Why PI Attorneys Must Screen Every Client for Medicare and Medi-Cal at Intake

James Wong — Founder & Pharmacist, LienScripts | February 10, 2025 | 9 min read

Most PI attorneys know Medicare and Medi-Cal create settlement complications. Fewer know that missing the screening step at intake — before medications are prescribed and billed — can expose clients to retroactive clawback and expose the firm to malpractice liability.

This post is for informational purposes only and does not constitute legal advice.

The Intake Question Most PI Attorneys Skip

[!KEY] Failing to screen for Medicare and Medi-Cal at intake creates conditional payment exposure that surfaces at settlement — and sometimes years later in the form of retroactive government recovery actions the client never saw coming.

At new client intake, most PI attorneys collect insurance information, take liability facts, and sign the retainer. What many don't do: specifically ask whether the client is covered by Medicare or Medi-Cal.

This omission has consequences. And they're not hypothetical — they surface at settlement and sometimes years later in the form of government recovery actions that blindside clients who thought their case was closed.

Why Medi-Cal Screening Matters

Medi-Cal is California's Medicaid program. When a Medi-Cal beneficiary is injured in an accident that creates third-party liability, Medi-Cal's right to recover from any settlement or judgment is automatic under California Welfare & Institutions Code § 14124.70 et seq.

Several things follow from this:

The lien arises automatically. DHCS (Department of Health Care Services) doesn't need to file anything to establish its lien. The lien exists by operation of law from the moment Medi-Cal pays for any injury-related service.

Notification to DHCS is mandatory. An attorney representing a Medi-Cal beneficiary in a PI case is required by law to notify DHCS. Under W&I Code § 14124.785, DHCS must receive notice within 30 days of retaining the client. Failure to provide notice can result in the attorney being personally liable for the amount that should have been paid to DHCS from the settlement.

Disbursement without satisfying the lien exposes everyone. If the case settles and the attorney disburses without addressing the Medi-Cal lien, DHCS can pursue recovery from the client, the attorney, and the settling insurer.

None of this is triggered by a complicated edge case. It applies to every Medi-Cal beneficiary with an active PI claim — which is a significant portion of a typical PI practice.

Why Medicare Screening Matters

Medicare's framework is different but equally consequential. Under the Medicare Secondary Payer Act (MSP), Medicare is the secondary payer when another party is liable for the injury. If Medicare paid for any injury-related services — medical treatment, prescriptions, anything — those are "conditional payments" that must be repaid from the PI settlement.

The mechanics:

Medicare issues Conditional Payment Letters (CPLs). When CMS is notified of a pending PI settlement (which insurers are required to report under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007), Medicare identifies what it paid for injury-related services and issues a CPL quantifying the recovery demand.

Settlement without addressing conditional payments creates serious exposure. The MSP Act allows CMS to pursue double damages against parties who receive settlement funds while Medicare's recovery rights are unresolved. Clients, attorneys, and settling insurers are all potentially exposed.

Future medicals may require a Medicare Set-Aside. For clients with ongoing injury-related medical needs who are already on Medicare or approaching eligibility, a Medicare Set-Aside analysis may be required to protect future Medicare coverage for injury-related care.

The Retrospective Audit Scenario

Here's the scenario that's less commonly understood and more dangerous in practice:

CMS and DHCS use data analytics to identify high-volume prescribers and billing patterns associated with PI cases. A prescriber whose NPI appears frequently in PI-related claims — a pain management physician, a specialist heavily involved in personal injury management — may be targeted for a retrospective audit.

When that audit happens, CMS or DHCS doesn't just look at one patient. They pull all claims from that prescriber during the audit period. Every patient whose medications were billed to Medicare or Medi-Cal under that NPI gets reviewed.

If a patient in that review: (a) was a Medicare or Medi-Cal beneficiary, (b) had a PI case settle, and (c) the settlement did not properly account for the government's conditional payments — the beneficiary faces retroactive recovery action. The settlement is already disbursed. The client's money is spent. The government still wants to be paid.

That client calls your office. They don't understand why they're receiving a collection notice from the government years after their case closed. And the answer is: because the screening step at intake was skipped, the Medi-Cal or Medicare lien was never identified, and the settlement was distributed without satisfying it.

[!KEY] A prescriber NPI audit by CMS or DHCS is not a targeted action against a single client — it is a sweep of all beneficiaries treated under that NPI during the audit period, which means one attorney's failure to screen can surface as a retroactive collection problem for dozens of former clients simultaneously.

This is not a theoretical risk. It is a pattern that occurs in PI practices that don't have systematic government benefits screening at intake.

How Pharmacy Liens Help Reduce the Problem

One specific way pharmacy liens reduce Medicare and Medi-Cal entanglement: when a client's injury-related prescriptions are dispensed through a pharmacy lien, those medications are not billed to Medicare or Medi-Cal. They don't become conditional payments. They don't appear in government program claims data for that patient.

At settlement, the pharmacy lien is simply another lien to satisfy from proceeds — like a medical lien. It doesn't require a Medicare conditional payment clearance letter or a Medi-Cal notice and reimbursement process. The TPL picture is cleaner.

This doesn't eliminate the need to address other Medicare or Medi-Cal covered services (medical treatment, hospitalization, physician fees). But keeping injury-related medications on a pharmacy lien rather than billed to the government removes one category of conditional payment from the settlement calculation.

[!TIP] When injury-related prescriptions are dispensed through a pharmacy lien instead of billed to Medicare or Medi-Cal, those medications are not conditional payments — they settle as a standard lien from proceeds without requiring CMS clearance or DHCS reimbursement processing.

Three Questions for Every New Client Intake

Add these to your standard intake form:

1. "Are you currently enrolled in Medicare (Parts A, B, or D)?"
2. "Are you currently enrolled in Medi-Cal?"
3. "Have you received any medical treatment or prescriptions related to this injury that you believe may have been billed to Medicare or Medi-Cal?"

A "yes" to any of these triggers a specific workflow: DHCS notification (for Medi-Cal), CMS reporting engagement (for Medicare), and a review of whether a Medicare Set-Aside is appropriate.

A "no" should be documented in the file — not as a permanent guarantee, but as a record that the question was asked.

The Malpractice Exposure Is Real

PI attorneys have faced malpractice claims and State Bar complaints arising from failure to identify and satisfy Medicare and Medi-Cal liens at settlement. California appellate decisions and State Bar formal opinions make clear that attorneys handling PI cases for government benefit recipients have specific, non-delegable duties around lien identification and resolution.

Systematic intake screening is the front-line protection. Everything else — DHCS notification, CPL resolution, Medicare Set-Aside analysis — follows from knowing the client's status at the outset.

[!KEY] Routing injury-related prescriptions through a pharmacy lien rather than billing them to Medicare or Medi-Cal removes that entire medication category from the conditional payment picture — simplifying settlement, eliminating one class of government clearance requirements, and reducing the client's exposure in any future prescriber NPI audit.

For more on managing pharmacy liens and coordinating with government benefit programs, visit for attorneys.