United States: Statutory And Contractual Liens In The Case Of Serious Personal Injury

In almost every personal injury case, medical bills are paid by either private insurance or governmental program. If the injury is caused by the negligent conduct of another, generally, the insurance company or governmental agency paying the medical bills is legally entitled to recover what it has paid, out of any monetary recovery for the injured person, by way of settlement or lawsuit. This does not include, however, automobile accident cases where, typically, the auto-insurance company pays the bills.

When handling a personal injury liability claim, great care must be taken by plaintiff's counsel not to prejudice the client's recovery. The client can, unknowingly, settle his claim only to find out later that a good portion, and in some cases all, of his recovery must be turned over voluntarily; otherwise, legal process against him may follow.

Most federal and state statutory provisions require that notice of a lawsuit or settlement be given within prescribed time limits (e.g. medicare, worker's compensation). All government claims are subrogated to the recovery of the injured party and must be reimbursed accordingly. One government program, in particular, allows for recovery against the attorney handling the client's personal injury claim. See 42 CFR 411.24(g). Most governmental liens, however, will be discounted to reflect the costs and attorney fees incurred by the injured party in pursuing his claim against the wrongdoer.

Private insurance companies have a contractual lien which may be asserted within six years from the date of settlement or judgment. This is true, even if the private insurer did not notify the injured person of its contractual lien. Private insurers, too, will discount their lien, taking into consideration liability issues, as well as, costs and attorney fees.

In conclusion, when handling a personal injury case, always be mindful of who is paying the medical bills, to ensure that your client complies with any statutory or contractual obligation. Finally, always claim the full extent of medical care rendered in order to fully and adequately account for the client's entire claim.