Hear From the
SCD President

As senior counsel, we often address liens in tort cases. Volumes exist on handling Medicare/Medicaid liens. I recently encountered a liability insurer asking a worker’s compensation insurer to provide all the medical records and billings relating to a worker who had received w/c benefits and was pursuing a third-party tort claim, without any HIPAA release or authorization from the injured person. The liability insurer indicated that a failure to do so would cause the insurer to “deny” and “dishonor” the w/c lien. In Hawaii, lien obligations and resolution are governed by Hawaii statutes. The w/c lien is statutorily imposed on any tort recovery paid to the claimant (HRS 386-8). And liens can be decided by the court under HRS 663-10. After placing all parties to a tort action on notice, generally by filing a lien notice in the civil action, the w/c carrier could file a motion with the court to have its lien determined and the payment obligation specified. The w/c carrier is not limited to having a tort insurer voluntarily agree to pay their lien. The Court can decide it.

It is also unusual for a tort liability insurer to be asking a w/c insurer to provide the claimant’s medical records and bills, if the tort claim is in litigation. The w/c lien is based on the payments made by the w/c insurer, not by the billed amounts from the providers. In Hawaii the w/c carrier needs to show what they paid for the related injuries, and that the amount they paid is in compliance with the applicable fee schedule. The tort liability defendant would normally obtain the claimant’s medical records directly from the plaintiff and/or the medical providers through discovery, i.e. document requests and subpoenas. After all, as the defendant they are the party given substantial discovery rights to obtain documentation and proof of the medical basis for the claim presented against them. But what if the tort claim is not yet in litigation, and there is an effort to resolve the claim prior to litigation?

This leads to the HIPAA release issue. If the injured worker has a tort claim against an insured defendant, and they want to obtain a recovery, and they know that their employer’s consent would be required to any such settlement (that’s the statutory law in Hawaii), I would assume the claimant (and their attorney) would be happy to provide the w/c insurer with a HIPAA release to share the records with the liability insurer. Or, if informed of the request for records, they may want to provide the records to the liability insurer themselves. In Hawaii the claimant can claim the full amount of the medical bills, regardless of whether the w/c carrier paid reduced amounts or not. In Hawaii a Plaintiff and their counsel normally get the medical billings themselves from their providers to include them as part of their claim. This gives them a higher potential recovery than if they just claim the lower amounts paid by a w/c or health insurer. Although there is some “wiggle room” in HIPAA regarding an insurer sharing private medical records for payment/subrogation purposes, why take the chance of sharing someone’s medical records without an authorization? The last thing anyone wants is a claimant asserting a HIPAA violation and possibly other breach of privacy claims against an adjuster and their company. Given the claimant’s interest in obtaining a tort recovery, my suggestion is to get them to consent to the release before providing someone’s medical records, or let the claimant provide the medical records to the liability insurer themselves.

Thank you! Harvey