Personal injury settlements are awarded to compensate you for your medical expenses, lost wages, pain and suffering, property damage and other costs related to the incident. However, if you owe money to another party, you may have a lien against your settlement, which may affect it greatly.
What is a Lien?
A lien is a legal claim that someone or something has on the property of another person until a debt is paid. A lien may be placed on a number of different things, such as real estate, personal property or a settlement to satisfy a debt owed to someone else. Further, liens placed on a personal injury case differ depending on who holds the lien. For the purposes of a settlement, the lien will be made against the amount of money you receive in court or by settlement, effectively reducing the total amount of settlement proceeds you may receive.
What Types of Liens May be Against Your Settlement?
If you are pursuing a personal injury settlement, liens may be placed against the settlement by any party who paid bills related to your injuries or provided services related to your injuries. Examples of parties that may place liens on personal injury settlements include:
- Automobile Insurance Providers – If an automobile insurance carrier covered any of your medical expenses after an accident and you pursue a personal injury settlement, the carrier may be able to place a lien against the settlement to recover the medical costs it paid.
- Medicaid – If Medicaid pays for any of the medical expenses related to your injuries, a lien will likely be placed against the settlement to recover these costs.
- Medicare – Like Medicaid, Medicare can place a lien against your settlement to recover any expenses paid on your behalf.
- Health Insurance Providers – Some health insurance providers may place liens against your settlement in order to recover some of the expenses they paid for your medical treatment.
- Healthcare Providers – In some cases, healthcare providers may place liens against your settlement if you have not yet paid your bills or if you have made an agreement with the provider indicating you will pay your bills with the funds from your settlement. This is especially common for injured parties who do not have health insurance, have a high deductible or receive care that isn’t covered under their health insurance policy.
Keep in mind that, although some attorneys may indicate that they have the ability to place a lien on your settlement if they withdraw from the case or are discharged, the law in many states restricts the ability of lawyers to utilize settlement liens. Nevertheless, if you plan to get a new attorney, you should consult with your new attorney to determine if the settlement lien may be utilized by your former attorney.
What if I Have a Lien?
So, what’s the bottom line? If you have a lien on your settlement, the lien must be paid in full before you receive your portion of the settlement. Thus, the settlement amount you actually receive will be equal to the total value of the settlement minus the value of your liens. This means that if your settlement offer is lower than or equal to the total amount of your liens, you may not receive anything at all. Crazy, right?
Hiring an Attorney
If you have liens against your settlement, the total amount you receive will be reduced. In order to ensure that you receive enough money to cover your own expenses and compensate you appropriately for your pain and suffering after the liens are paid, you need to make sure that your settlement is adequate. To give yourself the best chance of receiving a satisfactory settlement amount, you need to work with an aggressive, experienced attorney who will represent your interests and protect your rights throughout the case. Further, each state has different statutes which deal with these types of liens so it is important to hire the proper attorney. If you hire an attorney, they may also be able to work with the lienholder to reduce the amount of the lien, thereby putting more money into your own pocket.
Medicare and Medicaid Liens
By law, both Federal Medicare and State Medicaid must be reimbursed for what they have paid out for Medical coverage related to the injuries that are settled for from the time of the injury until the settlement has been reached. It is the responsibility of all parties that have been involved with the case to insure that these liens have been satisfied. This includes the Defendant Insurance Carrier, the Plaintiff and the Plaintiff Attorney. In most settlement agreements there is a section that needs to be executed by the Plaintiff to insure that these liens will be satisfied along with holding the Defense harmless if they are not. It is also worth noting that both Medicare and Medicaid have a negotiated reimbursement rate which is far less than the usual and customary rate. Medicare provides a procurement reduction formula along with several other compromised options for the final pay back. State Medicaid plans often have a reduction formula as well to insure that the injured party is able to obtain a portion of the final settlement amount.
If you are involved in a personal injury case with liens against your settlement, or if you are planning to file a personal injury lawsuit, contact Taos Injury Lawyers to make an appointment.