Imagine this: You and your family have fought long and hard, along with your personal injury lawyer, to win your accident lawsuit and have finally reached a settlement. Your lawyer then comes to you and tells you that he or she has discovered that there is a “lien” against your recovery, and that you will have to pay a portion of your settlement funds to satisfy this “lien”, resulting in a reduction in the money that you will receive in your pocket from the settlement. Frustrated and confused, you ask your personal injury attorney: “What is a lien and why do I have to pay it?” A good personal injury attorney would give you the following explanation.
A “lien” refers to a legal right of another person to be repaid. Typically, a “lien” will “attach” to an asset, such as a piece of property (e.g., a home or a car), and will require that funds generated by the sale of that property be used to repay the lien. Liens can also attach to recoveries in personal injury lawsuits; and because winning a personal injury case is never guaranteed, these types of liens are known as “contingent liens”, which means that the lien only has to be repaid if the personal injury lawsuit is either settled or won at trial or arbitration. Conversely, if a personal injury lawsuit is lost, many types of liens often do not have to be repaid.
There are many types of liens that can arise in the context of a personal injury lawsuit. Some of the most common liens that personal injury victims encounter pertain to medical bills. Sometimes, a medical provider will provide an accident victim with medical care and treatment, and will submit medical bills to a no-fault insurance provider, health insurance provider or workers’ compensation insurer for repayment. However, sometimes, these medical coverage providers sometimes deny payment to the medical provider even though they have provided an accident victim with necessary medical care; and, in such a case, the medical provider may, rather than sending the accident victim a bill, assert a lien over the proceeds of your accident lawsuit to ensure full repayment for the medical treatment that they have provided.