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TRICARE LIENS

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In North Carolina, dealing with TRICARE liens in personal injury claims involves several steps and considerations. TRICARE, the healthcare program for military personnel, retirees, and their dependents, often places liens on personal injury settlements to recover the cost of medical treatment it provided for injuries caused by third parties.

Here’s an outline of the process and key points to keep in mind:

  1. Notification:
    • Notify TRICARE (or its contractor) of the personal injury claim as soon as possible. This is crucial because TRICARE needs to be aware of the claim to assert its right to recovery.
  2. Lien Identification:
    • Identify the exact amount of the lien. TRICARE will provide a statement detailing the amount they seek to recover. This typically includes all medical expenses paid for treatment related to the injury.
  3. Negotiation:
    • In some cases, it might be possible to negotiate the amount of the lien. This can involve discussions with TRICARE to potentially reduce the lien amount, especially if the settlement does not fully cover all damages or if there are other substantial liens.
  4. Settlement and Payment:
    • Once the settlement is reached in the personal injury case, the lien must be satisfied. Ensure that TRICARE receives payment from the settlement proceeds before disbursing funds to the claimant.
  5. Legal Requirements:
    • Understand that federal law grants TRICARE the right to recover these funds, and failing to address the lien properly can result in significant legal consequences, including potential lawsuits or additional costs.
  6. Attorney Involvement:
    • It’s often beneficial to involve an attorney experienced in handling TRICARE liens. They can assist with negotiations, ensure compliance with all legal requirements, and help maximize the net recovery for the claimant.

When handling a personal injury settlement involving a TRICARE lien, the calculation of attorney fees after the lien is paid is mandated by specific guidelines from the U.S. government. The rationale behind this requirement is rooted in the federal regulations and policies governing TRICARE recoveries. Here’s an accurate breakdown of the process and the rationale:

  1. Settlement Amount Determination:
    • Start with the total settlement amount received from the personal injury claim.
  2. TRICARE Lien Payment:
    • Pay the TRICARE lien from the settlement amount first. This ensures that TRICARE’s right to recover its expenses is satisfied before other distributions are made.
  3. Net Settlement Calculation:
    • Subtract the amount paid to TRICARE for the lien from the total settlement amount to determine the net settlement amount.
  4. Attorney Fees Calculation:
    • Attorney fees are calculated based on the net settlement amount (i.e., the amount remaining after the TRICARE lien is paid).

Example Calculation

Suppose the following:

  • Total settlement amount: $100,000
  • TRICARE lien amount: $20,000
  • Attorney fee percentage: 33%

Step-by-Step Calculation:

  1. Total Settlement: $100,000
  2. Minus TRICARE Lien: $100,000 – $20,000 = $80,000 (Net Settlement)
  3. Attorney Fees: 33% of $80,000 = $26,400

Remaining for Client:

  • Net Settlement: $80,000
  • Minus Attorney Fees: $80,000 – $26,400 = $53,600

Rationale

  • Government Stipulation: The U.S. government mandates this method because TRICARE does not cover the cost of attorney fees for recovering the medical expenses it paid. Therefore, the attorney fees must be calculated based on the net settlement after the TRICARE lien is paid to ensure the government’s recovery is not reduced by legal costs.
  • Full Recovery for TRICARE: This approach ensures that the government recovers the full amount of medical expenses it incurred without having to share the burden of the attorney fees.
  • Compliance with Federal Regulations: Federal regulations governing TRICARE recoveries stipulate that the recovery process must prioritize the repayment of TRICARE’s expenses before other distributions, including attorney fees.

Conclusion

Calculating attorney fees based on the net settlement amount, after paying the TRICARE lien, is a requirement set by the U.S. government to ensure that TRICARE recovers the full amount of its medical expenses without bearing the cost of attorney fees. This compliance with federal regulations ensures that the government’s interests are protected while also providing a clear and fair distribution process for the settlement proceeds. Always consult with your attorney to understand how fees will be calculated in your specific case and to ensure that all lien obligations are properly addressed.