If you’ve been severely injured in a car or other vehicle accident, the medical costs alone to treat your injuries maybe in the tens of thousands of dollars or even more. Hospitals, physicians, other health care providers, and insurance companies will initially incur search costs while you heal.
In a personal injury lawsuit against another person or entity who may be liable for your injuries, you are entitled to recovery an amount for all damages sustained. This includes all medical costs, as well as other direct costs and pain and suffering.
Under Massachusetts and other state law, as well as in accordance with insurance policies, healthcare providers and insurance companies that pay medical bills are entitled to be reimbursed for the amounts that they are owed or that they have paid. This “right to reimbursement” is referred to as a “lien.” Under the law and insurance contracts, the lien amounts due to healthcare providers or insurance companies must be automatically paid out of a settlement or jury award.
As an example, suppose a person is injured and that the medical bills incurred are $100,000. The insurance company for the driver who hit that person is willing to pay a $300,000 settlement. If the injured person’s lawyer is due a 1/3 contingency fee, the lawyer would receive $100,000, the medical provider (or the insurance company who paid the medical provider) would receive $100,000, and the injured person would receive the remaining $100,000.
Suppose, for instance that the settlement is only $180,000. In this case, the medical provider (or insurance company) would be still be entitled to $100,000, the lawyer would be entitled to $60,000 (one third of $180,000), and the injured client would only be entitled to $20,000.
While the medical provider (or the insurance company that paid the medical provider) may be entitled to $100,000 in the above example, this is not fair. The injured victim must pay a lawyer (out of the settlement proceeds) in order to gain the recovery, but the medical provider or insurance company in essence would have a “free ride” – they do not have to pay legal fees.
This is wrong.
Most medical providers and insurance companies understand that the way our justice system works, the litigation process is necessary in order for them to be compensated (as those responsible for causing injuries will not voluntarily pay full compensation). As a result, depending upon the circumstances, medical providers and insurance companies are often willing to waive a portion of their liens to account for the legal fees incurred, and the efforts of the injury victims in the litigation process.
So, for instance, if the insurance company agrees to waive $25,000 of its lien, this $25,000 amount would go directly to the injured plaintiff.
In situations in which an injury victim’s recovery would be severely compromised by medical and insurance liens, a strong, experienced attorney willing to advocate strenuously for a lien reduction with insurance companies and medical providers is needed.
I help clients in these circumstances in such negotiation so that a fair settlement can be achieved to the extent possible, and so that more money will go into the pockets of injured clients.
To learn more about how medical and other liens may apply to your situation, please call me.
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