What Does a Doctor's or Insurance Company's Lien Do to Your Ability to Disburse a Settlement Check?

When someone suffers bodily injury due to an accident, health insurance companies may choose to offer a settlement check to avoid going to court. While waiting for a settlement offer to come through, medical services provided by doctors and other health providers may go unpaid until the injured party receives the actual settlement award. As a result, doctors and insurance companies may have first dibs on collecting payment for services rendered.

Personal Injury Settlements

• Personal injury settlements consist of lump-sum payments made by insurance companies to accident victims to cover any costs associated with an injury claim. In cases where bodily injury plays a role in an accident claim, the effects and potential effects of the injury can influence the amount of a settlement offer. The likelihood of needing ongoing medical treatment, time off from work and other factors all contribute to the overall costs involved. In order to ensure payment on services rendered by doctors or claims paid on by insurance companies, doctors and insurers can legally place liens against a forthcoming settlement award to ensure reimbursement for services rendered or claims paid.

Doctors' Liens

• A doctor's ability to place a lien against an upcoming settlement award varies based on the laws of each state. Some states allow doctors to draw up contracts with patients that authorize payment from an upcoming settlement. Other states automatically grant doctors lien rights that allow them to receive payment for services rendered once a settlement goes through. The amount of a lien may include the costs for services provided as well as interest costs and attorney fees. Some states place percentage limits on the amount a doctor can take from a settlement check, such as no more than 20 or 30 percent of the total lump-sum amount. In cases where multiple liens exist, percentage amounts may lessen depending on the number of liens and the laws of the state.

Insurance Company Liens

• With personal injury claims, the person found at fault must compensate the victim for damages and costs. Ultimately, the settlement offer comes from that person's insurance company. Until a settlement award arrives, the victim's health insurer may have paid on numerous medical claims. When this happens, the victim's health insurer has the legal right to a portion of the settlement award. In effect, this practice prevents victims from having their medical costs paid by their health insurer and through a settlement check. In some cases, a victim's insurance company may refuse to pay for medical costs until the settlement award goes through. In this case, insurers cannot place a lien against an upcoming settlement award.

Hospital Liens

• When dealing with personal injury claims, people who receive treatment from hospital-based doctors and providers may find out that the hospital has placed a lien on an upcoming settlement award. By law, hospitals can place a lien against a settlement award without a patient's consent provided it's done no later than 30 days after treatment, according the FindLaw legal reference website. In cases where a patient's health plan only pays a percentage of the actual cost of treatment, a hospital may attempt to make up for the remaining costs by placing a lien against the patient's settlement award. And while hospitals and health insurers have prearranged contract agreements in place, hospitals may still attempt to recover plan discounts from the patient.