If you are a member of the U.S. Military and are injured in a car accident, TRICARE (formerly CHAMPUS) will likely help pay for your medical care. TRICARE is a governmental healthcare program that covers military personnel and retirees, their families, survivors and some former spouses. The federal government has established a lien right against personal injury recovery for any medical expenses paid by TRICARE. Thus, if you are injured in an accident and TRICARE pays for any of your medical expenses, the program will be able to seek reimbursement from any proceeds received through your settlement or award.
The TRICARE program is divided into three regions (North, South and West), and North Carolina is located in the North region. This is important because you will need to be aware of what region you are covered by whenever contacting TRICARE.
In order for a TRICARE lien (or any lien) to be able to claim an interest in your personal injury recovery, it must attach and be perfected. While you may not be certain what these legal terms mean, it is important to understand how the lien works and how it may affect your overall settlement. As soon as someone covered by the TRICARE program receives treatment for their injuries, the program will automatically have a right of reimbursement from a personal injury settlement or award. TRICARE liens are unique in that they do not require the government to send notice of their lien. This is important because most lien holders must send notice of the lien in order for it to be valid (also known as perfected).
Due to the fact that TRICARE liens automatically attach and perfect, you will most likely be obligated to reimburse the program from your settlement. Moreover, you may have to use most or all of your recovery proceeds to pay the lien, as there is no cap on the amount of your recovery proceeds that TRICARE can receive. With the exception of Medicare liens, TRICARE will receive reimbursement before other liens and attorney’s fees. In other words, attorney’s fees are determined after TRICARE receives their portion of the recovery proceeds.
Let’s look at the following example to better understand how TRICARE liens may affect distribution of your recovery proceeds.
Assume that Jason, an active military member, was injured in a car accident. Jason received $15,000 worth of medical treatment that was covered by TRICARE. Jason eventually agreed to a $40,000 settlement. Jason’s attorney agreed to the normal one-third contingency fee. In this example, TRICARE would receive a $15,000 lien on Jason’s $40,000 recovery. Also, Jason’s attorney’s fees would be calculated after the $15,000 TRICARE lien is deducted; thus, 1/3 of $25,000 (8,333.33) rather than the total settlement amount of $40,000. Jason would receive the remaining amount ($16,666.67). The distribution and calculation are as follows:
Settlement Amount: $40,000
TRICARE Lien: -$15,000
Amount After Lien Deducted $25,000
Attorney Fee (1/3 of $25,000): -$ 8,333.33
Amount to Jason: $16,666.67
As a federal lien, TRICARE has substantial bargaining power and generally seeks reimbursement for the total amount paid for treatment. With this being said, TRICARE does allow for adjustments and can be reduced or waived if justice requires. Generally, the best way to try to reduce the lien is to file a waiver or reduction request for undue hardship. Although TRICARE does not have exact guidelines as to what constitutes undue hardship, you will want to base your arguments on fairness. Some tried and true fairness arguments are listed below.
1. You could need future treatment and will need some of the settlement to pay for these treatments.
2. You need the settlement or award money to pay your bills because the injuries sustained prevent you from working.
3. Your continuing treatment costs still have to come out of the settlement.
4. Some of the settlement or award is for your continuing pain and suffering.
Moreover, TRICARE liens, as with most other statutory liens, can only claim medical expenses that are specifically related to the injuries suffered in your personal injury claim. Therefore, you should always request a final itemization for a lien and dispute any claims that you feel are not related to your personal injury case.
Hiring an attorney to review your personal injury case is always an advisable idea. An experienced and trustworthy lawyer will work hard to obtain a waiver or substantial reduction for TRICARE liens in order to maximize your share of the recovery.