Many people are surprised to learn that in certain situations, the state and federal government, health insurance companies and hospitals can assert a claim against your personal injury settlement. When you have been the victim of an accident and have filed a personal injury lawsuit to recover the cost of medical bills, the people who paid for these medical costs may be able to file a medical lien against your settlement proceeds. A lien is a demand for repayment that may be placed against your personal injury case.
Your health insurance provider may also issue a lien to recover any money it spends on your personal injury accident treatment. You may be required to pay back these medical expenses. This is a process known as subrogation, whereby insurance providers can seek repayment from your settlement. The extent and strength of the subrogation claim depends upon the language used in the policy. Some states strictly prohibit an insurance company from placing a subrogation clause into a health insurance policy, so you should check the laws in your state.
In certain states, hospitals are entitled to file a lien for repayment of any monies spent on treating or caring for someone injured in an accident. Some medical providers may ask you to sign a lien letter, stating that you submit to a lien against your settlement to pay for services. Medical provider liens must follow a strict protocol in order to be valid. The hospital must follow the requirements of the Hospital lien statutes.
A lien carries with it the right to sell property, if necessary, to obtain the money. A mortgage or a deed of trust is a form of lien, and any lien against real property must be recorded with the County Recorder to be enforceable, including an abstract of judgment which turns a judgment into a lien against the judgment debtor’s property. There are numerous types of liens including: a mechanic’s lien against the real property upon which a workman, contractor or supplier has provided work or materials, an attorney’s lien for fees to be paid from funds recovered by his/her efforts, a medical lien for medical bills to be paid from funds recovered for an injury, a landlord’s lien against a tenant’s property for unpaid rent or damages, a tax lien to enforce the government’s claim of unpaid taxes, or the security agreement (UCC-1) authorized by the Uniform Commercial Code. Most liens are enforceable in the order in which they were recorded or filed (in the case of security agreements), except tax liens, which have priority over the private citizen’s claim.