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What’s a health care lien?

Many car accident victims are surprised to learn, after they’ve settled their case, that they have to pay a health care lien out of their settlement recovery. What’s a health care lien, and why should you have to pay it?

Let’s start with what a lien is, first. A lien is a claim by another person for money they’re owed for what they’ve paid or provided to you. In construction, builders and contractors have lien rights to payment for labor and materials they’ve provided to a project in case they aren’t paid by the owner or general contractor for the work they’ve done.

Similarly, if you have public or private health insurance, that insurance company has a right to get money back that they’ve paid for your medical treatment if you got a settlement. With some caveats, of course.

As I’ve written before, if you’ve got car insurance in Kentucky, you’re entitled to a minimum of $10,000 in no-fault benefits before a bill becomes your responsibility. Those no-fault benefits are for medical expenses and lost wages only. You don’t have to pay your auto insurer that money back because you’ve paid premiums for that coverage already.

If you’ve got medical expenses that are greater than the amount of no-fault coverage that you have, then your health insurance kicks in to start paying those bills. While you’ve been paying premiums for your health insurance, too, the health insurance company has what’s called subrogation rights. That means they stand in your shoes, in a limited capacity, with the same rights you have to recover against the person who negligently (or intentionally) caused your injury. The health insurance company only has the right to get back money that they paid for your treatment, however, while you, the injured person, have the ability to recover much more in damages than that.

If and when the health insurer learns that you’ve got a claim against someone else for damages related to a car accident, they will assert their rights to a lien against any money you recover for payments they made on your behalf for medical expenses related to that wreck. They paid the medical bills, not you, and so while you’ll be making a claim to recover those expenses from the at-fault driver, they’re the ones who really have the right to the money since they’re the ones who actually paid it, not you.

There are lots of different kinds of health insurance plans and policies. We’ve dealt with most of them. If you have questions about your car accident and how insurance coverage works, you need to give us a call at 502-633-6002 for a free consultation.