Let’s start with the basics. Simply put, a lien is a repayment obligation. It’s a claim or legal right against assets that may be used as collateral to satisfy a debt. Someone pays something on your behalf, and you agree to repay them at a later date. A lien could take the form of a bank lien, a judgment lien, a mechanic’s lien, a real estate lien, a tax lien, a medical lien, etc.
In the context of Camp Lejeune, the lien in question is a medical lien. It arises from the fact that insurance programs or companies have paid for certain medical expenses since the date the contaminated water at Camp Lejeune injured the victim. Most insurance policies contain provisions obligating members to repay the insurer a certain amount of money if the member receives compensation from the settlement of an insurance claim. Whether the amount asserted by the insurer is actually owed may depend on a number of factors including but not limited to the state of jurisdiction and the type of benefit in question. While some liens may be simple and can be addressed in a matter of days, others can be complicated and take weeks or even months to resolve completely.
How are Liens Typically Resolved?
Liens can be resolved in a number of ways. As related to lien resolution for incidents involving hundreds of victims or more (such as a mass tort or Camp Lejeune), three general approaches exist. Depending on your goals and your client’s desires, one approach may be a better fit than others.
1. Victim by Victim Approach
For some, handling liens on a victim-by-victim basis makes the most sense. Generally speaking, this approach yields superior lien reductions, meaning that injury victims maximize their net settlement proceeds. A potential pitfall this approach presents is that it may take longer to complete from start to finish, depending on factors such as who handles the lien negotiations and when those negotiations begin.
2. Law Firm by Law Firm Approach
Alternatively, liens could be handled on an inventory basis. Here, a particular lawyer or firm representing more than one injury victim could approach lien holders and strike deals which apply to all of the injury victims they represent. This approach brings some efficiencies to the table. The negotiated reduction can be applied to tens, hundreds or even thousands of people. A potential pitfall of this approach is that the negotiated reduction might benefit some victims more than others. A negotiated rate may benefit the catastrophically injured victim more than the less seriously injured victim.
3. Programmatic or Global Approach
A third approach is that liens could be handled in a programmatic or global manner. This means that all lawyers representing all of the injury victims strike the same deal with the lien holder which then applies uniformly to all injury victims. This approach may be the most efficient of all, and has gained favor over the past decade. Ideally, this leads directly to faster disbursement of settlement proceeds. Unfortunately, it rarely does and that’s the downside to this approach.
Mass tort settlements involve a number of moving parts. Unless liens are the final piece to the puzzle, victims (and attorneys) must wait for other issues to be resolved before they can receive their money. Further, as stated previously, if the negotiated rate applies to all victims, then it might mean some victims benefit more than others. This can pose issues when explaining to some clients how the attorney derived the net settlement figure.
To be clear, Camp Lejeune is not a “mass tort”. It is not subject to the multi-district litigation (“MDL”) process at the present time. There are not traditional tortfeasors like pharmaceutical companies or medical device manufacturers sitting across the negotiating table. Perhaps the only thing that may cause someone to think of Camp Lejeune as a “mass tort” is the universe of injury victims affected by the contaminated water. While Camp Lejeune may be a mass injury event, it is not a “mass tort.”
As of the date of this White Paper, there has been no one definitive approach established from the three (3) mentioned above. Currently, victims (and attorneys representing victims) of Camp Lejeune’s toxic water can pick their own lien resolution path that best fits their goals. If your goal is to be part of a larger process that bring efficiencies of scale to the table, perhaps the third approach works best. However, if your goal is to achieve maximum lien reductions on a victim- by-victim basis, then the first approach likely is your best path forward.