What Is a Settlement Lien
Explanation of Liens in Massachusetts and New Hampshire Auto Accident Cases
Certain liens may be placed on personal injury cases, such as auto accidents, and may require payment out of the proceeds of such cases to the lien holders.
Whenever a personal injury case is settled in Massachusetts, the insurance company is required by law to check with the Department of Revenue to see if the person receiving the settlement has any outstanding obligation for child support, public benefits of any kind, or any other money owed to the Department of Revenue, such as taxes. If so, then the insurance company is obligated to pay that portion of the settlement directly to the Department of Revenue after deduction of attorneys fees and costs. If you have any outstanding obligation for child support in the Commonwealth of Massachusetts, you must understand that the attorney has no power or ability to avoid that lien. New Hampshire may also attempt to assert a lien for child support. Any child support obligations should be rectified by the client to avoid an unpleasant surprise at the time of settlement.
For Massachusetts and New Hampshire:
Sometimes in personal injury cases the plaintiff has health insurance. Health insurance may pay some or all of the medical bills. Any time that is done, health insurance has the ability to put a lien on the file. Normally, in health insurance contracts, it is explicitly stated that if the plaintiff receives any settlement or judgment from the person at fault, then the health insurance company is entitled to be reimbursed for the amount they paid out for medical expenses. The theory is that the defendant reimburses the plaintiff for medical expenses and, therefore, if health insurance also pays the medical expenses, then the plaintiff is reimbursed twice for the same expenses. Health insurance providers may put a lien on the file by notifying the client, the attorney, or the defendant's insurance company, or all three. Once notified, the attorneys have no discretion in the matter and must reserve a sufficient amount for the health insurance lien. It is important that you inform the attorney of any notice from a health insurance carrier. If the health insurance carrier does not put a lien on the file, the attorney has no obligation to contact them regarding any potential lien.
On occasion the health insurance carrier will not place a lien on the file before settlement. However, after all of the funds have been disbursed, they will seek reimbursement of the amount they paid. In this case, the attorney might be holding no funds and everything may have been disbursed. It would be the client's responsibility to deal with the health insurance provider at that point, though an attorney can assist. Although this is an infrequent occurrence, it may happen.
If the client is aware that health insurance paid any bills, there are two choices. One is to notify the health insurance carrier. In that instance they will almost definitely put a lien on the file. The other is to decline to notify the health insurance carrier. In that instance, if the health insurance carrier has not placed the attorney or client on notice of a lien, then the settlement proceeds would be disbursed as if there were no lien. If the health insurance carrier later seeks to be reimbursed, it would be the client's responsibility to do so out of the settlement proceeds.
For further information please contact an attorney at our firm today.
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