What is a settlement lien and why would I have one?
A lien is an interest held by a third-party against the monetary damages awarded for a personal injury settlement or judgment. Put another way, it is a legal claim someone else has to the money you have been or will be awarded to compensate you for your injuries. The most common types of settlement liens include liens for medical bills unpaid by insurance, health care insurance payments, Medicaid and Medicare.
Healthcare related liens to cover injury-related debts
Medical debt is probably the most common source of settlement liens. When the medical expenses from your injuries result in a large amount of outstanding personal debt, because you were unable to pay for those expenses out of pocket, your personal injury lawyer can agree to “protect” the bills of medical providers. This means that, with your permission, you and your lawyer promise to pay the medical bills when you receive a settlement or judgment. Agreeing to this type of lien can protect you from debt collectors and damage to your credit rating.
Reimbursement to health insurance companies
Many health insurance companies include provisions in their policies that entitle them to be reimbursed for medical bills for which the insured party was reimbursed through settlement or judgment. Because personal injury awards in a personal injury settlement constitute reimbursement, the insurance company will likely seek a lien against this award in order to recoup the payments they made for injuries resulting from your accident. Your personal injury lawyer will typically be placed on notice of an attempted lien while the claim or litigation is ongoing.
Negotiating liens can delay your recovery
When facing a lien against your personal injury settlement, your personal injury lawyer can help you figure out how much these third-parties are entitled to and how much settlement money you will actually receive after deducting any liens paid. Unfortunately, the process of satisfying liens can drag on for months, and if you’re still negotiating your settlement and trying to take into account the amount owed to lien holders while setting this agreement, a lien can complicate those negotiations resulting in delay.
When does settlement usually occur?
Generally speaking, settlement will occur when either the insurance carrier or the defendant makes an offer of payment, before liability has been proven. The offer of settlement can occur before the lawsuit is filed. It can also be made after the lawsuit has been filed, but before the case goes to trial. A settlement can occur virtually at any point before a jury verdict, or before the court enters an order dismissing the case. In some cases, a settlement can be reached while the jury is deliberating.
Why most personal injury cases settle
You may be wondering why cases most often settle. Settlement provides defendants a way to control the financial risk they face, and to avoid legal costs which can be substantial. Settlement also allows defendants to keep the legal issues raised in the lawsuit out of the public eye. For businesses, that can be very important. Settlement can also be a way to avoid the time involved in a protracted trial. Trials can last for months, if not years; even longer if there is an appeal. For a plaintiff who has been injured and likely needs income, an early settlement would be very appealing. No matter how good your case may seem, whenever the case is filed in court there is always a chance that the plaintiff can lose the case and receive no compensation at all.
Choosing a personal injury lawyer
Depending on your case and your personal situation, a settlement mill type law firm may be sufficient for you. If you are looking to simply recover your medical expenses and resolve the matter as quickly as possible, then a settlement mill may be the best option. However, you are looking to recover the fair value of your claim regardless of how long it may take, then a traditional personal injury lawyer is what you need.
If you have questions regarding settlement liens, or any other personal injury concerns in Arkansas or Missouri, please contact the Cottrell Law Office for a consultation, either online or by calling us as (888) 433-4861.
Wesley Cottrell
Wes Cottrell earned his B.A. from Pittsburg State University in 1981 and his J.D. from the Washburn University School of Law in Topeka, Kansas in 1985. He was admitted to practice law in Kansas in 1986, in Missouri in 1987, in Arkansas in 1989, and Oklahoma in 1993. He is licensed to practice law in the United States District Court for the District of Kansas, eastern Arkansas, western Arkansas, and western Missouri. He was Deputy Prosecuting Attorney in Crawford County, Kansas from 1987-1989.
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