A lien is a security interest asserted by one party against another party’s property. Common examples are car notes or mortgages. In these situations, the lender retains an interest in the car or the house until all of the payments have been made and the lien is lifted. If payment is not made, the lien allows the lender to recover from a forced sale or take possession of the property entirely. In the context of personal injury law, liens are claims against the injured person’s ultimate financial recovery which must be paid before any proceeds can be distributed to the injured party.
Health care providers such as ambulance services, hospitals, doctors or physical therapists often assert liens on personal injury claims for their unpaid medical bills. Such liens can arise automatically by operation of Virginia statutes or through written agreements between the patient and the provider.[1] In many personal injury cases, a treating medical provider may agree to treat a patient immediately but forego payment in exchange for the patient’s written agreement to pay the provider in full once the patient’s personal injury claim is resolved.
Although the default rule in Virginia is that health insurers are not entitled to assert liens against their insured’s personal injury claim, there are a number of exceptions.[2] Some of these exceptions are based on federal law which trumps the state statute. Self-funded ERISA-qualified plans are often entitled to assert liens. A number of federal health insurance programs, such as Medicare and Tricare are entitled to assert liens. Medicaid, which is jointly funded by the federal and state governments, is also entitled to assert a lien against personal injury claim proceeds.
Incurring liens on a personal injury case is often unavoidable. Injured people desperately need medical treatment to recover and that treatment can be overwhelmingly expensive. Often, accepting a lien to receive care may be the patient’s only option. Incurring a lien on a personal injury claim is not the end of the world, but it does make final resolution of a personal injury claim more complicated. The final lien amount must be thoroughly checked to ensure it accurately accounts for accident-related treatment only. After that, many lien holders are willing to negotiate reductions to the amount owed if the proceeds available for payment are insufficient to fully and fairly compensate the claimant for their injuries.
About the Author: Dave Douthit is a personal injury attorney with Allen & Allen. Dave practices primarily out of the Firm’s Richmond, VA and Mechanicsville, VA branches. His background with big insurance companies and knowing how they work behind the scenes is an advantage for his clients when he is negotiating and fighting for their rights. If you or someone you know has a claim for personal injuries, the experienced attorneys of Allen and Allen are happy to identify any liens that may exist early on, advise you of the effect they will have on your net recovery when any offers of settlement are made and will make every effort to negotiate reductions in the lien amounts to protect a full and fair recovery.
[1] Personal injury lien statutes can be found at Virginia Code § 8.01-66.2 et. seq., available online at: https://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+8.01-66.2 .
[2] Virginia Code § 38.2-3405 contains the anti-subrogation statute, it is available online at: https://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+38.2-3405 .
