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How Will a Lien Affect Your Personal Injury Claim

A lien is a legal document. In law, a lien is a form of security interest that is granted over an item of property to secure the payment of a debt or performance of some obligation. The owner of the property who grants the lien is known as the lienor and the party who stands to benefit from the lien is known as the lienee.

In a personal injury claim, rather than property, a lien is placed on any settlement or judgment proceeds that you receive by a medical provider, medicade, medicare, health insurer, hospital or doctor for reimbursement or payment of medical services that they performed on you.

In the matter of a personal injury claim, a lien usually takes place because of a written agreement between you, who are the injured person, and your health insurance provider or carrier. Your personal injury attorney will also usually have a lien on your claim. What the lien does is secure your personal injury attorney’s right to get a fee that comes out of your personal injury judgment or settlement proceeds.

If your personal injury case does not go to court, your proceeds are referred to as a settlement, If your case goes to court, your proceeds are known as a judgment.

Contingency fee basis

Most personal injury attorneys work on a contingency fee basis. What this means is that you do not owe them a fee unless they win your claim. In which case, he or she gets a percentage that varies from state to state of your settlement or judgment proceeds.

By placing a written lien on your claim, your personal injury attorney is assured of the fact that he or she will be able to receive payment directly from your monetary proceeds. In the same way, your health insurance provider can ensure that they will be paid directly from your monetary proceeds.

In a personal injury case, the most common example of a lien being placed is when your health insurance company that has provided benefits to you that are related to treatment for your injuries from the accident, places a lien against your personal injury claim. This is true even though you may have been faithfully paying insurance premiums for several years.

Spelled out in your policy

You may say, “How can this be?” Your health insurance company’s right to place a lien on your personal injury claim in most instances is spelled out in your health insurance policy itself. It is usually one of the provisions of a health insurance policy. The lien affects your personal injury claim by giving your health insurance company the right to be reimbursed for medical payments it has made on your behalf. Your health insurance company may also require you to sign a lien before they will agree to provide you ongoing medical treatment if your health insurance coverage is not adequate.

However, there are instances where your personal injury attorney may be able to negotiate and reduce any liens that are placed against your personal injury claim. If your attorney is able to do this, your monetary proceeds will be greater from your gross settlement or judgment.