Quick answer: A medical lien, or reimbursement claim, is a legal claim on part of your settlement for medical bills that someone else paid or is owed. Hospitals can have liens under some state laws, health plans claim reimbursement under their terms, and Medicare and Medicaid have federal and state recovery rights. These claims are paid out of your settlement, but the rules often limit them, and the limits depend on the state and the kind of claimant.
On this page:
- What a lien or reimbursement claim is
- Who can claim part of your settlement
- Medicare
- Medicaid
- Hospitals and providers
- Health plans
- What to do about liens
- Next steps
What a lien or reimbursement claim is
When someone else pays your medical bills after an accident, they often want to be repaid if you later recover money from the person responsible. A medical lien is the legal claim that lets them take a share of your settlement. Related terms are reimbursement, where a plan's contract says you must pay it back, and subrogation, the process in which one party assumes another's legal rights; the Legal Information Institute's example is an insurer that compensates its policyholder and takes over the policyholder's right to recover from the person responsible.
These claims are paid out of your settlement, which is why they can shrink the check significantly. How the pieces fit is in how a settlement is calculated.
Who can claim part of your settlement
| Claimant | Where the right comes from | How it can be limited |
|---|---|---|
| Medicare | Federal Medicare Secondary Payer law | Reduced by its share of procurement costs |
| Medicaid | State law, within federal limits | Only the part of the settlement that represents medical expenses |
| Hospitals and providers | State lien statutes, where they exist | Statutory caps, which differ by state |
| Health plans | The plan's reimbursement terms, and state law | Depends on the plan and the state |
Medicare
Federal law lets Medicare recover payments it made conditionally when another party is responsible for the bills; see the Medicare Secondary Payer statute. The regulations then reduce Medicare's recovery for your cost of getting the settlement. When Medicare's payments are less than the settlement, you take the ratio of procurement costs to the total settlement and apply it to the Medicare payment, and subtract that share from what Medicare paid. For example, on a $100,000 settlement with $36,333 of fees and costs, a $15,000 Medicare payment shrinks to about $9,550.
Medicaid
State Medicaid programs also seek repayment, but federal law limits them. In Arkansas Department of Health and Human Services v. Ahlborn, the Supreme Court held that the State could not lay claim to more than the portion of the settlement that represents medical expenses, and could not reach the part that compensates for things like pain and suffering or lost wages. State rules on notice, fee sharing and reductions vary, which is what the Medical Lien Calculator covers for each state.
Hospitals and providers
A hospital or doctor has a lien on your settlement only where a state statute creates one, and the statutes differ widely. Two examples:
- Texas. A hospital lien is for the lesser of the hospital's charges for the first 100 days, 50 percent of all amounts recovered, or, if the trier of fact specifies the amount, that amount less a pro rata share of attorney's fees and expenses (Tex. Prop. Code 55.004).
- Virginia. Providers have a lien for a just and reasonable charge, not exceeding $2,500 for a hospital or nursing home, $750 for each physician, nurse, physical therapist or pharmacy, and $200 for each emergency medical services provider (Va. Code 8.01-66.2).
Health plans
Your health plan may claim reimbursement under its own terms. For many employer plans governed by the federal ERISA law, the Supreme Court held in US Airways v. McCutchen that where a plan creates a lien by agreement, the plan's terms govern, and general equitable principles such as the common-fund rule, which would make the plan share your legal fees, cannot override the contract. Plans that ERISA does not cover are subject to state law, which may follow different rules, so ask what kind of plan you have before assuming anything.
What to do about liens
- List every claimant early. Ask each provider, plan and agency in writing for an itemized, accident-related amount, so a lien does not surprise you after you accept an offer. See what to check before you answer an offer.
- Find out what limits apply. Caps, procurement-cost reductions and plan terms can change the amount, as shown above.
- Look at your net. The Attorney Fee Calculator shows what you keep after fees, costs and liens.
- Consider help for large or complicated liens. See whether you need a lawyer.
Next steps
The personal injury calculators cover every state, and our methodology page explains how each figure is verified. For advice on your own case, talk to a licensed attorney in your state.