Posts Tagged ‘insurance liens; medical insurance reimbursement; subrogation; settlement costs’

Insurance and Liens: Medical Insurance Reimbursement

March 10, 2010

Insurance and Liens; Medical Insurance Reimbursement.

Do you know what a lien is?

It is the right by someone or something to be reimbursed from your personal injury settlement or jury award.

Here’s a secret that most people are shocked to learn:

ALL the money that your medical insurance company and/or Medicare or Medicaid pay as a result of a personal injury must be reimbursed before the case can be settled or a jury verdict paid.

Despite the fact that you paid the premiums for your medical insurance you still  must reimburse the medical insurance companies. If you collect any money for a personal injury for which the medical insurance companies paid money to your healthcare providers,then the medical insurers are entitled to be reimbursed.

An attorney commits malpractice if he settles a case and disburses the money without also paying the liens on the case.

Reimbursement and the system that controls it can prevent a case from settling and always makes settling a case more difficult.

let’s take an example for explanation purposes:

Suppose your attorney has been negotiating with the insurance company that provides liability insurance for the car that struck and injured you.

You have an offer to settle the case for $10 ( to simplify the example).

Your healthcare insurers and/or Medicare or Medicaid have a lien on your case tobe reimbursed for the money they spent paying your medical expenses. The liens total $5.

Your attorney is entitled to 1/3 of the gross amount of the settlement= $3.33

In this scenario the case would be almost impossible to settle because the plaintiff, the injured party, would net $10 minus $8.33 = $1.67.

The plaintiff would recover less than the attorney or the healthcare provider.

It is very difficult to negotiate a reduction of these liens. It can be done but it is highly unlikely that the liens will be waived completely.  As you may imagine, the interests of the plaintiff and his or her medical insurers are frequently at odds. The insurers are stubborn and many times unrealistic in their demands to be reimbursed.

The negotiations are frequently antagonistic and often prolonged.

The only way to get the plaintiff more money is to either increase the settlement amount or reduce the liens or both.

As you can see, to paraphrase an insurance company advertisement, the last time you were in good hands is when you paid your insurance premiums.

by Arthur F. Licata, Esq.



telephone; 617-523-9977