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Home » Blogs » Personal Injury » A Quick Guide to Medical Liens and how They Work in Personal Injury Cases

A Quick Guide to Medical Liens and how They Work in Personal Injury Cases

For the most part, just the mention of the word “lien” causes people to become uneasy, similar to the words “audit” and “overdue.” This is especially true for those who are in position to receive funds via a settlement from a personal injury lawsuit.  A lien can arise whenever one party asserts a financial claim against another for a debt of some kind. 

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As such, a claimant may be put in a situation where a medical lien has been placed against their case if no other arrangement has been made to pay for treatment, such as through private insurance or otherwise. Medical liens are often complicated, as most people do not encounter them often or at all. Here, we will attempt to explain in a more in-depth fashion why medical liens are applied and how they work. 

Liens Against Personal Injury Settlements

Broadly speaking, a lien is a legal right to a person’s property that stands until that person is able to repay a debt or some other similar obligation. With regards to personal injury cases, the property in question would entail any financial settlement that is either negotiated by your attorney or awarded by a court. Any party who wishes to seek repayment by placing a lien against an injury settlement must do so by working with the court system. 

Medical Liens and an Example Scenario

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A large number of health insurance policy plans in the U.S. contain language that allows for insurers to place a lien against a policyholder, in the event that the insurer has to pay for medical costs while waiting for the party in question to come up with additional funds (i.e. the settlement funds from the suit). These provisions are put in place so that a policyholder can still receive treatment in the immediate term while waiting for compensation. Let’s discuss this idea further with a hypothetical scenario. 

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Let’s say that John and Nancy are involved in a car accident– Nancy was at fault for the accident and John suffered injuries to his head and neck. However, when it comes time to file a claim, Nancy and her insurer deny responsibility for the crash and John’s injuries. John, in turn,  files a personal injury suit in order to recoup compensation, but his injuries require immediate and constant attention, and he cannot wait weeks, months, or years until his case is settled. 

In the event that John’s personal insurer pays for his treatment in the short-term, they will most likely have grounds to place a lien against any settlement or verdict that John is awarded in his case against Nancy. For the most part, insurers will cover treatment, but they expect repayment. However much a carrier dolls out in medical expenses, they are then going to look to recoup as much of that money as they can.

Let’s imagine that in the end, John is awarded $250,000 in his case against Nancy. Whenever a settlement is awarded, it is the responsibility of the plaintiff’s (John’s) attorney to check if there are any outstanding liens to be paid. For simple figures, we’ll imagine that John’s insurer covered $50,000 in medical costs. So, they will be paid back through the settlement funds, and John will take home whatever of the remaining $200,000 is left after attorney fees. 

It is important to note that medical liens are not always placed by health insurers, but can also be placed by any other health provider that consents to provide care without immediate payment or similar arrangement. These can include hospitals, clinics, physician’s offices, and more. All in all, liens aren’t the scariest or most confusing things in the world, but accident victims should always seek the help of an experienced personal injury attorney, so that they can ensure the highest compensation possible as well full compliance with all liens and payments. 

Personal Injury Attorneys at Van Law Firm

If you’re struggling with expenses after being involved in an accident, or have further questions about medical liens, the trusted team of award-winning personal injury attorneys from Van Law Firm can help you get to the bottom of your case and policy. 

We’ve recovered numerous settlements in excess of a million dollars for our clients, and with nearly 500 5-star reviews online, our reputation only continues to grow around the nation. Call our office nearest you today to get started with a free consultation and case review. 

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