Key Takeaways:
If you are injured as a result of the negligence of another person and pursue a claim or lawsuit for your injuries, your health insurance company may have a right to recover what they paid in health benefits from your settlement or verdict.
In some instances, your attorney is required by law to hold the amount of a health insurance lien in escrow.
Your final award may be reduced by the amount of the health insurance lien.
Most people know that if you have suffered serious injuries because of someone else’s negligence, you may be able to file a claim or a lawsuit and receive compensation. What many people don’t know, however, is that some, if not all, of the money you are awarded can be subject to a health insurance lien.
What is a Health Insurance Lien?
A health insurance lien in the context of a personal injury case is a security (financial) interest in your case held by your health insurance company. If a lien is placed on your case, it means that when your claim is successful—whether at trial or through a negotiated settlement—the amount of the lien must be withheld from the total award and paid to the lienholder before any money is disbursed to you.
Funds subject to liens may have to be held in escrow by your attorney in an IOLTA account (a Client Trust Account), or they may have to be withheld directly by the insurance company. In some cases, your lawyer may be able to negotiate a reduction in the amount of the lien; however, this ability becomes more difficult if the lien is from Medicare, Medicaid, or a self-funded ERISA plan.
Why Do I Have to Pay Back My Insurance Company?
If you suffer injuries or an illness, you expect your health insurance provider to cover the cost of your care. After all, you pay a high monthly premium for such coverage. However, if those injuries were caused by someone else and you pursue a claim or lawsuit against that person, your health insurance company is entitled to be reimbursed from any recovery or judgment you receive for the expenses they paid for your medical care. The premise is this: your health insurance company insures you, not the person who caused your injuries, so they should not be responsible for paying the medical bills resulting from injuries caused by a third party.
When you purchase health insurance, you are bound by a Subscriber Agreement that sets forth the various benefits, limitations, and contractual obligations of your policy. Few people ever bother to read these agreements in full, but in these documents you will find the subrogation and reimbursement provisions. These provisions set forth the obligations of the member. And since any personal injury recovery is likely to include some degree of reimbursement of medical expenses, the health insurance companies maintain that they should be reimbursed for the money they paid for your medical bills. Both Massachusetts and federal courts have upheld these provisions when the policy language is clear and unambiguous.
How Do I Know If There Is a Lien on My Personal Injury Case?
If you have health insurance through Medicare, a Medicaid program such as MassHealth, or an employer-sponsored self-funded ERISA plan, your attorney must alert these insurers that you have suffered injuries as a result of another’s negligence and protect their reimbursement interest. Prior to any negotiated settlement, or after a jury verdict, your attorney is required to confirm the amount of their lien. These liens are referred to as “Super Liens” since they have many protections in place to ensure they are repaid.
If your health insurance is a fully-insured ERISA or a private plan, your rights and obligations are set forth in your Subscriber Agreement. You may or may not need to notify your health insurance company of a possible personal injury claim. If you are not required to notify your health insurance company, they may still reach out to you and inquire about your recent treatment. If you receive a questionnaire from your health insurance company, you are required to complete it in accordance with the cooperation clause located in your Subscriber Agreement. Based on your responses, they may forward a lien to your attorney. As such, we strongly encourage you to contact an attorney before doing completing this questionnaire.
What If There Is No Lien, Could I Still Owe Money?
Yes. There are some instances in which a health insurance company is unaware of a potential claim until after a negotiated settlement has been reached. In this instance, there is a possibility that the health insurance company may seek to recover directly from you. If this happens, you should immediately contact your attorney for guidance.
What Does This Mean For You?
Unfortunately, despite having paid high premiums for health insurance for many years, you may owe your insurance company the cost of your medical expenses if someone else was responsible for your injuries. When it comes time to negotiate a potential settlement of your case, your lawyer may be legally obligated to verify the total amount of any health insurance lien. Your attorney will be able to provide you with guidance regarding any potential lien reduction.
Parker Scheer LLP has highly skilled attorneys who have decades of experience managing client’s health insurance liens. Attorney Heather Boutet has Co-Authored the chapter “Liens, Public Benefits, and Trusts” in MCLE’s Massachusetts Motor Vehicle Torts: Liability and Litigation, 5th Ed. 2023.
