Liens are an ever-present challenge in personal injury cases and can drastically impact your recovery as an injured party. Several types of liens exist under both state and federal law. When you are injured it is important to know which liens may be involved in your case and how to deal with them.
The most common type of lien you are likely to see in your personal injury case is a medical lien. Medical liens are authorized under Arizona law (A.R.S. § 33-931) and allow any health care institution providing medical services in the state to attach a financial interest to your personal injury case. These liens are intended to compensate the medical provider for the full cost of care when they treat your injuries. These liens generally allow you to receive some medical care in return for giving the medical provider their money when the case is settled. Many doctors and health care providers do not accept liens. These medical liens often apply even if your health insurance company pays a portion of the provider’s bill as such rates are discounted and typically do not reflect the medical provider’s claimed costs ( also known as their “customary charge”). Medical liens must be paid out of your personal injury settlement/award before you recover.
Another common type of lien is an ERISA (“The Employee Retirement Income Security Act of 1974”) lien. When a qualified group insurance company pays a bill, they may be entitled to be paid back from the proceeds of a personal injury case. ERISA liens are authorized under Federal law and provide a mechanism for some employers to recover their costs when they pay for your medical care and treatment. In order to claim a lien against your recovery, however, the employer must have financed the health plan.
ERISA liens can be extremely problematic for you as an injured person if not identified and dealt with appropriately, as they can collect from both first and third party recoveries.
Finally, whenever the state or federal government pays for your medical care and treatment, you can be certain that they also have a right to attach a lien to your personal injury settlement. The various types of liens that the state or government might be able to attach include:
• A.R.S. § 12-962 – This statute provides lien and subrogation rights for Arizona state or political subdivisions. These types of liens often arise when you work for the state of Arizona and receive healthcare through a state offered health insurance plan or AHCCCS.
• AHCCCS (Arizona Health Care Cost Containment System) – AHCCCS is Arizona’s method of implementing Medicaid, a medical assistance program funded in part by the federal government for eligible low-income individuals. When AHCCCS pays for your medical care and treatment, the state has a right to attach a lien to your recovery.
• Medicare – Medicare is insurance provided to Americans 65 and older, or younger individuals with qualifying disabilities. If your insurance is provided by the federal government through Medicare, then the federal government can attach a lien to your recovery for the cost of your medical care and treatment pursuant to federal law (42 U.S.C. § 1396a(a)(25) and 42 U.S.C. § 1396k(b)).
• Medicare Advantage – Medicare Advantage plans are private health insurance plans that act as a replacement for Medicare medical coverage. Despite this distinction, Medicare Advantage plans have the same rights as the federal government to attach a lien to your recovery under federal law for the cost of your medical care and treatment.
• FEHBA – These liens arise when you are employed as a federal civilian service employee.
• FMCRA (Federal Medical Car Recovery Act)– FMCRA liens can be asserted by federal agencies which are responsible for the costs of your medical care and treatment when you are injured by a third party.
Whether or not you hire an attorney to assist you with your personal injury claim, it is important to recognize and address liens when you are injured by another person and seek recovery for your damages. Lienholders often have incredible rights of recovery and can come after you personally if you ignore their demands. With that said, lienholders often have to follow specific steps in order to preserve their lien claim. These steps are taken from the statutes which give these entities a right to claim a lien in the first place. If the lienholders fail to follow these steps, their liens may be invalid.
If you have been hurt and are facing liens in your injury case, it may be useful to consider hiring an attorney who understands these statutes and can ensure that you retain as much of your settlement as possible.