A lien, in the most basic of terms, is a demand for repayment. After an auto accident, it is common for an injured person to seek help from a third-party in order to pay for necessary medical treatment. These third-parties may include health and auto insurance companies, certain medical providers, or governmental programs. However, if you file a personal injury claim, any third party that paid a portion of your medical bills can seek repayment from your settlement.
Conversely, some states place restrictions on when, and if, a health insurance company can place a lien on your settlement. In some states, health insurance companies cannot have a repayment clause in any of their policies.
Who Can File a Lien
In short, anyone who has paid a portion of your medical expenses, or rendered services related to your accident, can file a lien. This may include, healthcare providers, health insurance companies, the government, and auto insurance companies.
The most common type is a medical lien. These offer coverage to an injured party who does not have adequate health insurance coverage. This enables the patient to receive continued treatment while promising the medical facility payment at a later date. In some cases, attorneys can negotiate the repayment of medical liens.
In order for health insurance providers to seek repayment, there must be a clause on the insured’s policy agreement. This clause must state the insurance company’s intention to seek compensation from your settlement. However, most states place strict limitations on these clauses, and some don’t allow them at all.
Government liens involve programs like Medicaid and Medicare. Medicaid liens require you to sign a formal agreement giving the government permission to pay your medical bills, conditioned upon their repayment. If a person going through Medicaid does not file a personal injury lawsuit, the government may still do so.
Medicare liens will not cover any medical bills in cases where Workers Compensation is covering the cost of medical treatment.
Auto insurance companies can only file a lien if they paid more than $5,000 in medical treatment.
In the case that a medical provider files a lien, you must sign a waiver signifying your acceptance of it. However, for the lien to maintain validity, providers must adhere to several strict requirements. A few examples of these requirements include:
- Time limit restrictions dictating when a lien must be submitted to the county recorder’s office.
- The information contained therein must be specific and have the injured party’s contact information.
Failing to adhere to these requirements makes the medical lien null. However, the injured party will still be liable for the cost of services, and the hospital or medical provider may bill their health insurance in order to receive compensation.
A Letter of Protection is a form of medical lien. This letter promises future payment to medical facilities through a personal injury claim settlement.
If worker’s compensation paid your medical bills, and you pursue a personal injury lawsuit, the worker’s compensation insurance company will have a claim on your settlement. However, liens made by worker’s compensation companies have limits that vary by state. Check your state statutes regarding these limits.
Typically you do not have to repay coverage provided by worker’s comp unless you sue someone other than your employer. In this case, the worker’s comp insurance company can place a lien on your settlement to receive compensation for your medical bills.
Often referred to as “super liens” government liens take precedence over all other liens. If government liens remain unpaid, you will face the penalties outlined by federal law. For example, you may have to repay double the initial coverage.
Additionally, the government has up to six years after treatment to notify you of any liens placed against you. This means you may not receive notification until years after you have settled your case.
Negotiating Your Lien
Insurance companies, as well as medical providers, may work with you to lower the amount of their claim(s). This can help lien holders recover from monetary losses faster, as it can expedite your case settlement.
You may negotiate a lien based on the fact that repaying the full amount would create financial hardship. Or you can negotiate based on the need for future treatment that your insurance will not cover. Additionally, if you have suffered permanent disability, or if you lost your job as a result of the accident you may be able to further negotiate. However, if a government lien has been filed, there is no way for you to negotiate a reduction.
What is the Purpose of a Lien?
Liens prevent a person from “double-dipping”, and in doing so creates equity. “Double-dipping” refers to a person who received no-cost healthcare and then collected additional money through settlement. Liens also stipend the amount that health insurance providers can charge, and keeps prices from rising.
They also help medical providers stay in business and avoid financial hardship. Furthermore, they can protect uninsured patients so they can get the treatment that they need.
If a lien comes against your claim, do not ignore it, or try and cover up the fact that you have received a settlement. If you unsuccessfully attempt to cover up a settlement, you may face additional fees from the third-parties seeking repayment, as well as criminal penalties.