Like bouncers at the door of a club, liens often prevent final settlement and resolution of personal injury cases until they are resolved. Government liens, private liens, statutory liens and others prevent final settlement until dealt with.
What's a lien? It's basically a claim by some third party to funds from the resolution of your injury case. Liens can be helpful in that clients can get medical care wherein the doctor will defer payment until the case is resolved, but they often hold up final disbursement of client funds.
Medicare & Medicaid Liens
Medicare & Medicaid, by statute, have liens on injury cases where they paid accident-related bills. Acceptance of these benefits is conditioned on an agreement that the government entity will be paid back if they pay medical bills wherein a third party caused the need for treatment. For example, if someone rear ends you and you go to the hospital and get treated while on Medicare, Medicare may assert a lien against your case vs. the person who hit you. The idea is they just want to be paid back for injuries caused by that third party.
A bureaucratic process handles release of these liens. Medicare only releases liens through the ‘MSPRC’, also known as the Medicare Secondary Payer Recovery Center. Getting through the MSPRC system can take months or longer. Even though you’re giving the government money and common sense suggests a swift resolution is in everyone's best interest, that’s rarely how it works. The entire country is now handled by this central office, creating massive delay.
Medicaid liens are handled state-by-state. In California, humans often answer the phone, read their mail and respond relatively quickly on the state liens, but even resolving these takes time. By law, the client and lawyer must properly resolve these liens. There is potential criminal liability for failure to do so.
Health Insurance Liens
Health insurance liens are hard to understand. Some think that because such companies use words like “community” or “health care” in their names, they have friendly intentions and are not out to make a profit. The way health insurance companies see it, they’re there to assist with health needs and to pay bills in the event of one of those feared diseases we don’t want to think about. When a third party causes an injury, if the health plan has to pay medical expenses, this falls in a different category.
Fine print in health plans often requires these companies be paid back. As with government liens, a condition of getting the health benefits is that patients agree to cooperate in paying back the money if there is an injury by a third party. This language creates the lien on the case.
Other liens include state statutes granting recovery to specific entities such as hospitals. But, one needs need to be certain that those facilities claiming these liens fall within the targeted group and are not some other provider attempting to jump under the umbrella.
Some health providers have new patients sign a form at the outset, obligating the patient to pay the provider directly any charges not covered by insurance. These are not really liens, but a contractual right of recovery. These vary by provider.
Many liens can be negotiated. Some are more negotiable than others. ERISA health insurance plans rarely negotiate, but it’s not impossible. Medicare and Medicaid want their money back, but there is often some flexibility, especially if the client's recovery is less than ideal.
Lien resolution presents one of the more frustrating issues in a personal injury case. The process of obtaining an itemization, reviewing and contesting unrelated items, submitting settlement details, negotiating a final number and obtaining a release or discharge of the lien is very time consuming, but understand that lawyers do this to put the most money possible in their clients' pockets. It's often worth the wait!
Chris Gansen is an attorney practicing personal injury and trial law in Los Angeles, CA. He specializes in catastrophic injury cases and products liability. You can find him on Twitter @thegansen or on his law firm's web site, www.gansenlawgroup.com and LaAutoLaw.com.