What is a Lien on a Personal Injury Lawsuit?

Rutter Mills Law Firm

What is a Lien on a Personal Injury Lawsuit?

Personal Injury Info

A lien is a third party’s legally enforceable right to take funds they are due out of the settlement before the plaintiff can receive any of the proceeds. In Virginia, several laws affect when a lien can reduce a personal injury settlement, creating uncertainty as to how much a plaintiff will ultimately receive. If you are facing a lawsuit, a personal injury lawyer can provide a customized analysis based on your situation.

How Liens Arise in Personal Injury Cases

The most common liens are related to medical care. When another party pays for some or all of the treatment of the plaintiff’s injuries, that entity– often an insurance company, healthcare provider, or government agency– could potentially have a lien for repayment.

Liens are created under state and federal laws, which can be contradictory. Under Virginia law, certain healthcare providers who provide medical services to personal injury victims have a lien on the patient’s claim against the negligent party. However, the lien is limited to a reasonable charge for the service. There are caps of $2,500 for a hospital or nursing home, $750 for each physician, nurse, physical therapist, or pharmacy, and $200 for each ambulance service.

Unlike many other states, Virginia does not allow insurers to assert liens for medical payments. However, there are many cases where this law is trumped by federal law. That means a lien by your medical or auto insurer may be invalid under Commonwealth statute, but a lien by Medicare or Medicaid may still be enforceable under federal law.

Liens can arise from other debts as well. For example, if there is a child support debt, that may need to be paid out before the victim receives any proceeds. Discuss your situation with a personal injury lawyer to find out what to expect in your case.

How to Handle Personal Injury Liens

It may seem unfair to have to pay back money related to an injury when you were the victim, but this policy is designed to prevent double-dipping. If your insurance policy pays your medical bills and then you are reimbursed by the at-fault party for those same bills, it would be a double recovery for you. Liens are meant to prevent this.

If you tackle your personal injury case on your own, you may be unaware of liens, and they could end up eating away at your proceeds. If you work with an experienced personal injury lawyer, they will attempt to negotiate the amounts that lienholders will accept; this can result in a significantly higher settlement. Often lienholders will accept a lower guaranteed amount, enabling a settlement rather than risk getting nothing if the case goes to trial.

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