What are Liens and How Will They Affect Your Personal Injury Settlement?

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Many people are surprised when they learn that in certain situations, a third party may have a claim against your personal injury settlement. These third parties may include health insurance providers, health insurance carriers, workers compensation, and even the government.  This can sound scary, especially when one thinks about a lien on a car or house. Liens relating to personal injury claims, however, are standard procedure.

What is a settlement lien?

In general, a lien is an interest placed on one party’s personal property to satisfy debt owed to a third person or entity. In the context of a settlement, the personal property is a portion of a settlement award that the lien holder is asserting a right to. In a personal injury context, liens can be asserted by an entity that paid any of the injured party’s bills arising from the accident. Liens exist to help people and companies get what they are owed.

Third Party Lienholders

Third party lienholders may include, but are not limited to, the following entities:

Healthcare Providers – In many cases, the injured party does not have health insurance or the party’s health insurance does not cover all the medical bills arising from the accident. Healthcare providers will seek to recover all medical bills with a settlement lien.

Health Insurance Carrier Personal injury settlement liens may be included into the health insurance plans of certain employers. These plans create rights to assert a medical lien on the injured party’s settlement. Valid liens include government employee insurance plans, ERISA plans, and worker’s compensation.

Worker’s Compensation – If you were injured in a work-related accident, a worker’s compensation lien may be issued if your medical bills have been paid through your state’s worker’s compensation fund. Worker’s compensation laws vary by state. Therefore, it is important to check if a carrier can assert a worker’s compensation lien against your settlement.

Government Liens for Unpaid Medicare and Medicaid – Generally, if the government paid for any portion of your medical care, they have a right to get paid back if you later recover money for your injuries from another party. Depending on the specific type of government program, some government agencies have different rights when it comes to asserting a lien against your settlement.

Negotiating a Lien

Liens balances from certain types of lienholders can be negotiated down. However, negotiating liens properly can be complicated and it is in an injured party’s best interests to consult with and retain an attorney to assist in seeking lien balance reductions. This will ensure that the client’s interests are protected and that savings are maximized where possible.

A good personal injury attorney will always try to get as much money in their client’s pockets as possible. Hiring an experienced attorney can help you avoid paying high amounts of liens to third parties and better resolve your case.  

Seek Legal Assistance

If an entity asserts their lien rights, it’s important to ascertain what language in the insurance policy or applicable law gives them the right to make a claim. Lien law is very complex. An experienced attorney may find ways to reduce or even eliminate a lien. If you are injured, give Quintana Law a call for a FREE consultation at (602) 418-0733.

The Anatomy of a Personal Injury Case

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After a catastrophic injury, putting your life back together and moving toward some sense of normality and closure can be extremely difficult. For many victims, one of the most important steps toward this goal involves filing a lawsuit and holding the negligent parties who caused their injury accountable. A personal injury law practice differs from many other types of law practices because most people with personal injury claims have had little or no exposure to attorneys before their injury.

Every successful catastrophic injury claim requires three elements: determining liability, preparing a settlement demand package, negotiation/settlement, and disbursement. Without sufficient facts and evidence, it may prove difficult for victims to recover financially for their injuries. The following is a brief outline of the steps taken in the preparation and presentation of a typical personal injury claim. This outline describes an automobile accident case, but other personal injury cases follow a similar pattern. 

1)    Determining Liability

One of the first things an injury victim must do is establish negligence and liability on the part of the party who caused their injuries. As established by law, negligence is a breach of a legal duty owed by one person to another. In other words, it is when a party is not exercising reasonable care, and somebody ends up injured as a result. There are certain basic types of information that need to be gathered at the start of a personal injury case, which include:

Basic Facts:

Your attorney will need to know what happened and how you were injured. This sort of information is gathered from interviewing you, the investigating police officers, witnesses to the accident, etc.

Medical Records and Bills:

Your attorney will request medical records and bills from the hospital and doctors you visited after the accident, and pre-injury medical records to respond to insurance company claims that your symptoms are not the result of the accident, but rather a pre-existing condition. The process of collecting records will continue until you have finished treating for your injuries.

Lost Wages and Other Damages:

If you have missed time from work because of your injury, your attorney will request that your employer complete a form stating the amount of time you missed and the amount of wages you lost. In addition, you and your attorney will need to determine whether you have suffered losses in addition to direct medical expenses and lost wages.

Insurance Coverage:

There are many potential sources of insurance coverage from which you might be able to receive compensation for your injuries. The coverage types pertaining to automobile accidents fall into three categories: liability coverage; uninsured/underinsured motorist coverage; and medical expense coverage (also known as medical payments coverage or "med pay"). Be sure your attorney is aware of every policy that might apply. 

The concept of contributory negligence, where it applies, can complicate the defendant’s liability for negligent actions and decrease a Plaintiff’s recovery. An insurance adjuster from the liable party’s insurance company is usually involved after an accident of any kind. One of their jobs is to research and investigate. During this time, they will hope to get a statement (recorded or written) from the victim or injured person. The goal is to get the victim to admit to some degree of fault, however small, so that they can dismiss their claim and avoid liability for damages. Never speak with anyone other than your attorney regarding your case, unless your attorney directs you to do so. You should consult with and retain an attorney as soon as possible after an accident or injury.

The insurance coverage of the liable party as well as your own personal insurance coverage are both key factors in how much you will be able to recover in a catastrophic injury lawsuit. When you are injured due to someone else’s negligence, it is important for your medical provider to bill your medical insurance first. This is especially important if you were injured in an auto accident.

2)    Preparing the Settlement Demand Package

Once your attorney has gathered all the information about your injuries and your damages, he or she will prepare a settlement package for the insurance companies from whom a recovery is sought. This package will include a narrative description of your accident, a discussion of the legal basis for claiming liability against the carriers' insured, an explanation of your injury, treatment, and prognosis, a statement of your damages, and a settlement demand. The damages statement will include specific items of economic loss such as your medical bills and lost wages, often referred to as "special damages," as well as a claim for the pain, suffering, and inconvenience suffered because of your injuries. These intangible elements of damage are called "general damages", and often make up the largest part of the settlement demand.

A properly prepared settlement package will demonstrate that you and your attorneys are willing and able to go to court if a settlement cannot be reached. This process may last approximately several weeks or months, if the attorney is missing information needed to complete the settlement package. Once everything is incorporated into the demand, it is sent out to the adverse insurance company.

3)    Negotiation/Settlement or Trial

If an offer is made, you will need to discuss it with your attorney to determine an appropriate response. Typically, there will be a series of offers and counteroffers before it can be determined whether a settlement will be achieved. If settlement is not possible, your attorney will advise you whether you should consider filing a law suit.

4)    Disbursement

Once you have accepted the settlement offer or obtained a jury verdict, the insurance company will send your attorney a release and the settlement check. Typically, the check is made out to you and your attorney. You will need to endorse the check for your attorney to deposit it into the attorney's trust account. Once the check has cleared, the attorney's staff will figure out what costs have been expended on your behalf, whether any health care providers have liens against the fund, and what your attorney's fee is. If you have any outstanding balances with health care providers without liens, your attorney will ask you if you would like to pay them out of your settlement. The attorney's staff may prepare a disbursement sheet for your review. Once you have signed the disbursement sheet and the Release, you will finally receive your settlement proceeds. It is important to remember that the process from start to finish in any case can be a lengthy one. Patience with the legal process and a strong commitment to following your medical provider’s treatment will plan will not only benefit you from a medical standpoint but will help your attorney to ensure that your best interests are protected.

If you or a loved one has been injured because of someone else’s negligence, give Quintana Law a call at (602) 418-0733.  We can help.