51:13
And you know, three more years and then we'll be looking good.
51:18
So we'll just have to wait and see.
51:20
Yeah. Well, Tim, I, I really enjoyed
51:23
our, our lean conversation. I, I appreciate you taking the
51:25
time to to come on and talk through some of your strategies.
51:28
Yeah, thanks for having me. And you know, there's, there's
51:31
much more we could discuss another time on down the road.
51:35
Definitely, definitely well and and thank you for listening
51:38
today. Please e-mail us at podcast at
51:40
Coopers dot law with questions, comments, feedback and
51:43
suggestions for who we should have on the show.
51:45
Like what you heard? Share us with a colleague and
51:48
leave us a five star review on your podcast platform of choice.
51:51
To all you doing justice out there.
51:53
Happy hunting.