THE LIEN HAS BEEN WITHDRAWN!

It has been a frustrating couple of months, but the Veteran's Adminstration has withdrawn it's lien claim against my client's uninsured motorist settlement.  I have to give props to the AAA adjuster, David Flinn, who, having accepted my view of the law, in the last couple of days actively contacted the VA and their local counsel to withdraw the lien.  This morning, he received a faxed confirmation that the lien has been withdrawn and he has already ordered a new settlement check to be issued without the VA listed as a payee.

I might add that this is more than a victory for my client.  Hopefully, any pending uninsured motorist claims that AAA has with VA liens that have been asserted will be reviewed and the VA told where they can put their liens.  This should save hundreds if not thousands of veterans a lot of money.

SHAME ON THE VETERANS ADMINISTRATION!

I represent a client that recently settled a personal injury claim, and a check in the file, but I cannot deposit it. You may ask, "Why?" That is an excellent question. I have been asking myself the same thing. A little history about the case is in order.

My client (I will refer to him as "Mr. X"), a veteran, was injured in an automobile accident about 2 years ago. Some of his medical care was through the local VA Hospital. It turned out that the other driver was uninsured, so we made a claim against his own insurance carrier, under the uninsured motorist provisions of his policy. The case settled about a month ago. Although I was aware that the VA had provided some medical services to Mr. X, I was not aware that the Department of Veteran Affairs had contacted Mr. X's insurance carrier and asserted a lien against the recovery. Mr. X signed the release which was sent to Mr. X's insurance carrier and, after a week or two, Mr. X's insurance carrier sent the settlement check to my attention. To my dismay, the Department of Veteran Affairs was listed as a payee on the settlement check in addition to Mr. X and myself as attorney of record. I contacted Mr. X's insurance carrier and demanded that they remove the Department of Veteran Affairs as a payee and issue a replacement check because, according to my research, the Department of Veteran Affairs is not entitled to make a claim against a veteran's uninsured motorist coverage. They only have a right to make a claim against the Third Party (negligent uninsured motorist) or that person's liability insurance carrier.

THE LAW

The relevant statute is the Federal Medical Care Recovery Act (FMCRA) 42 U.S.C. §2651. The FMCRA states, in part: "... the United States shall have a right to recover (independent of the rights of the injured or diseased person [emphasis added]) from said third person, or that person's insurer, the reasonable value of the care and treatment so furnished..."

As noted, FMCRA does not provide for a right to make a claim against uninsured motorist coverage because that is first-party insurance, not third-party insurance. Furthermore, as noted in the parenthesis, that right is independent of the rights of the injured person.

The FMCRA was a response by Congress to a decision by the United States Supreme Court in United States v. Standard Oil Co., 332 U.S. 301, 67 S.Ct. 1604 (1947), where the government argued that it was entitled to recover its expenditures because the negligence of third parties tortuously interfered with the relationship between the government and its employees. The Supreme Court rejected this argument, reasoning that federal law is the sole basis for interpreting the legal relationship between servicemen and the government and no federal law existed to sustain such a claim.

There have been a number of appellate cases that have interpreted the limits that FMCRA gives to the VA:

In Government Employee Insurance Company v. Roman David Andujar, 773 F. Supp 282 (1991), the Federal Government attempted to assert a lien against an uninsured motorist recovery. The Court reviewed the Federal Medical Care Recovery Act (FMCRA) 42 U.S.C. §2651, and concluded that the government was entitled to assert a lien only against a third party tortfeasor or insurance carrier, not from uninsured motorist coverage, stating:

"The court concludes that the United States is not entitled to any portion of the proceeds of the uninsured motorist coverage. In its brief, the United States argues that the "appropriate consideration [in deciding this motion] is whether the United States qualifies for consideration as an insured person under the policy." By the express terms of the policy, the United States is not an insured or a third party beneficiary. Cf. Allstate Ins. Co., 573 F. Supp. at 145_46 (United States' third party beneficiary claim inconsistent with provisions of state statute). Under the arguments advanced by the United States, it is not entitled to any portion of the proceeds."

In UNITED STATES of America v. Thomas TRAMMEL, et al., 899 F.2d 1483 (1990), where the government appealed from an order of summary judgment denying its claim under the Federal Medical Care Recovery Act ("FMCRA"), in affirming the dismissal, the Court fully discusses what the FMCRA allows and doesn’t allow, to wit:

"Although the government only had a derivative right of subrogation under the original draft of the Act,11 subsequent amendments granted the government the right to sue independently. Currently, the FMCRA expressly permits the government to enforce its right of recovery either by direct legal action or by intervening or joining in any action brought by the injured party against the third_party tortfeasor. [emphasis added] 42 U.S.C. Sec. 2651(b). The independent right to sue, however, does not mean that an independent cause of action exists in all circumstances. The FMCRA states:

"In any case in which the United States is authorized or required by law to furnish hospital, medical, surgical, or dental care and treatment ... to a person who is injured or suffers a disease, after the effective date of this Act, under circumstances creating a tort liability upon some third person ... to pay damages therefor, the United States shall have a right to recover from said third person [emphasis added] the reasonable value of the care and treatment so furnished."

EVEN THE VA'S PRACTICES AND PROCEDURES DOCUMENTATION CONFIRMS THERE IS NO RIGHT TO MAKE A CLAIM AGAINST UNINSURED MOTORIST COVERAGE:

II. PRACTICE AND PROCEDURE, B. REMEDIES, Section 16, states:

"Where definition of "insured" in insurance policy for coverage against uninsured motorist coverage includes only named insured and his relatives and residents of his household, and other persons while in or upon, entering into or alighting from owned automobile, United States could not recover [emphasis added] for medical expenses from insurance carrier as "insured" party. United States v Allstate Ins. Co. (1969, ND Fla) 306 F Supp 1214."

On the next page it states:

"U.S. has no direct right to proceeds of deceased victim’s uninsured motorist policy under 42 USCS § 2651, where uninsured motorist collided with victim’s car due to motorist’s negligence, Army hospital provided $76,155.29 in medical care for victims as required by law, but victims and motorist all died anyway due to severe injuries from crash, because § 2651 provides U.S. with right to recover only from tortfeasor. [emphasis added] Government Employees Ins. Co. v Andujar (1991, DC Kan) 773 F Supp 282."

CONCLUSION

All of my communications regarding the lien were with a paralegal at the local office of the Department of Veteran Affairs. When I contacted the Assistant Regional Counsel, he was completely unfamiliar with the law and told me "the paralegals run the program."  I have since written to the General Counsel of the Department of Veteran Affairs in Washington, DC and am awaiting a response. I hope he will do the right thing and straighten this out. When I hear back, I will post a copy of his response.

Gordon A. Glenn
09/09/2011