What Is a Lien on Settlement Proceeds and Who Can Put a Lien Against You?

Are you thinking of filing a personal injury lawsuit after suffering a loss or injury caused by another person? It’s a wise decision, as a personal injury claim can help you pay for many costs associated with an accident, including:

  • Medical Bills
  • Lost Wages
  • Future Medical Costs
  • Transportation Costs
  • And More…

However, it’s important to understand how a settlement (or verdict) is calculated. One cost that is difficult to predict is called a “lien.” Did you know any debt you accumulated due to your injury must come out of these proceeds? The entities or people you owe may put a lien on your settlement to ensure they get paid.  

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What Is a Lien on a Personal Injury Settlement?

A lien refers to a third party’s legal right to take part of or all of the settlement proceeds from your personal injury claim. The third-party files a request for the lien during the lawsuit and the judge will approve or deny it.

Once a judge approves a lien, the person or entity holding the lien gets paid from your settlement before you do. Be aware that someone can put a lien on your settlement that’s not related to your injury. Common examples of this include unpaid child support and taxes.

If a lien is approved, there is little you or an attorney can do. It’s considered a debt that legally must be paid.

Who Can Put a Lien Against You?

So, who exactly can put a lien on settlement proceeds? These are the 4 most common sources of liens relating to your injury.

car insurance claim forms with a pen and money on a table
health care costs on a billing statement, stethoscope on stone table background

Government-Based Benefit Providers – VA, Medicaid, and Medicare

If Medicare or Medicaid covers your medical bills after your injury, they will probably request a lien on settlement proceeds. These are a type of subrogation lien and the Centers for Medicare and Medicaid Services (CMS) administers them. 

A CMS lien takes priority over all other liens, but you only have to pay if they request it. There is a 6-year statute of limitations on these types of liens.

Healthcare Providers

The most obvious source of a lien is your healthcare provider. Hospitals, clinics, and physicians can force you to pay a lien by making you sign a lien agreement or letter of protection before they treat you. They may also request a lien depending on your state’s laws.

The medical lien statute of limitations in California is 4 years.

doctor sitting at a patient's bedside holding a stethoscope
a person showing a car insurance policy and pointing with a pen where to sign

Private Insurance Providers

Your private health insurance or auto insurance will also place a lien on your settlement if they cover treatments for you. Double-check your private insurance policies to see when and how they may place a lien on settlement proceeds.

Worker’s Comp Insurance

Finally, if you were injured at work, you’re likely using worker’s compensation insurance to cover your bills.

Let’s say you file a personal injury claim and receive a settlement against a party that is not your employer. Your employer may place a lien on your proceeds to cover the medical treatments paid for under worker’ comp. 

Finding the Best Lawyer for a Personal Injury Case

You should now understand how and why someone may put a lien on your settlement proceeds when you file a personal injury lawsuit. Working with a qualified and experienced attorney can help you see more of your settlement.

Recent surveys suggest that those who are represented by a personal injury lawyer will get four-times more, on average, than those who did not obtain a lawyer and simply accepted the insurance company’s initial offer.

If you need to file a personal injury claim, contact the knowledgeable attorneys at The Barnes Firm. The Barnes Firm personal injury attorneys have years of experience in successfully settling claims whether you were injured at work or around town. Contact us today to get the most out of your personal injury settlement!