What Is a Lien in a Personal Injury Case and How Does It Work?

A $100,000 personal injury settlement sounds like a lot of money. But before that check reaches your bank account, the hospital that treated your injuries and the health insurance company that paid your medical bills could be entitled to thousands of dollars.

This happens because of something called a lien. Hospitals, insurance companies, and certain government programs have the right to collect money from personal injury settlements to cover unpaid medical bills or reimburse expenses they've already paid.

So, what is a lien in a personal injury case, and how much of your settlement could go toward paying one? The answer could be thousands of dollars, and certain liens can be negotiated for less than the original amount.

At Pierce Skrabanek, we help injured people pursue compensation while working to reduce medical liens and other repayment claims when possible.

Have questions about medical bills or a potential settlement? Tell us what happened and what you're being asked to pay. Call (832) 690-7000 or reach out to Pierce Skrabanek online.

What Does a Lien Mean for Your Personal Injury Settlement?

A lien is a claim against money you receive from a personal injury settlement or court award. It allows certain medical providers, insurers, or government programs to collect payment before the remaining money is released to you.

For example, say you were injured in a car accident and received $30,000 in hospital treatment. If the hospital hasn't been paid and has an enforceable lien, part of your settlement could go toward that bill.

Your health insurance company could also request repayment for treatment it covered after the accident. These reimbursement claims work differently from liens, but both reduce the amount available to you.

Who Can Claim Money From Your Personal Injury Settlement?

1. Hospitals and Medical Providers

If you received treatment after an accident and the bills remain unpaid, the hospital or medical provider could claim part of your settlement. State laws determine which providers have this right and how they must establish their claim.

2. Health Insurance Companies

Your health insurer paid for surgery, emergency treatment, or physical therapy after the accident. Once you receive compensation from the person responsible, the insurer could request reimbursement for those expenses.

This is called subrogation, which allows an insurance company to seek repayment for medical bills it covered on your behalf.

3. Medicare and Medicaid

If Medicare or Medicaid paid for accident-related medical treatment, the program could seek reimbursement from your settlement. Medicare's reimbursement rules explain how payments are handled when another party is responsible for medical expenses.

Both programs have specific repayment rules, including restrictions on the amounts they can collect and procedures for disputing charges.

4. Workers' Compensation Insurance

If you were injured at work and received workers' compensation benefits, the insurer could seek reimbursement if you later recover money from a negligent third party.

How Do Medical Liens in Personal Injury Cases Work?

Medical liens in personal injury cases are addressed as part of the settlement process, before you receive your payment.

Here's how it works:

1. You receive medical treatment. A hospital treats your injuries, or an insurer pays your medical bills while the injury claim is pending.
2. A provider or insurer requests repayment. The organization claims payment from your settlement for qualifying medical expenses.
3. Your attorney checks the charges. The bills are checked for accuracy, whether they relate to your accident, and whether the organization has the right to collect.
4. The repayment amount is negotiated. Your attorney works to reduce the amount owed when reductions are permitted.
5. You receive the remaining settlement money. Attorney fees, case expenses, and outstanding repayment obligations are deducted before the balance is released.

How Much of Your Personal Injury Settlement Will You Actually Receive?

Let's say your personal injury case settles for $100,000. After attorney fees, case expenses, and medical liens are paid, the breakdown could look like this:

• Total settlement: $100,000
• Attorney fees: −$33,000
• Case expenses: −$2,000
• Medical liens: −$20,000
• Your take-home amount: $45,000

In this example, you receive $45,000 from a $100,000 settlement. The actual deductions will reflect your attorney fee agreement, case expenses, and the amounts owed to medical providers or insurers.

What if you could reduce the $20,000 medical lien before the settlement is paid? Pierce Skrabanek works to negotiate repayment amounts when possible, which could leave more of your settlement available to you. Call (832) 690-7000 to find out how we handle medical liens.

Can You Negotiate Medical Liens and Keep More of Your Settlement?

Yes. Certain medical liens and reimbursement claims are negotiable, and reducing them could increase the amount you take home.

For example, a hospital could agree to accept $12,000 instead of $20,000 to settle an outstanding bill. That $8,000 difference would leave more money available from your settlement.

Billing errors, duplicate expenses, and treatment unrelated to the accident are also reasons to question the amount being requested. Hospitals and private insurers sometimes accept reduced payments when the settlement isn't enough to cover all outstanding expenses.

Medicare, Medicaid, and certain employer-sponsored insurance plans have stricter repayment rules, which limit the available options.

What Is a Medical Lien in a Lawsuit vs. an Unpaid Medical Bill?

An unpaid medical bill is a balance you owe for treatment. A medical lien gives a provider the right to seek payment directly from your personal injury settlement when the necessary conditions have been met.

For example, owing a hospital $5,000 doesn't give it unrestricted access to your settlement. The hospital must have an enforceable lien or another recognized right to payment.

Even without a lien, you still owe the outstanding medical bill unless it's paid, reduced, or otherwise resolved.

Before You Accept a Settlement, Find Out How Much You'll Actually Get

A settlement offer can look generous until you subtract attorney fees, case expenses, and outstanding medical payments. A $100,000 settlement won't go very far if most of that money is already spoken for.

Pierce Skrabanek has recovered over $500 million in verdicts and settlements for injured clients, with more than 30 years of combined legal experience handling personal injury cases.

Before you agree to a settlement, find out what's being deducted and whether any of those amounts can be reduced. Contact Pierce Skrabanek or call (832) 690-7000 to schedule a free consultation.