What Is A Lien In A Personal Injury Case?

You’ve been through months of recovery, months of physical, mental, and financial turmoil all because of an accident that wasn’t your fault.

Finally, it’s time to receive compensation for your lost wages, medical bills, and other expenses that pile up while you’ve been out of commission.

But instead, here comes another wrench in your plans.

Now that it’s time to be paid what you’re owed, you learn that others have staked their claim first. A third party is placing a lien on your settlement, and you feel defeated.

Depending on the amount of the lien, this may put you back at “square one,” trying to figure out how you’ll recover from the harm caused by your accident. But you have options. Our personal injury lawyers can help you negotiate, reduce, and sometimes even eliminate liens connected to your personal injury case.

What is a Lien in a Personal Injury Case?

A settlement lien is when third-party tries to claim a portion or all of your settlement or jury verdict. To place a lien, the third party must file a notice of the lien with the appropriate party. In many situations, the notice is sufficient if your personal injury lawyer is aware of the lien, but some liens must be filed with a government entity or court.

Once the lien is approved, lienholders are allowed to be paid from your settlement money before you can even touch it.

For example, if your settlement amount is $100,000, and a third party has a valid lien of $80,000, it’s possible that the maximum you will be able to walk away with is $20,000.

In most cases, the third party’s lien claim is related to your personal injury case (medical providers, health insurance carriers, etc.). But some aren’t. If you owe debts, like child support and back taxes, your debtors can try to collect on the money they are owed.

Who Can File a Lien Against My Personal Injury Settlement?

Once word gets out that you’re expecting a personal injury settlement, you may worry about old debtors or claimants popping back up to get a “piece of the pie.”

You may also wonder who has a valid claim against a personal injury settlement.

In general, these four entities can place liens on your settlement.

Government Entities

Government entities like Medicare, Medicaid, and Veterans Affairs can lay claim to your settlement check before you see it. These claims are for medical services rendered or paid for in conjunction with your personal injury case. This is called a subrogation lien.

Health Care Providers

Medical liens, sometimes referred to as Letters of Protection, are the most common sources of settlement liens. Your healthcare provider may require you to sign a lien agreement or “assignment of benefits” before providing medical services. This gives the medical provider peace of mind in knowing they will receive payment for the medical treatment they provide at some point in time.

Workers’ Compensation Insurance

When you’re injured at work, your workers’ compensation insurance will most likely cover the cost of your medical services.

However, if you go on to pursue a personal injury lawsuit against a third party for your injuries, your workers’ compensation insurance carrier will have a legal right to be reimbursed for the medical treatment they paid for on your behalf.

Insurance Companies

If your auto insurance company or health insurance provider footed the bill for some or all of your medical costs, they might be entitled to reimbursement. In this case, they can recover that reimbursement through your settlement proceeds.

FAQs About Liens on Personal Injury Cases

How much can the lien take from a personal injury settlement?

The amount a lien holder can be reimbursed will vary from one type of lien to another. For example, a hospital is limited to receiving up to one-half of your total settlement amount. Some health insurance carriers are not required to reduce at all, while other health insurance carriers will reduce the amount they are compensated by 30% or more.

It depends on the unique factors of your personal injury case, so it’s important to speak with an experienced personal injury lawyer who can guide you through this process.

What happens to a lien if I don’t win my case?

If your case does not end successfully, there will be no settlement. Therefore, neither you nor the lien holders get paid. However, this won’t mean you’re off the hook. The lien holders may continue to pursue collection efforts to recover the balance due, but this will depend on the type of lien.

A third party is threatening a lien on my settlement. What can I do?

Once you’ve received notice of an intent to file a lien, you still have options to ensure that justice is done in your case. In instances where the information is incorrect (you don’t owe this debt, the amount is wrong, etc.), a personal injury attorney can help you dispute the invalid lien and protect your settlement money.

If the amount owed is disputed, your lawyer can typically get that straightened out, which will increase the amount of compensation you receive in your pocket.

Contact a Personal Injury Lawyer

If there are liens on your personal injury claim, you may be able to have them removed or reduced by working with a trusted personal injury attorney.

As an accident victim, you have a legal right to be compensated for your injuries. Contact our attorneys at Allbee Law Firm today to discuss your options.


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