Adjusters: Best Practices for Dealing with Liens

Cranfill Sumner & Hartzog LLP

In dealing with a workers’ compensation claim, adjusters will want to be sure to be aware of any other entities that may have a lien on money that might be awarded to the injured worker.  In North Carolina workers’ compensation claims, there can be several entities that could have a lien against settlement proceeds:   

• Health Insurance Providers

• Disability Insurance Providers (short term disability and long term disability carriers)

• Veterans Administration

• Child Support Agencies

• Medicare or Medicare Advantage Plans

• Medicaid

As the adjuster handling the claim, there are a few simple steps you can take to deal with liens efficiently.

Thoroughly Review the Records

Oftentimes, a thorough review of the records associated with the claim will put you on notice that there is a lien associated with the file.

Medical Records: If you notice that the claimant received treatment for his/her workrelated injuries at the Veterans Administration (“VA”) then there is a possibility the VA may have a lien against any settlement proceeds.  

Medical Bills: A review of the medical bills will likely show whether or not any of the medical expenses have been paid by an entity other than workers’ compensation insurance.  If another entity has paid for benefits related to the work injury then that entity may also have a lien against settlement proceeds.  

Wage Records: A review of wage records will show whether or not the claimant had part of his wages withheld to satisfy an outstanding child support obligation.  Additionally, the child support agency may send you a lien letter upon notification of the claimant’s work injury.

Claimant’s Personnel File: It is also beneficial to review the claimant’s personnel file to find out whether he/she received short term disability or long term disability benefits following the work injury.  The short term disability carrier and long term disability carrier may also have a lien against settlement proceeds, if they paid benefits following a work-related injury.  

Conditional Payment Letters: If Medicare has paid for medical treatment, they may send out a conditional payment letter noting conditional payments have been made.  A conditional payment is a payment that Medicare makes for services where another payer may be responsible. This conditional payment is made so the claimant won’t have to use his/her own money to pay the bill. The payment is “conditional” because it must be repaid to Medicare when a settlement, judgment, award or other payment is secured.


If reviewing the records does not uncover the liens associated with the file, then the discovery process will be able to uncover any entity that might need to have a debt satisfied out of the ettlement proceeds.  Discovery allows you and your attorney to figure out who has been paying or the medical treatment and allows you both to find out more about any possible liens.

A Well Drafted Settlement Agreement Can Make Your Life Easier

If you are able to settle the claim, all liens associated with the claim should be addressed when preparing the settlement agreement, or “Clincher.”  When preparing this agreement, you can address which party will be responsible for making sure the liens get paid.  If you want to make your life easier, include protective language in the settlement agreement that the claimant and the claimant’s attorney must pay anyone with an associated lien – it will be one administrative task off your very full plate!

Sticking with a few simple steps in handling each file will ensure you are on notice of any liens and will ensure these liens are taken care of during settlement.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Cranfill Sumner & Hartzog LLP

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