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  • Writer's pictureRobert Schuerger II

How to Deal with a Personal Injury Lien – What Victims Need to Know

Filing personal injury claims is always complex. After an accident, victims should spend time building their cases and collecting evidence to prove their allegations.


In addition, injured parties have to navigate settlement negotiations to recover compensation for the damages or losses they suffered as a result of the accident or attack.


However, victims should consider many other aspects. One of the most important considerations they can make is the potential liens on their settlement or judgments.


Injured parties planning to take legal action against someone else should understand what liens are, how they work, and how they can affect their personal injury claims and settlements. This is essential to preparing solid cases and getting the compensation they deserve.


Here's a comprehensive guide on liens against a personal injury settlement.


What Is a Settlement Lien?

What Is a Settlement Lien?


The term "lien" describes the legal right that allows a third party to claim a portion of the injured victims' judgment or settlement sum in a personal injury case.


Companies and individuals use liens to recover what they are owed. Sometimes, these third parties' claims on settlement proceeds are even stronger than the victims' allegations.


Liens may or may not be related to victims' injuries.


Here's an example: When victims get help from another person to recover from their injuries or damages, such as medical treatment, but do not pay out of pocket for these services, the healthcare provider has the right to place a lien against their settlement.


This will help the third party recoup the money spent on claimants' treatments.


Liens that aren't related to injuries often occur when claimants owe unpaid taxes or other court-ordered payments, such as child support.


How Do Liens Work?


A lien is attached to the sum that claimants are set to receive as a settlement or verdict in their cases.

Parties planning to claim a lien on injured people's judgment must file the appropriate paperwork and follow the steps set by state law.


Placing a lien on an injured individual's judgment requires preparing and filing the right notice. Third parties must make sure claimants are notified of this action.


The lien holder receives the first payments from the settlement or verdict if the lien placed on their case is valid. Therefore, injured people don't even see this money if the defendant is responsible for the payments.


In these cases, the amount of the lien goes right to the lien holder. Claimants get the remainder.


Who Can Place a Lien on Injured People's Settlement?


Several government agencies and private parties can place a lien on a personal injury settlement, including the following:

  • Hospital or medical provider treating claimants' injuries

  • Health insurance providers offering benefits after an accident

  • The government, if injured parties have Medicare or Medicaid

  • Employer's insurance, if a person receives a settlement in a workers' compensation case


Different Types of Liens in Personal Injury Cases


Different types of liens can be placed against a settlement. Depending on the circumstances, they may be supported by state or federal laws or a contract.


In this regard, these are the most common types of liens:


Medical Liens


In most personal injury cases, people who have been physically harmed have high medical bills. Many of them are unpaid. Schuerger Shunnarah Trial Attorneys has all the information on what goes into releasing your medical records in a personal injury case.


However, healthcare providers have the right to place a lien on the injured person's settlement to ensure they receive fair payment for the medical services they provide.


These laws allow injured people to receive treatment even if they do not have insurance since they can defer payments until the case settles.


Additionally, some states allow claimants to reduce medical providers' lien by the same percentage that they are paying their legal team. Attorneys often negotiate this lien to settle for a smaller sum.


In Nashville, Tennessee, a healthcare provider or hospital can place a lien on the injured person's settlement for all necessary and reasonable charges for medical care and treatment.


However, the hospital or medical lien cannot exceed one-third of the damages recovered.


Insurance Liens


Most insurance companies write a contractual lien into their policies. This ensures insurers are repaid if they pay out benefits to an injured person, and the individual receives proceeds from a verdict in a personal injury case.


This is a common practice among health insurance companies. However, laws are different from state to state.


In some states, the insurance lien must be reduced by the same percentage of the settlement that claimants' lawyers receive.


Government Liens


Injured individuals who file a personal injury lawsuit can expect a lien on their verdict or settlement if they receive local, state, or federal government benefits, including the following:

  • Medicare benefits

  • Medicaid benefits

  • Unemployment benefits

  • Food stamps

  • Housing benefits

Liens can also occur in cases involving individuals with other government-related debts, such as child support, unpaid taxes, or alimony.


Credit Card Debts


Many people injured in an accident are unable to work for at least a short period. If their injury or illness is serious, this could be long-term or permanent.


However, being unable to work often results in lost income. Since injured individuals still have to cover medical expenses, they can accumulate credit card debt.


Credit card companies have no contractual or statutory right to place a lien on a personal injury settlement. Therefore, most of them negotiate a reduction in the amount owed, so claimants agree to give them a lien voluntarily.


Pre-settlement Loans


Many injured people take out pre-settlement loans to make sure they can meet their financial needs until they can receive a payment in a personal injury settlement or verdict.


In these cases, the loan company usually places a lien on the proceeds of their claims.


How to Deal with a Personal Injury Lien


When there's a lien on their personal injury claims, injured parties often have different options to resolve it. However, this depends on the strength of their case and the type of lien holder.


The procedure differs if injured individuals are dealing with a health insurance company or a state agency, for example.


How Will These Third Parties Find Out About a Case?


Health insurance companies, Medicare, and Medicaid require people to report any personal injury claims to them. However, they often find out about the case even if injured individuals don't report the accident.


If these third parties discover that some payments have gone to medical expenses for treatment related to injuries, but there is no report, they will send a letter asking people if they sustained an injury.


Insureds must comply with this request and provide the details of the claim. Otherwise, this could jeopardize their eligibility for future benefits.

  • Resolving a Health Insurer's Lien

Health insurers' liens are usually contractual and are defined by the health insurance policy.


When personal injury lawyers settle a case, they cannot disburse any money to claimants until health insurers are repaid from the settlement proceeds.


In some states, health insurers have the right to recover 100% of what they paid. However, Tennessee is one of the states that reduce the medical or hospital lien to one-third, which is the percentage that most injured people pay their attorneys.

  • Resolving a Medicare Lien

Unlike the health insurer's lien, this one comes from federal law and is automatic. However, the procedure is the same.


A lawyer who settles a personal injury case cannot disburse any money to claimants until Medicare is reimbursed if there's a lien on the settlement proceeds.


  • Resolving a Medicaid Lien

When a person receives health insurance benefits through a state agency or program, such as Medicaid, the lien is also automatic. It's similar to a Medicare lien but comes from both federal and state laws.


Can Claimants Ignore the Lien in a Personal Injury Case?


Claimants and their lawyers should not ignore a lien from a health insurer, Medicaid, or Medicare. This can affect their cases and result in a lawsuit. In fact, it may be considered a criminal offense.


Additionally, individuals who ignore these liens may jeopardize their rights to future health insurance, Medicaid, or Medicare benefits.


However, claimants who disagree with the lien can contest it. After that, a judge will decide if the lien on the settlement is valid.


Courts uphold liens when claimants genuinely owe money to a third party. Sometimes, multiple liens are placed on a case. The judge can determine which ones should be prioritized.


What Can a Personal Injury Attorney Do?


A qualified and experienced personal injury lawyer can help claimants address injury lawsuits for std infection and liens that third parties can place on their cases.


Attorneys can help injured people find out if the liens are valid and recommend negotiation strategies to lower the amount that will be deducted from the settlement.

  • Negotiating the Amount to Reimburse Health Insurers

While this is up to the health insurer, lawyers often negotiate the amount of the payback. Many companies agree to negotiate because their interests are aligned with the claimants' objectives.


Health insurance companies can only get their money back if claimants win the case and receive a settlement amount. However, they will not get repaid if the insureds lose.


Both parties want to avoid that result. Therefore, some health insurance companies are willing to accept less than they're owed if lawyers convince them that claimants' cases are not as strong.

  • Negotiating the Amount to Repay Medicare

Due to federal law, Medicare cannot agree to negotiate the amount. There are exceptions for the most unusual cases, but this rarely happens.


People are legally required to reimburse Medicare for all medical bills paid on their behalf if they settle personal injury claims or win a trial.


Expert lawyers advise their clients to assume that they will not be able to reduce the amount to repay Medicare.

  • Negotiating the Amount to Reimburse a State Agency

Many state agencies agree to negotiate the amount of their liens. However, some are more willing to reduce theirs than others.


Are Liens a Bad Thing?


A lien can help injured people get the financial support they need after they are hurt in an accident or attack. It often encourages medical providers to offer treatment even if they know they will likely be paid after victims get paid.


Similarly, an attorney's lien allows lawyers to help injured people even if they do not have the money to pay for their legal services out of pocket.


A person who has filed a personal injury claim will not want a lien placed on their cases. However, they are not always a bad thing. A lawyer can help injured people address liens and get the best results.


Do Claimants Need Help from a Lawyer?

Do Claimants Need Help from a Lawyer?


A lawyer can make a difference in a personal injury case. Injured people often handle many things before they even file a claim.


Victims should build solid cases, collect enough evidence to prove their claims, and submit all necessary documents. In addition, they deal with the financial burden of high medical bills and the physical or emotional pain caused by their injuries.


A personal injury lawyer can guide victims through the entire process, from the moment they are in an accident or attack until they have to defend their cases in court.


When a third party places a lien on the case, the role of a lawyer is even more essential. A serious injury attorney in Nashville can help victims navigate the process of dealing with liens to maximize their recovery.


Many people choose to deal with this process on their own but may end up losing the compensation they need and deserve. However, a lawyer can help them ensure they fulfill all the requirements related to liens on their cases.


Call Schuerger Shunnarah Trial Attorneys Today!


Every injured person in Nashville, Tennessee, who plans to file a personal injury claim and needs help with addressing liens on their cases can find a seasoned lawyer at Schuerger Shunnarah Trial Attorneys.


Our team of lawyers is willing to guide victims through the legal process. We work hard to reach fair settlements and negotiate liens to help victims retrieve the money they need for a full recovery.


If you or a loved one need legal assistance from an experienced injury liens attorney, contact us today!

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