Take Away: STOP saying that either the VA or Tricare has a “lien” on a client’s recovery. Unless you give them such rights, they don’t have them.
There is perhaps nothing more confusing regarding settlement or case value analysis than what liens or claims need to be satisfied, and what can be done to reduce them. While state law affects many of these issues (discussed in other papers) the rights of federal actors – the USA and its agencies – are pretty standard across jurisdictions. Nevertheless, there remains much misinformation regarding such claims. In this article, I will discuss the rights of the VA to recover for the value of its medical care services, and the rights of Tricare to recovery payments made for care where a non-government person or entity has caused bodily injury for which either the VA provided medical care or the same was paid for by Tricare or any of its subgroups. The information here does not apply in actions against the USA under the FTCA.
The answer to the most commonly asked question, when your injured client has been treated at a Veterans Administration Medical Center (VAMC) is: Unless the patient consents, The VA does not have a right to collect for the value of its services directly from the client/patient nor from their recovery from a third party . The same applies to Tricare. Being the government, their rights are controlled by statute and the CFRs giving effect to the statutes. And by these, the VA has a right to proceed against the tortfeasor; they have a right to get your client’s cooperation in doing so, they can require you to assign them your right to collect for the VA medical bills, and for some reason they have a right to be informed of a settlement offer. There is no statute or regulation that allows them to collect against YOUR client’s claims (unless your client claims the value of VA medical care in their suit).
Because I have recently read legal articles and postings saying the opposite, I will discuss here the actual laws and some cases as a starting point for you to check these statements.
The authority for the federal government to recover in these tort cases comes from federal law, specifically 42 U.S.C. § 2651, appropriately referred to as the Medical Care Recovery Act (MCRA). To pursue its right to recover for medical expenditures, the United States may:
(1) intervene or join in any action or proceeding brought by the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors, against the third person who is liable for the injury or disease or the insurance carrier or other entity responsible for the payment or reimbursement of medical expenses or lost pay; or
(2) if such action or proceeding is not commenced within six months after the first day in which care and treatment is furnished or paid for by the United States in connection with the injury or disease involved, institute and prosecute legal proceedings against the third person who is liable for the injury or disease or the insurance carrier or other entity responsible for the payment or reimbursement of medical expenses or lost pay, in a State or Federal court, either alone (in its own name or in the name of the injured person, his guardian, personal representative, estate, dependents, or survivors) or in conjunction with the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors.
The enabling language of the MCRA specifically grants the right to recover “from said third person, or that person’s insurer, the reasonable value of the care and treatment so furnished.” 42 U.S.C. § 2651(a). The point is that the VA does not have a “lien” or claim against your client’s settlement or verdict, unless you are representing the VA’s interest in recovering that value. By the same token, your client does not have a right to claim those medical cost damages in court without the VA’s (or Tricare’s) consent. And if you do that, you are bound to repay them their money.
The same is true for care given at military hospitals. Neither they nor the VA will generate a billing statement, or its equivalent, unless they intend to make a claim for recovery. They are not set up to do such legal work on their own, so almost always this doesn’t happen unless you ask them for such a statement. And of course, if you do, they will then require you to cooperate and represent their interest in recovering their costs. They do this by requiring you sign an agreement for representation of the government’s claim.
Much of the confusion, I believe, is caused by the statutory language following right after the above quote from § 2651(a). That language references a subrogation right:
…the United States shall have a right to recover (independent of the rights of the injured or diseased person) from said third person, or that person’s insurer, the reasonable value of the care and treatment so furnished, to be furnished, paid for, or to be paid for and shall, as to this right be subrogated to any right or claim that the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors has against such third person to the extent of the reasonable value of the care and treatment so furnished, to be furnished, paid for, or to be paid for.
This reference to a “subrogation” right leads to thoughts that it means the government agency has a right to recover from the patient- your client. That is not what subrogation means, and in the case of these statutes there is case law clearly indicating that neither the VA nor Tricare have that right (absent assignment or agreement). This is why the terms of subsection (d) of 42 U.S.C § 2651 are so important- they set out the scope and limits of the government’s authorized actions. None of those include having a lien on a patient’s own, separate, action for damages against a third party (again, unless you have agreed to represent their interests in the action).
The case law citations follow the statutory language: