If you settle or obtain a judgment in a personal injury case, it would not surprise most people that a person would have to deduct attorney’s fees and the costs of litigation from the final amount of the settlement or judgment. It may not be so obvious, however, that a person would have to pay back an entity that has paid for that person’s medical bills, property damage or lost wages. The right of another party to obtain repayment from a person’s recovery from a claim is called a lien.
There are many types of lienholders and a person’s rights and obligations may be different depending on what type of entity paid for the medical bills, property damage or lost wages. If Medicare paid for medical treatment, there is a duty on the part of the injured person or her attorney to notify Medicare about the litigation and inform Medicare of the amount of any settlement or judgment. Medicare will expect repayment of the amounts it paid that resulted from the liable party’s negligence. The amounts paid for by Medicare when another party was at fault are called conditional payments. The injured person should make sure that all of the treatment Medicare claims are conditional payments actually relate to the subject of the litigation.
If a workers’ compensation carrier paid for medical treatment or lost wages, this entity has a right under New Hampshire law to be repaid from any settlement or judgment received by the injured person. Further, any settlement must be approved by either the Department of Labor or the Superior Court.
Insurance companies and medical treatment providers may also need to be reimbursed from a settlement or judgment.
Repayment of liens should never be overlooked when considering whether to settle a case because the final amount received by the injured person will be reduced by the amount of the lien. The amount of the lien may or may not be negotiated depending on the circumstances and type of lienholder.