What's A Medical Lien, And How Do They Work?

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Being involved in an auto accident is something that no one wants to have to handle.

There are hundreds of things to worry about, and the situation can quickly become stressful and overwhelming.

Those feelings are amplified if you were also injured in the accident and needed medical care afterward.

The care you receive after the accident is necessary but very expensive.

Insurance can help with the payments, but that rarely covers all of the expenses.

Luckily, if the accident wasn't your fault, your expenses can be covered by your personal injury settlement.

The doctors have to provide you with care even if you aren't able to pay for it, so in certain situations, they will put what's called a lien against your settlement.

This ensures that the doctors are compensated for the care they provided to you.

What Is A Lien?

In short, a lien is something that ensures a person, group, or business is compensated for services or goods provided to someone else.

In this instance, we're dealing with a medical lien.

In certain situations, the government, health insurance companies, and hospitals can assert a claim against your personal injury settlement.

If you've filed a personal injury lawsuit to recover the cost of medical bills, the people who paid for these medical costs may be able to file a medical lien against any proceeds from your lawsuit.

A medical lien is a demand for repayment that can be placed against your personal injury case.

When personal injury lawsuits are filed, the amount of money you have spent and could spend on your treatment is always taken into account.

Types Of Liens

There are a few types of liens that can affect your personal injury settlement.

Medical Provider and Hospital Liens

Depending on the state you live in, hospitals are entitled to file a lien for repayment of the money spent caring for you after your accident.

Some medical providers will ask you to sign a lien letter stating that you submit to the lien against your personal injury settlement.

There are a few requirements the hospital must follow when placing a lien against your settlement. A couple of those requirements are as follows:

  • The lien must be filed within 180 days after you are released from the hospital.
  • The lien must have your proper name, your correct address, the name an address of the hospital, and the dates of service.

If the hospital doesn't follow these requirements, their lien will not be enforceable.

This doesn't mean you won't be responsible for the bills; the hospital just can't put a lien against your settlement.

Worker's Compensation Liens

If you get hurt at work, a worker's compensation lien may be issued if your medical bills or lost wages have been paid through your state's workers' comp fund.

The lien amount will be for whatever your worker's comp fund paid toward your medical bills.

Workers comp laws vary significantly between states, so it's important to look up your state's laws to see if a workers comp lien can be put on your settlement.

Government Liens

If the government helped pay for any part of your medical care,  they have a right to get paid back if you recover money for your injuries from another party.

The program that was used to pay for your medical care, Medicare and Medicaid Liens, or Veteran's Administration, will determine the rights it has to your settlement.

Some of the programs will have the right to claim a portion of your proceeds. 

How A Medical Lien Impacts Your Settlement

 Once your settlement is accepted, and you've been awarded damages, the people that provided or paid for your medical care can collect on their debts.

The cost of your treatment will be deducted from any damages that you receive.

If they ask for more than the damages you receive, it's possible to negotiate down to an amount that is more suitable for you.

A good attorney will negotiate with these providers both before and after you’ve received damages to minimize your costs, so you do not experience any financial hardship.

Your Insurance Company

It's also possible for insurance companies to make arrangements with medical providers to provide services at a discounted rate.

For example, the insurance company could negotiate the cost down by 25% in exchange for immediate payment.

These proposals are typically accepted because the legal process for many cases takes years and there is no guarantee that a patient will receive compensation. 

Medical Liens Are Risky For The Medical Care Providers

Most doctors and hospitals despise liens and prefer immediate payment.

With medical liens, providers could wait years to receive their payment, and the patient might not receive any damages once it's all over with.

Because of this, it's often possible to negotiate timely payments instead of getting a medical lien out against your settlement.

Your personal injury lawyer will make every effort to reduce your financial burden by seeking the most compensation allowed and by making arrangements that are in your best interest.

Negotiating A Lien

It's not unheard of to get the lien holder to accept less than the amount they paid. A good lawyer may be able to negotiate a lower amount with the medical care providers. 

Sometimes with workers compensation suits, a lien may be so large that it creates a disincentive to seek damages.

If the lien exceeds the total amount a plaintiff is likely to receive from a lawsuit, the plaintiff may choose not to sue.

The plaintiff's attorney can negotiate with the carrier to resolve the lien for substantially less than the face value of their claim. 

The Role Of Your Lawyer

A good lawyer will limit your financial responsibility, so you receive as much money as possible once your liens have been satisfied.

Most companies and providers will be very flexible because they don't want to wait years for payment if they even receive any compensation at all.

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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