Medicare Madness: Wrongful Death Claims and Survivorship Claims and Release Language

Medicare Madness: Wrongful Death Claims and Survivorship Claims and Release Language

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We’re seeing an uptick in CMS lien recovery activity across the board, with a particularly hot topic being Medicare asserting liens against wrongful death (WD) recoveries.

Let’s be clear: CMS has no lien rights against a California wrongful death recovery. If you represent only the WD heirs, and there is no survivorship claim being pursued, no claim for past medical special damages exists—and thus, no basis for a CMS lien.

However, things get complicated when a survivorship claim on behalf of the estate is also in play. This often arises when you commence a claim on behalf of an injured plaintiff who passes away before the matter resolves. If the death is related to the tort, you now have a wrongful death claim on behalf of the heirs and a survivorship claim on behalf of the estate. It’s common for one of the wrongful death heirs to also serve as the estate’s representative, raising both representation and conflict of interest issues.

Frequently, the only recoverable damages in the survivorship action are past medical special damages—the very expenses that trigger the CMS lien. Since CMS only reduces its lien for actual procurement costs, pursuing that claim often results in the full recovery going to CMS and the attorney, leaving nothing for the estate.

Even if you exclude any claim for past medical special damages and do not represent the estate, you may still face CMS lien assertions against the wrongful death recovery. That’s because liability carriers often insist on settlement documents that release all potential claims, including those of the estate. In policy limits cases, this is often the only way for the carrier to secure finality. If the settlement is unapportioned, and the estate’s claims are released, CMS will interpret that as a recovery by the estate—and pursue its lien accordingly.

Practical Ways to Address the Issue:

• Represent only the WD heirs—not the estate. Consider referring the estate representation to separate counsel.
• If you represent both the estate and the WD heirs, use separate fee agreements
• and obtain written conflict waivers that clearly define the scope of each representation.
• Avoid making any claim for past medical special damages in discovery responses, settlement demands, or other communications. Be explicit: “Plaintiffs are not seeking recovery of past medical special damages subject to any CMS lien.”
• Request that the liability carrier report only wrongful death damages in their SMART Act Section 111 reporting—both at the outset and at resolution.
• Use separate settlement releases for the estate’s claims and the wrongful death claims.

A Note About Release Language:

Even when a release clearly states it covers only wrongful death claims, a broad indemnity/hold harmless clause—wherein the heirs agree to be responsible for “any and all liens”—can create third-party beneficiary rights in favor of CMS. We’ve seen it happen.

To mitigate that risk, consider adding the following to the release:

“Nothing in the release shall inure to the benefit of any nonparty to this release, named or unnamed, including any governmental or insuring entity. No third-party beneficiary status or standing is established or implied for any individual or entity.”

Also, don’t forget: private Medicare Advantage Plans (MAPs) continue to assert Secondary Payer Act liens just like CMS. The same limitations on CMS lien rights should apply to MAP liens—but you must be ready to raise those defenses.

Challenging SPA liens is time-consuming, requiring up to four levels of administrative appeal before you can even file in federal court. That’s why early, strategic planning is essential.

Explore More Resources with Lien Project Network

For a deeper dive into lien resolution strategies, settlement planning, and reimbursement challenges, explore our educational modules. Lien Project Network serves as a trusted resource for plaintiff attorneys, providing insights on financial planning, public benefits, and structured settlements in the context of lien management.

Need Assistance? Work With The Lien Project, PC

If you need expert legal assistance in navigating lien resolution, reimbursement claims, or settlement planning, our team at The Lien Project, PC is ready to help. As an LPN member, you earn credits that can be applied toward lien reduction and resolution services provided by The Lien Project, PC, allowing you to offset up to $900 per year. Your investment in continuing education through Lien Project Network not only enhances your lien resolution skills but also reduces the cost of engaging legal experts when needed.

Schedule a Consult today to see how we can help maximize your client’s recovery.