Personal Injury Settlement Liens: The Complete Guide

What Is A Settlement Lien?

A settlement lien is a legal right granted to a third party, and it essentially says that a third party has more of a right to your settlement money than you do.

In most cases, settlement liens ensure that people and organizations that have helped you through the process receive the payment they’re owed. For example, a hospital that treated your injuries or an attorney who recovered the settlement for you might be entitled to a lien.

Who Can Get A Settlement Lien Against You?

There are many different parties who might be able to get a lien on personal injury settlements. Usually, those parties have funded your medical care in some way and are looking to be reimbursed, but there are some exceptions. Take a closer look.

Insurance Companies

Often, when you’re injured in an accident, your health insurance company partially or completely pays for your medical treatment. Your car insurance also may have reimbursed you for property damage.

However, if you later receive a personal injury settlement, insurance companies will almost always go through a process called “subrogation.” Subrogation happens when the insurance company attempts to be reimbursed for what they paid.

It might seem unfair, but ultimately, subrogation is meant to ensure you don’t receive double recovery for damages. You might think of it like borrowing money from a friend to buy groceries if you’re running low on money before you get paid. Once you do receive your paycheck, it’s only fair to reimburse them.

However, in some cases, subrogation might not be legal. The legality of subrogation depends on the circumstances of your accident, what you were reimbursed for, and other factors. Your personal injury attorney will be able to look closely at your case and help you determine whether your settlement might be subrogated.

Healthcare Providers

Most car accident personal injury cases deal with very severe injuries — and as you might already know, such injuries tend to come with significant medical bills. If you have health insurance, your insurance company might not cover all your medical bills. If you don’t have health insurance, you might be left to cover the bills on your own. 

Most people can’t afford to pay these bills out of pocket, so they often count on their settlement to pay. However, personal injury cases often take a significant amount of time to resolve. 

During that time, your medical bills might pile up. If enough time passes, those bills could even go to collections. Even if you pay off a bill that goes to collections, it will still have long-lasting, damaging effects on your credit.

A hospital or other healthcare provider might get a lien on your settlement to avoid that. Medical liens on settlements help to reassure healthcare providers that they will receive payment for their services.

However, the wording used in these liens is critically important. You want to make sure that you’re only agreeing to reimburse the healthcare provider for services directly related to the accident. For this reason, you never want to try to negotiate a lien by yourself. An experienced personal injury attorney can draw up a lien that is fair to both you and the provider.

Attorneys

Often, your attorney will have a lien on your settlement. This is normal, and it’s why you don’t have to pay anything upfront when you work with a personal injury attorney.

For example, many firms work on contingency for personal injury cases. To start the process, you set up a free consultation. At this consultation, you discuss your case with an attorney. If the attorney takes on your case, you only pay when they recover compensation for you. If they don’t recover compensation, you pay nothing.

Once you receive compensation, you agree to pay the attorney a certain percentage of the money you receive. At your consultation, you can discuss fees in more detail.

Government Agencies

Much like health insurance companies, government agencies that help pay medical bills after an accident might put a lien on your settlement. Some of these agencies include:

• Medicare
• Medicaid
• Veterans Administration (VA)

Just like private health insurance companies, government agencies that offer health insurance policies will usually include language in your contract that outlines their ability to subrogate.

Child Support Agencies

Typically, liens placed on personal injury settlements are only directly related to the medical care you received as a result of the accident. However, if you are behind on child support payments, Nevada allows child support agencies to place a lien on your settlement. 

The good news is that unless you are very behind on child support and/or only receive a relatively small settlement, you’re very likely to still have a significant amount of money left after paying child support.

In some cases, it might make sense to fight the lien. For example, if the settlement is barely enough to cover your medical bills and you owe a substantial amount of child support, you could reasonably argue that drastically reducing the amount of your compensation to cover child support arrears is unfair.

A qualified personal injury attorney knows when it makes sense to fight a child support lien and when it does not. Your lawyer can assess the circumstances of your case and your lien and help you decide how to move forward to protect your best interests.

Understanding The Lien Process

The way the lien process works can vary slightly depending on the party seeking a lien. Because the majority of personal injury liens are held by emergency healthcare providers, Nevada law allows hospitals to automatically attach a lien to your personal injury settlement or court judgment. 

Hospitals may only ask for enough to reimburse them for the reasonable cost of your hospitalization, though. The law has some safeguards in place to prevent unscrupulous hospitals from taking advantage of your situation, so your attorney can review hospital records to make sure the lien isn’t asking for more than the cost of medical services.

Not all third parties can have automatic liens. Ordinarily, the third party seeking a lien must file paperwork with the appropriate court. Assuming the lien is granted, you will receive a notice informing you.

Most of the time, when there is a valid lien, it will be taken out of your settlement or court judgment before you even see the money. That’s why it’s so important for your attorney to investigate any liens placed on your compensation to ensure they are fair.

If you do receive a notice that a lien has been attached to your compensation, don’t panic. You have the right to challenge the lien, and your personal injury attorney may be able to work directly with the lienholder to negotiate the total amount owed.

Facing A Settlement Lien? Get In Touch Today

Your personal injury attorney can negotiate more than just insurance settlements. At Adam S. Kutner, Injury Attorneys, we have helped numerous clients in Las Vegas negotiate liens placed on their personal injury compensation. In many cases, we’ve been able to significantly lower the amount of the lien.

Personal injury liens can be highly complex, especially if your case involves multiple liens. It’s important not to negotiate liens yourself, as you may end up paying far more than you have to.

If you’ve been injured in a car accident you didn’t cause, don’t wait to start protecting your future. Let our team put our experience to work for you and fight to maximize your recovery.