Hip Replacement Class Action Suits And How Medicare And Health Insurers Will Be Getting All The Money
As reported recently in the International Herald Tribune (12/29/11) and in the New York Times (8/22/11) in excess of 5,000 lawsuits have been filed against medical product manufacturers who produced and sold faulty hip replacements, leaving many patients crippled and facing further surgery. In fact, the DePuy Orthopedics division of Johnson & Johnson voluntarily issued a recall of it's artificial hips in August 2010.
The most widespread medical implant failure in the United States in decades, involving thousands of all-metal artificial hips that need to be replaced prematurely, has entered the money phase. Medical and legal experts estimate the hip failures may cost taxpayers, insurers, employers and others billions of dollars in coming years, contributing to the soaring cost of health care. The financial fallout is expected to be unusually large and complex because the episode involves a class of products, not a single device or just one company. The case of Thomas Dougherty represents one particularly costly example. He spent five months this year without a left hip, largely stuck on a recliner watching his medical bills soar. In August, Mr. Dougherty underwent an operation to replace a failed artificial hip, but his pelvis fractured soon afterward. The replacement hip was abandoned and then a serious infection set in. Some of the bills: $400,776 in charges related to hospitalizations, and $28,081 in doctors' bills....The so-called metal-on-metal hips like Mr. Dougherty's, ones in which a device's ball and joint are made of metal, are failing at high rates within a few years instead of lasting 15 years or more, as artificial joints normally do.The wear of metal parts against each other is generating debris that is damaging tissue and, in some cases, crippling patients.
But who is going to be the financial beneficiary of these lawsuits? Medicare and private health insurers who paid for the initial surgeries and who will pay for additional surgeries and other medical care to the victims of the faulty implants.
Again, from the International Herald Tribune article:
Insurers are alerting patients that they plan to recover their expenses from any settlement money that patients receive. Medicare, the government health program for the elderly, is also expected to try to recover its costs....To recoup their expenses, insurers typically notify patients through lawyers that they expect to be reimbursed from any settlement money that patients receive, rather than pursue their own lawsuits with the device makers. Also, Medicare is expected to enforce new laws next year that will make it easier for the agency to recover taxpayer dollars spent treating patients injured by problem drugs and medical devices.
How can this be? How is it that public and private health insurers are first in line to be paid from personal injury and product liability suits from these cases? Shouldn't the injured victim, the patient, be the one to recoup his or her financial and physical losses? The patient, who has gone through the agony of hip replacement surgery, now facing more surgery, is the one who has suffered. Why should an insurance company get a free ride on the back of the injured patient's lawsuit?
It's called subrogation. And although none of my clients are ever willing to accept the concept when first explained to them (and with good reason because it is they who paid for the private health insurance coverage!), subrogation is nevertheless a legal and equitable right of an insurer to be compensated (read: paid back!) for any monies paid on behalf of their insured due to the negligence of someone else. The insurer, be it Blue Cross or Medicare or Medicaid (Department of Public Welfare in Pennsylvania), is, in fact, the first to be paid back before anyone, gets a dime for their pain and suffering. This is true for the attorney that handle personal injury claims. We are not permitted to be paid for the work to generate a settlement or verdict for our clients until the subrogation lien is properly dealt with and paid. (Forget the fact that the personal injury attorney handling cases where a subragtion lien is involved is essentially an unpaid collection agent for the insurance carrier, but that is an essay for another day).
I have written about subrogation may times before. I want ( and need!) my clients, prospective clients, and the public generally to be familiar with the concept, because I don't want them to be surprised at the end of their case. In the eyes of the law, the insurance carrier who pays health benefits to an accident victim is a victim as well, and but for the wrongdoing of the tortfeasor would not have had to pay any benefits.
As to subrogation in the hip cases ''all these payers want to be paid back,'' says Matt Garretson, the founding partner of the Garretson Resolution Group, a firm in Cincinnati that manages subrogation issues for attorneys in all sorts of cases, including mass tort cases. And the payors will be paid back, because there are stiff penalties, both civil and criminal, to those who fail to pay attention to a subrogation lien in the personal injury case.
