Medical Liens Explained

Medical LiensA medical lien is a common term in auto accident and personal injury cases. It is the amount of money you have to pay back to the organization that paid your medical bills. In some cases that will be a government organization like Medi-Cal or Medicare, in other situations it may be your health insurance.

Why do you have to pay money back? Well, the basic reasoning is that when you settle a case, part of the money being paid to you is for the medical bills. And if somebody else paid the medical bills for you, then they want that money back.

Three types of medical liens you need to keep in mind:

  1. Statutory Liens

These are liens that are established by some law. This type of lien would be in place if your medical bills were paid by any government program such as Medi-Cal, Medicare or any type of county based insurance program for low-income individuals.

  1. Health insurance liens (rights of reimbursement)

These are liens that are created through your private health insurance. Believe it or not, buried deep in your health insurance contract is a paragraph or section giving the insurance company the right to be reimbursed by you for any money you recover for medical bills that they paid.

  1. Private liens

These are liens that you create yourself usually because you have been in an accident, are not covered by any insurance and you need medical care. In this situation, your lawyer will often recommend you seek out a doctor that will treat you on a lien basis. In other words, they provide you with medical care and defer the payment until your case is settled.

Resolving Medical Liens

Your lawyer will handle the resolution of your medical liens as part of your case. Just like an insurance company negotiates a reduction in the amount they pay to doctors, your lawyer will negotiate your medical liens. This is necessary because you had to pay for a lawyer and pay costs of a lawsuit in order to get any money at all, so the idea is that you should get a break from the amount owed since you were the one that paid to get the recovery.

The laws that create the statutory liens all have built-in formulas for reducing the amount owed to them. Some health insurance contracts have the formulas built into them as well. Certain private medical liens can be difficult to resolve because these do not have formulas to reduce the amount owed. However, there is always room for negotiation, no matter what type of medical lien. Here are some of the factors that will be considered when negotiating your liens:

  1. Attorney fees;
  2. Lawsuit costs;
  3. Other liens – often you will have several liens;
  4. Causation – was the medical care related to this accident or a pre-existing issue;
  5. Fault – if the accident was 50% your fault! then you probably are not being paid all of your medical bills, so you shouldn’t have to pay back the full amount either.

These are all factors used to negotiate your medical liens. The process of lien negotiation can take several weeks, and often can delay payment of a settlement. However, you are paying these medical liens with your money, so it is in your best interest to take the necessary time to allow your lawyer to negotiate the best deal possible.