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Insurance Liens, Medical Treatment and the Personal Injury Claim

It may come as a surprise to a client when they learn that after their personal injury claim settles they must, in many cases, reimburse their health insurance company for medical bills paid. This makes little sense to a client who feels as though they’ve done nothing wrong, yet they must pay back the health insurance company for medical bills paid as a result of their personal injuries. I often hear my clients ask, “why doesn’t the defendant pay my medical bills if I’ve done nothing wrong?” It’s hard to argue with this logic. Unfortunately, the answer to this question sounds in contract law. Most people do not read their entire health insurance contract word for word. As such, most people are unaware that the insurance contract normally gives the insurance company the right to be repaid in circumstances that involve personal injury claims. This procedure is known as subrogation, or third party recovery.

With the above in mind, it’s important to discuss potential liens with your attorney prior to agreeing to settle your personal injury claim. Experienced personal injury attorneys will begin to identify potential lien sources and will work with the insurance company, immediately, once they have notice of lien. This affords the attorney an opportunity to negotiate the lien amount down from full value. A reduction of a lien amount may occur if there is insufficient liability insurance coverage, or if liability issues result in a reduced settlement amount. Properly perfected liens must be identified and appropriately handled in order to avoid unanticipated financial hardship after settlement funds have been dispersed.

It’s vital to have an experienced personal injury attorney handle your personal injury claim in order to be sure that any liens on your personal injury claim are dealt with within the framework of contract law and other applicable laws of the Commonwealth of Massachusetts.