A lien is a legal claim made against your personal injury claim or settlement recovery. The most common type of lien in a person injury claim is one asserted by your health or auto insurance company for medical treatment paid on your behalf. Another type of lien is one asserted by your healthcare provider. If the hospital or your doctor is owed money for your treatment following the accident, they can assert a lien in your settlement, or on your home or other property.
Resolving lien claims can be difficult because of the many complex laws that apply to them, and because holders of lien claims are often slow to respond in writing to questions about their liens. Unfortunately, the law does not always say that lienholders are required to respond to your lawyer within a specific time. Sometimes it takes months to get an appropriate answer. This delay prevents prompt payments of settlement funds to clients like you, and can be frustrating for you and your lawyer. Unfortunately, this time delay may be unavoidable depending on the type of lien and the identity of the lien holder. Your law firm should work hard to obtain this information and resolve these issues, so that the settlement can be distributed and you can resolve your case.
One example of a complex lien claim that may take some time to resolve is a Medicaid or Medicare lien. If Medicaid or Medicare has paid for some of your treatment they are entitled to reimbursement of those payments. These federal programs will then have a lien on your settlement. Your lawyer will probably have to hold back a part of your settlement equal to the debt until you can negotiate an agreement and pay the agency.
Medicare and Medicaid are notoriously slow in responding to information about their liens, so delay is likely. In some cases the delay may be several months or more. Again, your settlement funds cannot be distributed until you reach an agreement and pay Medicare or Medicaid to resolve its lien. This is because your attorney may be personally liable for the lien if it is not resolved.
When multiple insurers or debts are involved in your claim, this can become quite complex. For example, you might run into complicated lien problems when you have your own private insurance (including a settlement from a personal injury case) but are using Medicare as a secondary insurer. When it is not certain whether Medicare is a primary or secondary insurer, Medicare will make a conditional payment. If it is later determined that some other party was responsible for that payment, Medicare is entitled to a refund from that party, or from you or the health care provider, if one of you was paid by that party. The federal government may place a lien on your property to recover this type of conditional payment.
In addition to Medicare and Medicaid, there may be liens asserted by a state governmental agency. In Washington, the Department of Labor & Industries (DLI) and the Department of Social & Health Services (DSHS) are common lien holders in a personal injury case. These departments often provide medical benefits for many people who have been injured in an accident. When this happens, these departments are granted a statutory lien on your personal injury recovery. This means that DLI and/or DSHS must be paid back out of your settlement. However, your lawyer will often be able to get the lien amount reduced to account for your attorney fees and costs incurred in pursuing your claim.
Another problematic lien is the ERISA lien, which stands for “The Employee Retirement Income Security Act of 1974.” ERISA is a federal law that gives special rights to employers with respect to health care plans. Typically the ERISA lien is much more onerous than your typical state law created lien. For instance, there are certain equitable defenses available to you when dealing with a state-law created health plan lien. This means that your attorney may be able to compromise or completely eliminate the state law lien, and thereby maximize your settlement recovery. Not so with the ERISA lien. Recent federal and Supreme Court decisions have taken many of these state law defenses away.
Unfortunately, if your ERISA health plan has paid for your medical treatment then you may have to pay back the ERISA plan 100% out of your recovery. You should consult with your lawyer about the ERISA lien because there still may be certain defenses available so that the lien amount can be reduced or avoided entirely.
The laws governing government lien claims are complicated so it is often best to consult with a lawyer if you have a claim where the government has paid for some or all of your medical treatment and/or income loss. This is especially true if ERISA applies to your claim.
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