In the course of a personal injury case, it is not uncommon for private healthcare insurance companies to assert a lien against any monetary recovery by a plaintiff, whether it be through a settlement or a trial. In this post, we will explain what a personal injury lien is and what effect a lien can have on your claim.
What is a healthcare lien and why am I receiving one?
When an insured receives a notice of lien or a questionnaire about an accident or injury in the mail, it may seem as if the healthcare insurer is sending a bill. This is not the case. Under most insurance contracts in Massachusetts, a private healthcare insurance company has what’s called a “right of subrogation” – this means simply that if you recover from a third-party (for example, a negligent driver in an automobile accident) for medical bills and treatment your insurer has paid for, the insurer can seek to recoup what it has paid out from any settlement or jury verdict in your favor. One important thing to note is that a private health insurance company is only able to recover the amount that it actually paid out for the insured’s medical care – it is very common for health insurers to pay far less than the “sticker price” for medical treatment due to contracts insurers have with most healthcare providers.
Although Massachusetts law allows an injured party to recover the “full amount” of medical treatment in a personal injury claim, the lien would only be for reimbursement of what the insurer actually paid – typically far less than the actual cost. And a lien is only valid (1) if there is an actual monetary recovery; and (2) for treatment and bills that are related to the personal injury claim. The idea behind a right to subrogation is to prevent a “double recovery”, although this is a dubious argument where an insured has paid perhaps tens of thousands in dollars in premiums over the years.
What should I do if I have received a lien?
Unfortunately, once you are put on notice that a lien is being asserted against your personal injury case, there is little to do but pay it should you recover – ignore it at your own risk. Make sure that you forward any notice from your healthcare insurer to your personal injury lawyer as soon as you receive it.
While attorneys can negotiate with insurance companies to reduce or lower a claimed lien, it is not always successful. Healthcare insurers, however, must be mindful of the risk involved with any personal injury trial and should be willing to negotiate a reduction to account for that risk – insurers who refuse to do so may be left with nothing if the case goes to trial and the jury finds against the insured.
At SUGARMAN, we have decades of experience with handing subrogation issues and negotiating with insurance companies regarding liens. If you require any assistance dealing with the complexities of a personal injury claim in the aftermath of a tragedy, call 617-542-1000 or fill out the Contact Form to speak with an attorney.