After an accident, the injured victim will seek medical treatment. Emergency care, medical imaging, and surgeries can cost a lot. When health insurance is available, these expenses will be covered by the health insurance company. This creates a lien, which is a legal right that a creditor has in another’s settlement until that debt is satisfied. The lien is created for the expenses provided for the medical treatment to the injured victim and is attached to the settlement or judgment.

Liens are formed in three ways. First, they can be made by contracts as treatment is sought with a medical provider. These are agreement made to pay the medical provider from the settlement funds. Second, liens are created through statutes. For example, California Civil Code § 3045.1 places a statutory lien for any emergency care rendered by a hospital. Private health insurance companies, on the other hand, are contractual. Within the policy, the insurance companies have a contractual subrogation right for reimbursement for all payments made towards medical treatment where a third party is at-fault and there is a recovery from the third-party.

Although there may be a lien on a settlement or judgment, these liens can be reduced. Some examples of reduction are for costs, attorney fees, or public policy, such as the made whole doctrine which limits the lien claimant’s reimbursement where the injured victim has not fully recovered by the third-party settlement or judgment. Other policies such as the common fund doctrine limits an insurance company’s ability to recover funds from the injured victim’s settlement or judgment by implemented a pro-rated share of the fees and costs among the lien claimants. The doctrine is incorporated into insurance contracts. Though, insurance policies covered by the Employee Retirement Income Security Act (ERISA) are not provided discounts for attorney fees.

Other reductions can be made for unrelated charges, unreasonable charges, reduction for comparative fault, apportionment for claimants, and deductions for our-of-pocket payments.

In short, regardless if the claim is reported to the health insurance company, there is a contractual duty by the victim to repay the amount paid by the health insurance company.

‍Consult with an attorney‍

Dealing with private health insurance liens can be tricky. But there are many tactics in reducing the total lien amount. Work zealously and diligently in negotiating the final lien amount early on in the case to ensure maximum recovery. Lawyers are not experts in math, but they are experts in the law. An attorney should be consulted.

Do not wait, never hesitate, and reach out to a professional attorney who is ready to work for you.