5 Things to Know About Medical Liens & Personal Injury Law

Being harmed by the negligent actions of another person or company may give you grounds for a lawsuit. But while you’re waiting for your case to go to court, or hoping for a settlement, you will likely still require medical treatment. Your insurance company may step in and pay. If you have a personal injury case and your insurance company has paid for medical treatment related to injuries involved in that case, you could end up with a medical lien. Here are five of the most important things to know about those liens.

1. A Medical Lien is an Insurance Company Asking for Reimbursement

Insurance companies pay for care that’s covered under the policy their clients have. But if you’re injured by someone else and file a lawsuit, your insurance company will likely want to be reimbursed for the costs they incurred. Since your insurance company paid for treatment, they will argue that it’s only logical and fair that they are reimbursed if you receive money from a successful lawsuit. If you had paid for all your care, you would be entitled to keep the money yourself.

Not all insurance companies will do this, and it will also frequently depend on the amount of money owed. For most personal injury cases, there are substantial medical bills and other expenses. If there weren’t significant expenses to pay and harm caused, it would likely not be worth the time and effort of a lawsuit. If you seek medical care for an injury and later file suit against the party that caused the injury, don’t be surprised if your insurance company wants some of what you receive.

2. The Process of Paying the Lien is Called Subrogation

Paying off your medical lien is called subrogation. How much of a case your insurance company has for receiving that money from you or your attorney, depends on the language in the contract you have with that insurance company. The laws of your state can also matter when it comes to whether your insurance company can be fully or partially reimbursed. Some states have stronger laws protecting the money you may receive from a lawsuit, while others are more friendly to the insurance companies.

If you’re shopping around for a new insurance company, whether you’ll have to pay them back in the event you file a lawsuit for personal injury probably isn’t at the top of your mind. But it’s something you might want to consider. You could also focus on the laws in your state, so you have more knowledge about how those laws could affect what you and your insurance company may need to discuss or negotiate later. A personal injury attorney can help guide you with the right knowledge and information.

3. Hospitals May Also File Liens for Reimbursement

It’s not only your insurance company that could decide it wants some of the money you receive in a personal injury case. 

William McFarlane, a top litigator representing insurance firms in Florida at William McFarlane Law, says, “Hospitals are also very likely to file for reimbursement for the care they provided in a personal injury case. That’s especially true for significant injuries, where the cost of care was excessive or ongoing. When you go to the hospital with an injury that was caused by another party, part of the paperwork you’re asked to sign may be a lien letter. That letter means you agree to reimburse the hospital for costs in the event that you receive a personal injury settlement.”

Most people sign what the hospital gives them, but it’s important to look at what’s being signed and make sure you’re aware of what it could potentially mean for your financial future if you file a lawsuit and receive compensation.

4. You Can Negotiate the Amount of Your Medical Liens

You have the opportunity to work with your attorney and the insurance company or hospital to negotiate the amount of your medical liens. In most cases you won’t have to pay the entire amount of the lien. Most companies will agree to work with you, so you can keep more of the compensation you received. It’s best not to try to handle these kinds of negotiations alone. Instead, it’s better if you let your attorney work through the process with you.

With strong legal representation on your side, you’ll have more power to negotiate for the best possible outcome in the case of your lien. That’s true for any liens placed by your insurance company, and also true for liens that have been placed by the hospital where you were treated. If you signed a lien letter with that hospital, though, you may not have as much negotiating power. A lot of that will depend on your state’s laws in this area.

5. Attorney’s Fees Often Come Before Medical Liens

Your attorney will be paid from the compensation you receive before any medical liens are paid, in most cases. That could mean you won’t see a lot of your actual compensation if you don’t get a large settlement. By working with an attorney who can get you the best possible outcome for your case, you may see more of the money the lawsuit generated.

You may also want to talk with your attorney about negotiating fees, liens, and other items before you sign on to work with them. When you ask questions and gain knowledge, it can be easier for you to make the right decision for your financial future.