What is a LIEN and how will it impact my personal injury case?
Lawsuits or settlement negotiations can take a long time before resolution. Due to this fact, individuals and entities can try to get their “stake their claim” by establishing liens on the eventual settlement award in a personal injury case.
What is a Lien? In the personal injury context, a lien is a court order placed on the injured party’s settlement award to satisfy debt owed to a third person or entity (usually a medical provider or insurance carrier). The third party seeking to place a lien on a settlement must file a lawsuit through the court system.
Who May Have a Lien on my Personal Injury Settlement?
- Medical Providers: Medical providers will often seek to recover all medicals bills with a settlement lien. However, when the injured party has no insurance at all, he or she may be able to repay only a partial lien. Partial repayment involves negotiations with the medical provider, usually negotiated by the plaintiff’s attorney. Liens can also be created by an agreement. If the injured party has no or minimal health insurance, they may asked to sign an agreement with the medical provider at the time of receiving treatment. This agreement is an agreement to pay back the medical provider with funds received from the settlement or from the final judgment. These agreements should be reviewed by the injured party’s attorney.
- Health Insurance: Personal injury settlement liens may be contracted into the health insurance plans of certain employers. These plans create a right to a medical lien on the injured party’s settlement. Valid liens include government employee insurance plans, ERISA plans, and workman’s compensation.
- Medicaid & Medicare: Under Medicaid laws, the Medicaid applicant is required to assign his or her rights to payments for medical care from a third party to the government. It is important to note, even if an individual on Medicaid does not pursue a claim, the government has the power to do so. In a personal injury case in which Medicaid has paid for medical bills, the state is statutorily required to be paid from the proceeds of the case, and will impose a lien on any settlement. However, it must be made clear that Medicaid liens only apply to Medicaid payments related to the injury.
Under the Medicare Secondary Payor Act (MSP), Medicare should not pay medical bills when payments are made or expected to be made under workman’s compensation or under insurance plans/policies. If there is a conditional payment, the United States can bring an action against the primary plan responsible for payment of expenses. It is important to hire an attorney that specializes in personal injury and who is aware of the particular laws related to Medicaid and Medicare reimbursements.
- Automobile Insurance Carriers. Under automobile insurance plans providing medical payment coverage in personal injury cases, the insurance company could be entitled to reimbursement from a settlement for payment of services.