Medical Bills After an Accident: How Liens and Health Insurance Subrogation Work

Getting your personal injury settlement money isn’t always the quickest process. This is due in large part to liens and health insurance subrogation. You may wait a few weeks to a few months before getting your money because hospitals, health insurers, Medicaid, and others may have claims or liens on settlement funds. These claims or liens can also cut into your net recovery amount. To make sure claims are fair and to get the money you deserve, work with an Alabama personal injury lawyer.

How long before you get your settlement money, and why the wait?

In Tuscaloosa County, the median household income is $66,231. No matter your income, a personal injury can be financially devastating, and it is frustrating to have to wait for your settlement money.

You should have your funds within a few weeks (if there are no major lien issues) to a few months (if there are significant lien issues) of signing the settlement agreement.

The process usually looks something like this:

• After the parties sign the settlement agreement, the insurance company (or the defendant) takes a few days to a few weeks to send the money to your lawyer.
• The law firm deposits the money into your client trust account and must wait for the funds to clear.
• Your lawyer assesses lien and reimbursement claims for accuracy and finalizes them.
• Your lawyer can negotiate with the parties to reduce lien amounts and maximize your net recovery.
• You get a final settlement statement from your lawyer. It outlines the gross settlement amount, the net recovery, the lien payments, attorney’s fees, and other costs.

What are medical liens?

Often, personal injuries mean significant medical expenses: emergency room visits, surgeries, rehab, and many other sizable bills. Someone has to pay. Sometimes, the hospital or medical provider agrees to wait for payment, figuring they can get money from medical liens in a personal injury settlement.

Otherwise, it’s usually your health insurer, Medicaid, Medicare, or some other program that pays upfront. However, these groups believe it is unfair for them to pay for someone else’s negligence. Subrogation or a similar type of reimbursement claim is their way of getting the actual liable parties (or their insurance policies) to pay.

What is health insurance subrogation?

Health insurance subrogation is the right of your health insurer to seek reimbursement for expenses it incurred when someone else was responsible for your injury. Subrogation rights do not always translate to filed liens. Insurers may not bother to file a formal lien because of the reimbursement clause in the insurance policy or their rights under state or federal law.

Usually, when you and your lawyer discuss liens, you are talking about a mix of liens, subrogation rights, reimbursement claims, and other demands. It’s easier to collectively refer to them as “liens.”

So all medical bills are valid liens (or subrogation or reimbursement claims)?

No, not all bills become valid claims or medical liens in a personal injury settlement; there must be a legal basis for a provider to assert a lien or claim. Lawyers review the reasoning and the amount of the lien or claim and find that some are not enforceable. Legal basis could include any of these (plus other scenarios):

• Hospital lien statute
• Letter of protection in which you agree to provide reimbursement from any recovery you get
• Health insurance subrogation or reimbursement
• Medicare or Medicaid recovery claims authorized by law
• Workers’ compensation lien
• Federal benefits reimbursement right

A medical lien might end up unenforceable for a number of reasons. Maybe the hospital simply did not go through the process of perfecting a lien but sent you bills, didn’t follow proper procedures when filing, or is asking for an amount that exceeds the statute. If a medical bill lists charges not related to your accident, it is also unenforceable.

Overall, here’s what your potential claims on a personal injury settlement could look like:

• Hospital liens for unpaid balances
• Health insurance subrogation claims for reimbursement
• Medicare or Medicaid reimbursement claims for expenses the programs paid related to your accident

Is it easy to negotiate lien amounts down so you can maximize your compensation?

Many times, yes, but it does depend on who is asserting the lien and the relevant facts.

Hospital and medical provider liens tend to be easier to negotiate

Hospital liens tend to be easier to negotiate. Other medical providers (medical offices, doctors, physical therapists, etc.) may not have liens per se but rather contractual reimbursement claims, letters of protection, or similar devices. Still, the negotiation should be relatively simple. Of course, it’s always possible for discussions to become contentious.

Sometimes, hospitals or providers ask for amounts that aren’t reasonable given the limited size of a settlement. This is one possible negotiation point. Plus, if providers refuse reductions, that causes delays and uncertainty, and hospitals or providers may end up with less than they could have negotiated for earlier.

Suppose, for example, your settlement amount is $60,000, and your medical liens are $20,000. Your lawyer may be able to negotiate the liens down to, say, $15,000, but this is a very broad example.

Health insurance subrogation claims fall in the middle

Often, these are negotiable but less straightforward than negotiating medical liens. Much depends on the insurance policy language, the applicable laws, the settlement size, and whether you were made whole (meaning you got full compensation for your injuries).

If you received a settlement that is much less than your total losses (perhaps because the negligent party had a small insurance policy), that could reduce or even eliminate the insurer’s reimbursement rights (depending on the policy language and applicable law). However, there are exceptions to “made whole” arguments, one being some self-funded employer-sponsored plans. Your personal injury lawyer conducts thorough reviews of the insurance plans and laws.

Medicaid and Medicare claims tend to be the hardest to negotiate

Formulas and very specific federal and state rules limit negotiating room. Compromises may still be possible, though.

Why you shouldn’t accept liens and similar claims at face value

Suppose you get a $100,000 settlement and pay every lien and reimbursement claim at face value without questioning any of them. You would be giving up much more money than if your lawyer had been able to review claims for reasonableness, fairness, and other factors. Lien resolution is an important part of your personal injury attorney’s job.

Speak with our personal injury attorneys today

Medical bills, liens, and health insurance subrogation after an accident in Alabama shouldn’t be something you worry about. You deserve to focus on your recovery. Prince Glover Hayes can help. Get in touch with us to discuss potential next steps.