If you have been injured in an accident and are close to settling your claim with the insurance company, you’ll want to know just who else is entitled to a portion of your settlement, and how much. Those who are entitled to a portion of your settlement are called lien holders, and a lien is the legal right a creditor has to acquire part of someone else’s property. Usually, a lien will remain in effect until it is fully satisfied and released.
Personal injury claims can have many potential lien holders, including but not limited to:
- Medical personnel such as doctors, hospitals, and clinics;
- Governmental entities such as the Veteran’s Administration, the military, Medicaid, or Medicare;
- Workers’ compensation insurance; and
- Health insurance and auto insurance companies.
Who Can Place A Lien on a Personal Injury Settlement?
Generally, a lien is placed on a personal injury settlement when the injured party doesn’t have the money to pay for their necessary medical treatments. The hospital and doctors provide the services, but if the injured party can’t pay the bills, a lien will be placed against any insurance settlement that is received to satisfy those debts.
A lienholder may let you know that they are filing a lien, or they may not. Figuring out who may have placed a lien against your settlement, and how to satisfy those liens, is a complicated task best left to a skilled, experienced personal injury law attorney, such as those at The Sevey Law Firm.
So, who can ultimately place a lien against your personal injury settlement?
- Medical Treatment Providers – There are several ways that health care or medical treatment providers can place a lien against your settlement. They can have you sign a letter of protection before administering treatment, or they can exercise their right to place a lien under the law, or both. If you sign the agreement and then fail to satisfy the lien, the health care provider has the right to sue you for payment.
- Government Entities such as Medicaid, Medicare, and Veteran Benefits – If you utilized either Medicaid or Medicare to pay for your necessary medical treatments following an accident, it’s very likely that they already have a lien against your settlement. Settling these types of liens is called “subrogation,” and is handled by the Center for Medicare and Medicaid Services (CMS). If you have a CMS lien, it has the right to be paid first before any other liens on your settlement proceeds. The other side of the coin is that you do not have to reimburse them unless they ask you to, but they do have a six-year-long statute of limitations during which they can ask to be reimbursed.
Having said that, it may be months, or even a year or more, before you actually receive the notice to reimburse CMS. Because of this, it pays to put aside the amount that CMS has paid for your medical treatments in the event that they do request a reimbursement.
If Veterans Administration (VA) benefits paid for part of your medical treatments, the VA likely has placed a lien against your settlement. As with Medicaid and Medicare liens, a VA lien will also be paid before any other liens.
CMS and VA liens are often described as “super liens” because they take precedence over any other liens and will be repaid first. If you do not repay super liens, you will be facing strict federal penalties, such as having to pay back twice the original amount of the lien.
- Workers’ Compensation Insurance – If you sustained injuries from an accident that happened at work, and workers’ compensation insurance helped pay for your medical expenses, you generally will not have to repay them. The one exception to this is when you file a third-party claim against someone other than your employer. If this is the case, you will have to reimburse your employer’s workers’ compensation insurance company.
- Private Insurance Carriers – If you carry private health insurance that helped pay for your medical treatments, you will very likely have a lien from them placed on your personal injury settlement. This is typical for private insurance companies, because it is unfair for you to get paid twice – once when they pay for your medical treatments, and once when you receive your personal injury settlement (the amount of which includes your medical treatment costs).
If you utilized your vehicle insurance policy to pay for medical treatments, it is possible that they, too, have placed a lien against your settlement. Check your policy language for details regarding when they can and can’t place this lien.
5. Personal Injury Protection (PIP) or Uninsured/Underinsured Motorist (UIM) Coverage – Laws regarding lien placement by PIP or UIM providers has changed for some jurisdictions recently, so it pays to have a seasoned attorney representing you who is familiar with these changes. They will be able to review your policy documentation and give you a definitive answer on whether these insurers can legally place a lien against your personal injury settlement.
How Long Are Private Liens Valid?
The federal government has six years within which to place a lien against your personal injury settlement. Other insurance providers, such as private health insurance companies, auto insurance companies, and workers’ compensation insurance companies have varying statutes of limitations but are usually never as long as the federal government statute. If you have not received a notice from a private lien holder within a year of receiving your settlement, it is probable that they’ve waived their claim against your settlement.
Before you spend your personal injury settlement, you should work with a personal injury attorney such as the attorneys at The Sevey Law Firm to discover any private lienholders that may have a right to part of your settlement proceeds. You can contact us by phone at (916) 788-7100 or online using our contact page.