How to Avoid Personal Injury Liens From Ruining Your PracticeWhen you suffer a personal injury due to an auto accident, work injury, or any other incident, you may be able to recover damages. Damages are the expenses you incur as a result of your injury, including medical bills, lost wages, expenses for car rental, and auto repairs.

When you hire an attorney for a personal injury case, it is normal for the lawyer’s fees to be paid on a contingency fee agreement. This means you pay nothing until the case is won through either settlement or trial. When the settlement is received, your attorney handles another aspect of the case—payment of personal injury liens.

If you are suffering from a personal injury you may be seeking an attorney to handle your case. Read on to learn about personal injury liens and your attorney’s negotiations with and obligations to lien holders.

What are Personal Injury Liens?

A personal injury lien is a demand made for repayment of expenses regarding your personal injury. When a lien is made it is that third-party’s right to receive a portion of the settlement proceeds. The purpose is to reimburse them for their cost in providing you with care.

There are two types of claims and liens against personal injury lawsuits. Your personal injury attorney will know which liens carry priority and how to negotiate the claims for reimbursement.

Statutory liens are those made by ERISA health insurance plans, hospitals, Medicare, Medi-Cal, Veterans Administration, and Workers Compensation.

Contractual liens are those made by auto insurance medical pay, health insurance, and individual medical care providers including ambulance, x-ray, doctors, and any prior attorney.

The difference between a lien and a claim is that a lien is enforceable against the settlement funds. A claim for reimbursement or an outstanding debt may become subject to collections.

Contingency Fee and Liens

When you hire an attorney on a personal injury claim, they will have you sign a contingency fee agreement. This means you have no out-of-pocket cost for hiring the attorney.

When you win your case through settlement or trial they will collet their attorney fees. This is generally 33-1/3% of the settlement. If you lose, you owe no attorney fees.

Clients often have many questions on settlements. This includes everything from how long it takes to reach a settlement, how soon they will receive their payment. They also wonder if their insurance can take part of their settlement, which they can via a lien.

Upon winning your case the defendant will issue a check payable to you and your attorney. You will sign the check and your attorney will deposit it into their bank account.

Your attorney will handle the distribution of the settlement. They will pay their own attorney fees, expenses, and liens. You will receive the remaining funds.

Expenses include office expenses, expert witness fees, deposition transcript costs, medical records copies, and investigator fees.  If the case does not proceed to court, you will usually have a maximum of $500 in expenses.

Obligation to Lien Holders

When liens are placed against your settlement the attorney has an ethical and fiduciary obligation to make sure those claims are paid. The attorney representing you will take steps during the course of your case to negotiate and reduce those liens. Their knowledge of personal injury law in your state will assist them in negotiating to reduce any liens against your settlement.

Many clients do not understand there is an obligation to pay back liens against their settlement. Attorneys have an ethical and fiduciary obligation to make sure any liens are paid. The American Bar Association Model Rules of Professional Conduct, Rule 1.5, states that an attorney must:

  • Notify the client or third parties that have an interest in receiving payment against the funds awarded
  • Promptly deliver to the client or the third party any funds they have a right to receive, and
  • Provide a full accounting of the funds upon request by the client or a third party

Because of the attorney’s obligations under the ABA, payment of all liens will be made from the settlement funds prior to providing you with the net proceeds.

Attorney Lien Negotiations

When your attorney receives a lien against your case they will maintain contact with that lienholder, providing them with up-to-date information on the progress of your case. They will also evaluate all liens to make sure they are accurate, including:

Reading the Contract for each claim to determine what type of law governs their lien and claimant’s rights. They will review what portion of the settlement the claimant can legally try to recover. For instance, in most cases, insurers are not legally able to recover settlement funds in the case of an uninsured or underinsured motorist.

Balance Billing is something that hospitals may do. This is when they charge you, the client, for the difference between the hospital charges and the amount your health insurance paid to them. This may or may not be acceptable and your attorney will handle such negotiations.

Reducing unreasonable charges and double billing is something that may occur. Your attorney will review all billings to make sure the charges they have on the lien are reasonable. They will also review to make sure the lien is for medical bills that are part of the settlement.

Reduction of statutory gap deals with any laws that govern the level of liens against various areas of the claim, such as ambulance charges. There may also be ceilings on the portion of the settlement that can be taken by claims.

Comparative fault reductions in the settlement may also provide an opportunity for your attorney to negotiate the claim to a lesser amount.

Reduction for made whole rule states a lienholder cannot receive repayment until the insured person is fully compensated. The Washington Supreme Court issued a ruling in Daniels v. State Farm Mutual Auto Insurance Company regarding such recovery. Their ruling is that an insurer is unable to receive reimbursement from a third party who injured their insured client until after their insured person has been made whole through the recovery of their losses or damages.

Each case is different and rules and laws change. That is why it is important to have an attorney who has experience in personal injury claim negotiations, so you pay the least amount of liens from our settlement.

Do I Have a Case?

If you or a loved one have injuries from an accident and are wondering if you have a case, you may fill out our confidential online questionnaire. This information assists us in evaluating your case prior to or during your free consultation.

During our meeting, we will provide our legal opinion regarding your case. We will also explain all aspects of handling a personal injury claim on a contingency basis, and how we handle personal injury liens.

We at Etengoff Park Law Group serve Washington and Oregon, concentrating in personal injury claims. We invite you to call or text (360) 693-2919 for a free consultation. We look forward to helping you get the compensation you deserve.