YOUR LAWYER SHOULD GUIDE YOU THROUGH THE LIEN PROCESS

It’s hard to understand federal and state laws surrounding “liens,” but approaching liens in Kansas personal injury claims is not impossible. A lien is an offset that a creditor (often your health or auto insurance) demands to be paid if an injury victim receives a settlement.  Lawyers who represent injury victims have a responsibility to guide their clients through the settlement process, including liens. Many lawyers issue blanket statements to their clients when they receive a settlement, directing their clients to “Pay all liens and creditors.” This raises potential ethical issues.

In order to assert a valid lien, Kansas and federal law requires that creditors meet certain guidelines. If the guidelines are not met, the lien is not valid and the proceeds you receive from settlement should not go directly to a creditor. There are also circumstances where a lien should not be paid in full, and conditions are such that a lien-holder would negotiate the amount of the lien. Whether it is the lawyer or client negotiating this part of the claim, both have more leverage to negotiate prior to finalizing a settlement. Lawyers who proceed with a settlement and hand off lien issues to their clients with no information are abandoning their clients in a time of need.

Injury victims sometimes have a hard time understanding why Kansas law may require them to pay back another party, particularly when they are not at-fault for their injury. It is even harder to understand why an injury victim would have to pay back an insurance company, after years of paying a premium for insurance coverage. If your health insurance or auto insurance has paid bills on your behalf, it is possible either or both will try to pursue a lien. In many of our client’s claims, handling a lien becomes more complicated than negotiating a fair value for our client’s injuries.

Key Success Factor: Understand How and Where Liens Appear

Liens and claims for repayment appear in various situations. A few of the more common situations include:

(a) Statutory Liens: a statute may authorize a third-party to place a lien against your settlement. These claims often appear through Medicare, ERISA plans, and with the Veterans Administration.
(b) Contractual Liens: auto insurance companies require Personal Injury Protection (PIP) to be paid back; healthcare providers may provide care contingent on placing a lien against a settlement; or if you have hired and fired a lawyer on your case, the earlier lawyer may place a lien on a future settlement amount.

It is important to highlight that a “lien” is separate from a “required repayment.” One major difference between the two concerns the accounting, exactly when the injury victim is required to pay. Certain types of liens must be paid first (sometimes called “first dollar in”), prior to the client getting paid. All liens are not created equal. The law regarding certain liens is more clear-cut, while other liens the law is not established. If it is questionable whether there has been compliance for all requirements to assert a lien, the lien should be challenged. It is the lawyer’s role to make the argument for the best interests of the client. This includes contesting liens of questionable validity. A client should not be left to pay an invalid lien.

Key Success Factor: Assess Potential Liens Before Settlement

It should not “come from left-field” that a third-party plans to assert a lien against a client’s settlement. A lawyer should be proactive on assessing potential liens to get a head start on determining whether the lien is valid.
If it is possible to negotiate the lien, (the outstanding lien amount or whether the lien includes a reduction for lawyer’s fees) there is more leverage for this determination and a potential negotiation prior to settlement.

While managing a case with a lien might seem overwhelming, it is an essential piece of Kansas personal injury claims to ensure that a client maximizes the possible compensation for their injury. It is possible to comply with liens, manage and negotiate, and prevail over invalid liens, but don’t wait to get started.

Have you been injured and have a question about a lien? Call Patterson Legal Group at (888) 687-2400.

Sources:

1. Smith, Kaitlin M. “Examination of the Personal Injury Plaintiff’s Struggle for Adequate Compensation under Government Rights of Reimbursement, An.” (2013).
2. Salters, Neil L., et al. “Evaluation of the Case.” Products Liability Practice Guide 1 (2012).
3. Aidman, Evan K., and Evan Aidman. Winning Personal Injury Cases. ALI-ABA, 2011.
4. Photo by LendingMemo.