Medical liens: what are they and how do they apply to your settlement?

Congratulations! You received notice that your personal injury lawsuit has settled. You ask your attorney how soon you will receive your check in the mail, and you are told that your settlement must undergo medical lien resolution before you will receive your settlement funds. So, what is a medical lien and what does it mean for your settlement?

What is a medical lien?

A medical lien is a repayment demand issued by your medical insurer. Either by law or the small print on your insurance agreement, your insurance providers are permitted to recover some of the medical expenses they paid for on your behalf for the injuries you sustained.

I paid all of my hospital bills, so I don’t have medical liens, right?

If you have medical insurance, this is not necessarily true.

Picture this imaginary scenario: You need $100 to have your car repaired. Your friend spots you $80 for your car repair, and you pay the remaining $20 balance to your mechanic. Whew! You wouldn’t have been able to afford that $100 repair bill without your friend’s help. A few months later, you find $500 in your glove compartment. Your friend is going to want his $80 paid back to him!

Medical liens work in a similar way to the above scenario. Your medical insurer covers certain expenses you are charged at the hospital, and you are responsible for paying the remaining balance, usually in the form of a co-pay or a hospital billing statement. Once you receive a settlement award for your personal injury case, however, the insurance company wants to be paid back for the expenses they covered. So, they assert a medical lien to recoup their expenses.

What’s the point of paying for medical insurance if my insurance provider is reimbursed from my personal injury settlement?

Let’s go back to that car scenario for a minute. What if there was never $500 in your glove compartment? You would not have been able to pay for your $100 repair bill, but thankfully you had a friend to alleviate most of that repair bill by spotting you $80. Hospital bills are expensive, and your medical insurer helps to alleviate some of that expense, much like your friend alleviated much of the expense of your car repair bill in our pretend scenario.

My hospital bills were expensive. If I pay back my medical insurer from my settlement funds, there won’t be any money left over for me!

Your Meyers & Flowers attorney will negotiate your medical liens with your insurance provider to make sure the entire settlement is not taken up by medical liens. After all, you suffered from the injury, and your attorneys want to make sure you receive as much of your settlement as possible. The process of negotiating down the dollar amount of the medical lien is called “lien resolution.”

Can medical liens be asserted by Medicare, Medicaid, or the VA?

Yes. Both private and public medical insurers can assert medical liens. 

We know that medical liens can be confusing, and there are lots of fine details that go into medical liens and medical lien resolution. If you have any questions about your medical liens or the resolution process, call our office at 630-576-9696.