How you can send Medicare home with no money for their lien
You request an allocation hearing. An "allocation hearing" is typically requested by a motion to the Court that is presiding over your case. In your motion for an allocation hearing, you ask the Court to determine the "allocation" between the non-economic (also known as pain and suffering) and the economic damages, i.e., loss of wages and medical expenses. If, for example, you settle your personal injury lawsuit for a fraction of its full value due to limited insurance coverage or questionable liability, you should ask the Court to allocate most, if not all, of your settlement proceeds to non-economic damages.
By making an allocation of the settlement to non-economic damages, you can reduce or even eliminate the Medicare lien. For example, if the Court determines that 95% of your personal injury settlement represents compensation for non-economic damage (i.e., pain and suffering), then Medicare can only attempt to collect its lien from the portion of the settlement representing economic damages. Even better, if the Court allocates all of your settlement proceeds to non-economic damages, then Medicare cannot collect any of its lien. In that case, Medicare gets nothing.
The collection agency for Medicare liens is the Medicare Secondary Payer Recovery Contractor ("MSPRC"). The MSPRC will acknowledge an Order of a Court that makes an allocation between non-economic and economic damages. If you get a favorable ruling from the Court that 90% of your settlement represents compensation for non-economic damages, the MSPRC will acknowledge the authority of the Court to make such a determination. In that case, the MSPRC will only attempt to collect from the portion of your settlement representing compensation for past medical expenses.
When you face the prospect of getting little or no money from your personal injury settlement due to a hefty Medicare lien, you should request an allocation hearing and ask the Court to make an allocation between the portion of your settlement representing non-economic and economic damages. An allocation hearing may be your best friend for reducing, or even eliminating, a Medicare lien.