After you’ve won a personal injury settlement or verdict, it can feel as though a long and difficult journey has come to a successful end. But if a medical provider or insurance carrier has asserted a lien on the proceeds resulting from your case, your final award may be reduced.
A lien is a claim of a right to payment from proceeds received in a settlement or judgment. In some cases, a lien claim can be so costly that it prevents the injured party from receiving any net recovery at all.
This is why it’s so important to hire a personal injury attorney who is familiar with the relevant state and federal rules, statutes, and case law pertaining to liens. A skilled lawyer can assess the validity of any liens asserted against your recovery, negotiate for reductions (and possibly waivers), and help you fight for the maximum compensation possible. Any liens asserted against your recovery must be resolved before funds from the settlement or judgment can be disbursed to you.
What Types of Liens Can Be Asserted on a Personal Injury Award?
There are two types of liens that can be asserted on a personal injury award: contractual and statutory. A contractual lien is a claim for repayment based on an agreement between the medical provider and the injured party. Contractual liens may be asserted by:
- Health insurance companies;
- Medical providers who performed treatment on a lien basis; and
- Med-Pay insurance providers, if the injured party obtains a monetary recovery from a third party.
Statutory liens are claims for repayment that are presumed by statute. Statutory liens may be asserted by:
- Workers’ compensation insurance providers;
- Hospital emergency services; and
- Medicare, Medi-Cal and Medicaid.
Will I Have to Reimburse My Health Insurance Company?
Maybe. Your health insurance company might have a claim for reimbursement if a third party caused your injuries based on the contractual language of your health insurance policy. Many health insurance companies, including Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), incorporate language in their policies for a lien against the proceeds recovered by the insured for injuries caused by a third party.
Can a Personal Injury Attorney Get a Health Insurance Lien Reduced?
In many circumstances, yes. A skilled attorney may be able to get your health insurance lien reduced if:
- The Lien Exceeds the Amount Paid for Non-Capitated Services: If your medical provider billed you for each service performed rather than charging you a flat fee, such services would be considered non-capitated. In this scenario, the health insurance lien cannot exceed the amount actually paid for the non-capitated services.
- The Lien Exceeds the Statutory Cap on Capitated Services: If the medical services were provided on a capitated basis, meaning you were billed a flat fee, the health insurance lien cannot exceed 80 percent of the customary and usual cost of the same services performed on a non-capitated basis within the same region where the services were rendered. That means the gross capitated lien claim would be reduced by 20 percent. However, if a non-capitated service was provided in addition to the capitated services, the non-capitated service would not be subject to the 20-percent reduction.
- The Lien Includes Co-Pays: Copays that you paid for services rendered should not be included in the lien.
- You Were Found Partially at Fault: If you were found partially at fault for the accident that caused your injuries, the lien must be reduced by the fault percentage by which your recovery was reduced. For example, if you were found 30 percent at fault for the accident, the lien against your settlement or judgment must be reduced by 30 percent. In this scenario, your attorney should negotiate comparative fault with the lien holder before agreeing on a settlement in your personal injury case. If the lien holder refuses to negotiate, your lawyer can request the third-party claims adjuster to write a statement that says the settlement was reduced by the percentage of fault assigned to the plaintiff.
- The Lien Doesn’t Account for Attorneys’ Fees and Legal Expenses: The lien claimant is required to share in the cost of reasonable attorneys’ fees and legal expenses.
- The Lien Claim Exceeds the Lien Recovery Cap: If you retained an attorney, the health insurance lien cannot exceed one-third the money owed to you. If no attorney was hired, the lien cannot exceed half the money owed to you.
- You Have Not Been “Made Whole” by the Settlement: If the insurance policy of the person who injured you was insufficient to fully compensate you for your injuries and pain and suffering, this may limit your health insurance company’s ability to exercise its right to subrogation. This is known as the “Made Whole Doctrine.”
Is It Possible to Get Medicare Liens Reduced?
Both Medicaid and Medicare are public assistance programs that provide government benefits. If a plaintiff’s medical bills were paid by one of these programs, a statutory lien can be asserted when the plaintiff obtains a recovery from a third party for personal injuries.
Medicare makes a pro-rata lien reduction that takes into account attorneys’ fees and other costs to procure the settlement or judgement. The attorneys’ fees used to make this calculation cannot exceed 40 percent of the total recovery.
Is It Possible to Get Medicaid Liens Reduced?
California’s Medicaid program, or Medi-Cal, provides health insurance coverage to low-income people. When a Medi-Cal beneficiary suffers an injury due to a third party, Medi-Cal is obligated to recover payments made for services rendered for the beneficiary. Fortunately, there are limits on the amount that Medi-Cal can recover in third-party liability cases.
For instance, any Medi-Cal claim for reimbursement must be reduced by 25 percent to account for attorneys’ fees and legal costs. This is called the “25% Rule.” There’s also a “50% Rule” that ensures the California Department of Health Care Services does not recover more than the Medi-Cal beneficiary after reducing the recovery by litigation costs and attorneys’ fees. If the 50% Rule applies, the 25% Rule will not apply to the same case.
In some cases, the DHCS’s Medi-Cal claim can be waived or reduced if it would cause undue hardship to the beneficiary. If you receive Medi-Cal benefits, it’s important that you consult an attorney who has experience negotiating these liens with the DHCS.
Discuss Your Case with a Personal Injury Lawyer in Long Beach
Your Injuries Are Personal to Me
Resolving medical liens is one of the most technical and complicated steps to recovering compensation for a personal injury. A skilled attorney can evaluate your case from all angles to determine the most strategic way to approach the negotiations.
Attorney Michael D. Waks has an extensive background in lien negotiations with medical providers, health insurance companies, and government agencies. With more than 30 years of experience, Michael has a refined knowledge of state and federal statutes, rules, and case law pertaining to liens, and he will use all the resources at his disposal to fight for the compensation you deserve.
Our law firm offers free initial consultations, and we can come to you if you cannot come to us. Schedule a case evaluation today by calling (562) 206-1939, or use our Contact Page to send us a message online.
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