In this episode Attorney Chuck Franklin explains what a lien is. He also gives examples on how a lien or liens can effect your settlement.
Hi folks, today I’m going to talk about Insurance liens or liens on your settlement. That’s any potential settlement you may have in an injury accident case.
I’ll give you a hypothetical. It is fairly difficult to understand but I will give you a hypothetical here. If somebody causes you to have medical treatment, let’s say they pop you in the nose. Your health insurance carrier, the one that covers your medical expenses like Blue Cross Blue Shield, AHCCCS, or United Healthcare. They pay out a contract price with Banner Health Services for your nose to get fixed. Or X-Rayed let’s say.
Let’s say a nose X-ray is ten bucks but off the street if you pay cash it’s one hundred dollars. That is a $90 difference between the contract price and the street price if somebody is paying cash for it. Ultimately if you settle the case against a third party, because somebody popped you in the nose and you sued them and collect against them of their insurance company, then they can reach into your settlement and pull their $90 out. That is allowed under Arizona Statute.
Also, if your health insurance carrier (the one that pays your medical expenses) ends up paying any amount of money and it is governed under federal law , which is called the Employment Retirement Income Security Act of 1974 (ERISA) . It has been around that long, it just hasn’t been enforced until probably the last five to seven years, since the recession started. Then they can reach in and take any amount of money that they paid out, penny for penny, from your under insured proceeds as well as the third party.
You’re probably thinking “WHAT? I paid the premiums on it, why can they take my money?” Well according to the U.S. Supreme Court they can. So not only did they take money from the third party that you settled with, but when you have to reach into your own pocket from uninsured or underinsured proceeds, to try and make you whole, they can take that money as well too.
So it used to be that I would get one third and the client would get two thirds, subject to any bills that were still outstanding. The bills that hadn’t been paid by your health insurance carrier. That’s not the case anymore. It is very difficult, lengthy, and involved to get insurance carriers to back away from their entire lien and only accept pennies on the dollar. In order to get them out of the way so they we can put some money in your pocket.
Every lawyer that does the kind of work that I am discussing will have to do lien reduction work at the end of the case so that the providers get paid. Occasionally you get super lucky where the client doesn’t have any insurance and we ended up getting the lien reduced from almost $70,000 down to less than $10,000. Now the provider is getting something in this case it was a hospital. They are getting something otherwise I was going to walk away from the case is the theory. But now they are happy, the client obviously is happy, I’m happy that we were able to work on behalf of the client.
So it take’s a lot of work and it takes a whole bunch of time to get this stuff done. it’s not as easy as it used to be. It has made my job harder. And the clients, typically they get impatient, they want their money, and I don’t blame them. But it is something that takes a lot of time. It’s more difficult to do that, to get those liens reduced than it is to actually collect from the third party that caused the torte feaser, the defendant that caused the injury to you which caused you to have medical treatment.
Then if you don’t have enough uninsured or underinsured coverage or you don’t have health insurance, or your health insurance is limited somehow because there is caps on how much they pay out (these are all new things.) Then something is going to come out of pocket and we negotiate those things as well, for you and that takes time.
I hope that gives you at least a good general understanding of liens. It’s not a third to the attorney and two thirds to the client / patient anymore. It doesn’t work that way. I wish it did, but it doesn’t.
I hope that helps you out a little bit.
If you or anyone you know needs legal assistance of any kind do not hesitate to contact Attorney Chuck Franklin here: (480) 545-0700