Part 3 of a 3-Part Series on Personal Injury Attorney Fees
Read Part 2 Here: What Happens to Attorney Fees When You Change Lawyers in Massachusetts?
In virtually every personal injury case, a third party, often a health insurer or government program, may have a claim, or lien, against the settlement. These liens generally seek repayment for medical benefits paid due to the injury. Many clients worry that, after repaying health insurance or other liens and paying attorney fees, there may be little left for the injured victim. This concern is valid, especially when the settlement must be discounted due to insufficient insurance coverage, the inability of the responsible party to pay, or disputed liability.
How Liens Affect Attorney Fees
The relationship between liens and attorney fees varies depending on the type of lien:
Workers’ Compensation Liens:
Workers’ compensation insurers are required by law to pay attorney fees and expenses in proportion to their claim relative to the total injury settlement. Essentially, they share part of the attorney fees, reducing the financial burden on the victim.
For example, if a settlement involves both a workers’ compensation claim and a separate personal injury claim against a third party, the workers’ compensation portion of the settlement may automatically contribute toward attorney fees. This proportional payment ensures that the injured worker does not lose a disproportionate share of their settlement to legal costs.
MassHealth (Medicaid) and Medicare Liens:
MassHealth, the Medicaid program in Massachusetts, is typically entitled to full reimbursement of what it paid for a person’s medical care, without any automatic reduction for attorney fees.
But there’s an important exception. Under the U.S. Supreme Court’s decision in Arkansas v. Ahlborn, when a personal injury settlement reflects less than the full value of a claim, the MassHealth lien can be reduced proportionally. In practical terms, that means the lien is adjusted to match the reality of the recovery, ensuring the injured person still receives a fair share, even when the case settles at a discount due to limited insurance coverage or disputed liability.
Medicare liens follow a similar framework, but with their own set of rules, procedures, and strategic considerations. In practice, Medicare will assert a lien against any settlement, judgment, or award. But unlike MassHealth, Medicare does allow for a built-in reduction to account for attorney fees and case costs. This is often referred to as a “procurement cost reduction.” The idea is straightforward: since the plaintiff incurred legal expenses to secure the recovery, Medicare shares proportionally in that burden.
These reductions matter. Without them, it’s possible for liens and fees combined to consume most—or even all—of a settlement. The law is designed to prevent that outcome and preserve a meaningful recovery for the injured party.
Health Insurance Liens in Massachusetts:
Health insurance liens in Massachusetts follow a different rule. They are entitled to full repayment without any reduction for attorney fees or expenses, as established by the Supreme Judicial Court case Pierce v. Christmas Tree Shops.
This rule can sometimes result in a settlement where the insurer and the attorney receive most of the funds, leaving the injured victim with very little. To prevent this outcome, attorneys often try to negotiate with health insurers for a lien reduction, especially when full repayment would deprive the injured person of compensation. While insurers are not always willing to adjust their lien, they sometimes provide credit for attorney fees and expenses.
Bringing It All Together: Understanding Attorney Fees from Start to Finish
This article concludes our three-part series on personal injury attorney fees in Massachusetts. Each part addresses a different stage of the process—but together, they answer a single, essential question: What happens to your recovery after a case resolves?
- Part 1 explained how contingency fees work—why injured clients typically pay nothing upfront, and how attorneys are compensated only if they succeed.
- Part 2 addressed what happens when lawyers change mid-case, including how fees are divided without increasing the client’s overall financial burden.
- Part 3 (this article) examined how liens—often unavoidable—interact with attorney fees and can significantly impact the final recovery.
A settlement number tells only part of the story. What you actually receive depends on how attorney fees, expenses, and liens are handled. With the right legal guidance, the final number can be maximized through strategy and negotiation.
If you or a loved one has been injured and you would like to speak to an attorney about a personal injury or wrongful death matter, contact one of SUGARMAN’s attorneys by calling 617-542-1000, emailing , or filling out our contact form.