Scratching the Surface of Lien Resolution

Scratching the Surface of Lien Resolution

Every job has them – those pain-in-the-neck, not-exactly-in-the-job-description, but oh-so-necessary tasks. For personal injury attorneys, these include resolving liens. There’s really no escaping them; in 2019, approximately 92% of the U.S. population had health insurance in some form or another. Because most private insurers and public programs have the right to recoup monies they paid for medical expenses caused by the negligence of another, this means (in theory) that you’ll encounter liens in nearly all of your cases.

Before we dive in, a quick explanation: in this post, we’ll use the term “lien” to refer to a lien and a subrogation interest. While there are differences between the two, for instant purposes, they’re similar in that they reflect monies that should be paid to a third party from your client’s settlement funds.

Why is lien resolution oh-so-necessary? The most obvious reason is to protect your client, yourself, and your firm from liability associated with nonpayment of such liens, which will give all involved peace of mind. And when it’s done properly, it will also help you manage your client’s expectations.

The best way to achieve these purposes is by starting early – i.e., by discussing lien resolution with your client at the beginning of the case. In doing so, you can get a head start on identifying potential lienholders and have your ducks in a row by the time settlement negotiations begin. And then, when a chunk of the settlement funds is distributed to a lienholder before any money reaches your client’s hands, she won’t be caught off guard (and thus more likely to leave your office free of buyer’s remorse).

In the personal injury context, liens can come from a variety of sources. If your client’s medical providers agreed to defer collection of their fees until the case resolved – typically through a “Letter of Protection” (LOP) – they could qualify as lienholders. If your client’s private health insurance carrier paid for medical treatment related to her injury, it could assert a lien. If your client’s medical expenses were covered by Medicaid or Medicare, the government would be entitled to reimbursement. This, of course, isn’t an exhaustive list of potential lienholders, but we’ve made our point.

The various ways in which liens arise means that different rules apply to each kind. The enforcement of LOPs would be controlled by the terms of the LOP. The enforcement of private health insurance liens would be controlled by the terms of the policy and possibly the Employee Retirement Income Security Act (ERISA), if applicable. The enforcement of Medicaid or Medicare liens would be controlled by the applicable state and federal Medicaid statutes or the Medicare Secondary Payer Act, respectively.

As we discussed in a previous post, attorneys are fair game when it comes to liability for unpaid liens. For instance, where ERISA applies, a plan administrator can sue a plan participant’s attorney for reimbursement. Where Medicare conditional payments are involved, the government – and, in certain jurisdictions, a private party – can pursue a beneficiary’s attorney for reimbursement.

This is a long way to say that resolving liens is no small task; it has the potential to take up as much of your (very valuable) time as the actual litigation of your client’s case. Fortunately, lien resolution can be easily outsourced, thus permitting you to spend your time where it matters most – seeking justice for your clients. Contact Global Litigation Consultants today and rest assured that your clients’ liens will be handled in a proper and timely manner.

And if you represent Medicaid recipients in personal injury cases, read on to our next post where we discuss Gallardo v. Dudek and the forum shopping issues resulting therefrom.

Disclaimer: The information provided through these blog posts does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available through these blog posts are for general informational purposes only.

I’d Like More Info