A Basic Primer on Liens in a Personal Injury Case

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.

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Surplus Lines Umbrella Insurance May Be Required to Provide Uninsured Motorist Coverage in New Hampshire

McDowell & Osburn recently settled a case against a surplus lines insurer that did not want to provide uninsured motorist coverage for a 12 year-old girl who was hit by a car while walking across a street.   The young girl suffered a brain injury in addition to broken bones and internal injuries.  The young girl’s parents had an umbrella policy purchased through an independent agent and placed with United States Liability Insurance Company [“USLIC”].  USLIC claimed that it was a surplus lines insurer and pursuant to RSA 405:24 it did not have to comply with the RSA 264:15 mandate that UM coverage equal the liability coverage amount and offered its claimed UM coverage limit of $25,000.

Our office brought a declaratory judgment court action against the insurer seeking the full amount of the coverage purchased by the parents.  We argued that the USLIC policy was essentially the same type of insurance regularly available from any number of admitted insurance companies and the plaintiff’s family presented no unusual risk relative to obtaining coverage.  Therefore, the USLIC policy was not a ‘surplus lines’ policy and the RSA 264:15 mandate that all umbrella policies provide UM coverage in the same amount as liability coverage applied.

The New Hampshire Superior Court agreed that RSA 264:15 applied to the USLIC policy and stated in an order that “[g]enerally, surplus lines insurance insures against liability for unusual risks that fall outside traditional markets and are typically unavailable through state-authorized carriers.”  The Court ordered UM coverage up to the $1,000,000 liability limit of the umbrella policy.  Order of 11.30.11.

After USLIC appealed to the New Hampshire Supreme Court the case settled in February of 2013 for the payment of a confidential amount by USLIC.

Child with Severe Burns to Both Feet

McDowell & Osburn recently settled a case involving a two-year old child with severe burns to both feet.  The two-year old was playing in the back yard of the duplex where his family rented an apartment.  His mother’s boyfriend was watching him and his baby brother.  When the boyfriend checked on the baby, the two-year old toddler ran over to investigate the remains of a bonfire in the back yard.  The fire looked like it was fully extinguished and was not apparently hot.  The toddler walked into the ashes and was seen by the neighbor’s relative and pulled out.  Unfortunately, there were hot coals under the ashes and the toddler suffered severe burns to the bottoms of both feet.  The toddler had toes amputated, skin graft surgeries and remains at risk of needing one or both feet amputated.  Because of the burns, the toddler (now in elementary school) must wear special footwear and has trouble walking.

The neighbor had held a large party in the back yard of the duplex the night before the toddler was burned.  He was also the manager/owner of a nearby bar.  He advertised the party at his bar and had entertainment at the party that would normally have taken place at the bar.  Over 100 people, many of whom were regular bar patrons, attended the cook-out/party.  The neighbor/bar-manager referred to the party as his annual thank you to his bar customers and the local community.  The bonfire burned until after midnight.  Obviously, the host of the party never fully extinguished the fire as required by law.

The owner of the duplex who rented the apartments to the bar manager and the toddler’s family knew about the annual parties and bonfires.  The owner did nothing to check on the party or the fire arrangements.

Suit was brought on behalf of the child against the neighbor, the bar and the owner.  The case settled on a confidential basis favorably for the child that included the creation of a trust to help fund future medical needs for the child.