Costs of Settling Claims for Persons with Disabilities
Under Virginia law, a person under a disability includes persons confined due to a felony conviction, persons under the age of 18, and incapacitated persons. When such persons are involved in personal injury cases, additional court procedures are required to settle the claim. For example, when there is an incapacity, a guardian and conservator may need to be appointed to sue on behalf of, or defend, the incapacitated person. Similarly, when a felon is involved in litigation, the court may appoint a guardian ad litem to represent the interests of such individual. Common among all persons with disabilities is the requirement that a court approve all compromises and that payment of settlement proceeds be made to a proper fiduciary. These additional requirements increase the costs associated with such claims.
The U.S. District Court for or the Middle District of Florida, Tampa Division, recently decided to permit expert testimony pertaining to contributions by insurance companies towards expenses associated with settling claims for persons with disabilities, specifically costs to obtain guardianship and to establish a special needs trust. See DeCamp v. State Farm, No. 8:20-cv-1747-VMC-TGW (Sept 7, 2021). The expert specifically opined that, “in refusing to pay or contribute to the expense of the guardianship to resolve this catastrophic claim, State Farm was not acting consistent with the custom and practice in the industry.” The expert further contended that it is not relevant whether the policy specifically addressed such costs because, “insurance companies frequently pay ‘routine loss expenses’ that they are not required to pay under the terms of a policy.”
The issue regarding whether an insurance company is liable for ancillary costs associated with a settlement is critical to the Plaintiff’s argument that State Farm engaged in unfair claim settlement practices. This case, depending on the ultimate outcome, may pave the way for Plaintiffs to recover legal fees necessary to resolve a personal injury claim for a person under a disability.
ASK THE ATTORNEY
Hook Law Center: “I have received this letter from the Estate Recovery Unit of the Department of Medical Assistance Services… what does this mean?”
Answer: Many of our clients have contacted us about this letter. We were not sure why these letters were suddenly sent, however, on October 15, 2021, the Department of Medical Assistance Services issued a statement indicating that the letters were sent erroneously and that they will be sending new letters to address the error. If you took action to cancel coverage as a result of this notice, DMAS will assist in restoring your coverage if you contact them at 1-855-242-8282.
Although this letter was erroneously sent to many Medicaid enrollees in the Commonwealth, it is important to understand the contents of the letter. Specifically, the letter confirms that premiums paid by Medicaid on your behalf to your Managed Care Organization will be included in your estate recovery claim.
Commonwealth Coordinated Care Plus (CCC Plus) is the Managed Care program for Medicaid-eligible adults who are aged 65 or older, children and adults with disabilities, nursing facility residents and those receiving long-term services and supports. The program is designed to provide integrated services under a single program and enrollment, with the intention to improve quality, access and efficiency of health care for the program’s members.
Estate recovery itself is nothing new. Under federal law, states are required to recover funds for medical payments made by a Medicaid program from the estates of certain deceased enrollees. As noted in the letter, however, estate recovery may not be had when there is a surviving spouse, or a surviving child with a disability, or a surviving child under the age of 21. Additional exceptions may be made in the case of an undue hardship or when cost to pursue recovery is too expensive.
