ERISA liens on child settlements are not always required to be paid, and our firm is here to help. At Florida Probate Law Group, we strive to deliver child injury settlements free from unnecessary liens in order to maximize your client’s recovery. Burdensome ERISA liens in child injury cases are vulnerable to being negated through settlement apportionment during the local court approval process. Federal courts have recognized the authority of state probate courts to protect child injury settlement funds, even when healthcare providers argued lien preemption based on strong subrogation language within the subject ERISA plan. See In The Matter of the Guardianship of O. D. v. The Ashley Healthcare Plan, No. 3:2011cv00146 – Document 17 (N.D. Miss. 2013); Bauhaus USA, Inc. v. Copeland, 2001 WL 1524373 (N.D. Miss. Mar. 9, 2001).

Healthcare providers seeking to enforce liens in federal court have even been forced to pay attorney’s fees after having their actions dismissed. In 2015, the Mississippi Supreme Court allowed attorney’s fees to be levied against a healthcare provider for their frivolous federal action to enforce an ERISA lien that had been negated by the local probate court. In the Matter of the GUARDIANSHIP of O.D., A Minor: Ashley Healthcare Plan v. Michael DILLARD and Kimberly Dillard, 177 So.3d 175 (2015). The thought of a healthcare provider seeking enforcement of an ERISA lien in federal court, only to wind up with an bill for the defendant’s attorney’s fees, will give pause to future lien holders in the same scenario.

Injured children and their attorneys should be encouraged by the limitation of ERISA preemption by federal courts. State probate courts wield the power to diminish or erase ERISA liens in child injury cases. In the court approval phase of a child injury case, Florida Probate Law Group will always seek an order apportioning the minor’s settlement to the maximum advantage of the minor. Our firm works statewide, on a flat fee basis, with no fees or costs up front. Click here for a breakdown of child injury rules in Florida. Should you have a question about a specific case, call (352) 354-2654 or email cdavid@floridaprobatelawgroup.com.

Special Needs Trusts for Injury Settlements – Eligibility

For an individual to be eligible for a special needs trust in Florida, they must be under 65 years old and disabled as defined in as defined in section 1614(a)(3) of the Social Security Act. For clients over the age of 65, a Pooled Trust under 42 USC 1396p(d)(4)(c) is appropriate. Here, we will address trusts for individuals under 65 funded through a personal injury settlement. In considering whether a client is disabled, the Social Security Act informs us that disabled means “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.” Fortunately, this determination has already been made in most cases. Any client receiving SSI benefits in Florida has been determined as disabled under this definition.

Once it has been determined that a client is eligible, a trustee must be selected. Typically a family member will fill this role, however a professional trustee should be utilized when there is not a friend or family member who can be counted on to diligently and responsibly administer the trust. It must me imparted to the trustee that spending trust funds on ineligible expenses will jeopardize all trust assets. Upon the death of the client/settlor, Medicaid will hold a lien over trust assets for the amount expended by Medicaid on services for the settlor during their lifetime. The amount of this lien will be far less than the settlor would have paid for the same medical services out of pocket, as Medicaid receives an approximate 40% discount on medical bills relative to an individual consumer.

The primary tenants of a “self settled” injury settlement Special Needs Trust are as follows:

1. The trust is designed as a special needs trust pursuant to 42 U.S.C. Sec. 1396p (d)(4)(a) and that it is for a disabled person under age 65.
2. That the intent of the settlor is to allow eligibility for ongoing public assistance including SSI or Medicaid.
3. That the intent is to “supplement” and not “supplant” public benefits.
4. That distributions may be made in the trustee’s sole discretion for maintaining the quality of the beneficiary’s health, education, safety and welfare when they are not being provided by ongoing public assistance.
5. That the trustee will repay all state Medicaid bills upon termination of the trust provided they may pay other estate expenses first.

Florida Probate Law Group has experience establishing Special needs trusts for for Medicaid beneficiaries to protect settlement proceeds. We work statewide supporting plaintiffs firms in probate, guardianship, special needs planning, and lien defense. Call (352) 354-2654 or email cdavid@circuit8law.com if you have questions about an issue affecting a settlement.

Child settlements requiring a guardian ad litem in Florida can slow down the resolution of a case, however it is possible to have this requirement waived. In many child injury claims, it is within the court’s power to require a guardian ad litem to submit an opinion on the adequacy of a proposed settlement. While the intention of this rule is good, securing a GAL report may be redundant and can sometimes be avoided. Although Florida Statute section 744.3025(1)(b) provides that a guardian ad litem (GAL) is to be appointed when a minor’s settlement equals or exceeds $50,000.00, section 744.3025(1)(e) dispenses of the requirement if a guardian of the minor is appointed and the guardian has no potential adverse interest.

Because minor settlements netting more than $15,000.00 to the minor already require a guardian of the property (a different role than a GAL) to be appointed, the exception contained in section 744.3025(1)(e) is applicable more often than not. Section 744.3025(1)(e) reads as follows: “A court need not appoint a guardian ad litem for the minor if a guardian of the minor has previously been appointed and that guardian has no potential adverse interest to the minor. A court may appoint a guardian ad litem if the court believes a guardian ad litem is necessary to protect the interests of the minor.”

Thus, when a guardian of the property with no adverse interest to the minor is appointed to facilitate the settlement, the court may waive the requirement for a GAL.

Florida Probate Rule 5.636(d) supports this interpretation of the statute stating that a GAL shall be appointed when the settlement exceeds $50,000.00, “IF (a) there is no court appointed guardian of the minor; (b) the court appointed guardian may have an adverse interest; OR (c) the court determines the representation of the minor is otherwise inadequate.”

In determining whether the guardian of the property has a conflict of interest, we must ask if that guardian would benefit in any way from accepting an inadequate settlement on behalf of the minor. The most common conflict of interest is when the guardian of the property has their own claim arising from the same incident as the minor’s claim (typically when the guardian of the property is a parent). In such a case the guardian and the minor may divide a limited pool of settlement funds. In such a case, a GAL should be appointed.

For more information on child settlements, see our child injury flowchart here.

If you have questions about guardianship issues affecting your settlements, call (352) 354-2654 or email cdavid@floridaprobatelawgroup.com.