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Medical Liens: Whoever paid for your healthcare has rights to a piece of your personal injury settlement
May 18, 2020
Author: Jeremy Fietz
You were injured in a collision. You were ambulanced to the ER. You were taken care of by doctors, nurses, and maybe even specialists like orthopedists. You went to physical therapy.
You went through the hassle of bringing a legal claim (file or just negotiated with the insurance company) and your lawyer just told you that some of your settlement money has to be paid back to your health insurance (or Medicare). What the hell?
Blame the government. For years, government payors like Medicare and Medicaid have had the legal right to make claims against the proceeds of your settlement for the amounts paid for your collision-related health expenses (this is called a health care “lien”). In the last decade or so, private insurers like Blue Cross, Aetna, Health Net, Kaiser, etc., have amended their health insurance contracts (the one you never read) to also give them the right to a portion of your recovery that reflects the amount they have paid on your behalf. In other words, they saw the government getting their money back and said “hey us too!”
The reason these “third parties” get some of your settlement is that part of your personal injury case is a claim for your related medical expenses (EVEN IF YOU DIDN’T PAY THEM YOURSELF). This is because of what is known as the “collateral source rule” – which is the legal principal that a defendant that is responsible for your injuries should not get the benefit of the fact that you paid for health insurance (or that the government provided it to you). So part of your claim is for the health expenses that you didn’t pay (so the people that actually paid have the right to get the money that you essentially collected on their behalf).
So don’t be mad at your lawyer when this comes up (hopefully he told you about this at the beginning of the case but, even if he didn’t, it is just a sad fact of life).
What can you (your lawyer) do about it? It depends. How each insurance company deals with this is mostly the same: they send a notice to you or your lawyer that says “Hey if you get paid for a claim relating to your injuries you have to give some of that money to us.” (The technical term for this is “subrogation” but don’t worry, there is no test).
It is similar if your health care was paid for by Medicare or Medicaid and because the government carries a big stick, often times, the car insurance company won’t release the insurance money without knowing that Medicare or Medicaid are part of the picture.
So if my lawyer can’t stop it, what good are they? Well, a good lawyer can make a HUGE difference when it comes to this (as well as other) aspect of your case. There are certain buttons to push when it comes to negotiating these claims and knowing who to push them with and when, can mean thousands of dollars more in your pocket. Remember, the healthcare repayment COMES OUT OF YOUR SHARE. For this reason, lazy or worse lawyers, do nothing but pay the bill out of your share when the time comes. It doesn’t affect the lawyers’ share so they spend little time finessing the issue because it can delay settlement. But this is where the lawyer should be earning more of their fee on your case. Often these lien claims can be negotiated to a fraction of what the original lien claim was – putting a dollar for dollar difference in your pocket! For example: assume two identical cases (except one where the lawyer spends the time and attention to negotiate the medical lien).
The lawyer in CASE B spent the time to fight and negotiate the health care lien and it resulted in more that 75% increase in what the Client took home at the end. Obviously not all situations can be negotiated this dramatically but a lot of them can. We’ve had success negotiating big liens to almost nothing because we knew where, when, and how to deal with these issues.
Isn’t the lien negotiation just as important as getting a good settlement amount? This is a trick question. The correct answer is: the lien negotiation counts to the client even more than the settlement amount because it results in a dollar for dollar increase in what the client takes home to their family.
Good luck with your case!
Legal Disclaimer: The information in this article is not intended to be used as medical information or diagnosis. The sources of the information presented in the article have been researched and are linked within the article. Please seek out medical advice from a licensed medical professional if you are experiencing a problem with any of the drugs or devices mentioned in this article.