Don't Let Personal Injury Liens Be a Headache for Your Practice

If you practice in personal injury, or you have relatives who call you for help with their personal injury claims, you are well aware that liens have become one of the most difficult aspects of personal injury law. Dealing with liens, claims for reimbursement, and unpaid medical providers is a massive headache that is taking over personal injury law. But we have some tips to help you get started on dealing with them.

FindLaw has put together The FindLaw Guide to Negotiating Liens in Personal Injury Cases, a six page downloadable pdf that provides a roadmap for approaching and negotiating liens and highlights some of the pitfalls for the unwary. Please note that we refer to all liens, claims for reimbursement, and unpaid bills as "lien claims," but remember that not all liens claims are created equal, nor do they all have the legal effect of a valid perfected lien.

Strategy for Approaching Lien Claims

First and foremost, the Guide explains a streamlined approach to dealing with lien claims. These basic steps include:

  • Understanding that attorneys have ethical and fiduciary obligations to repay lien claimants.
  • Understanding what types of lien claims exist and what law and/or contract principles govern each type of lien claim.
  • Assess what lien claims are involved at the outset of the case.
  • Explain to your client their obligation to pay lien claims.
  • Call and write letters to each lien claimant at the beginning of the case.
  • Keep the lien claimant in the loop as the case progresses.
  • Contact the lien claimant to negotiate their claim BEFORE finalizing the third party settlement.

 

Having a comprehensive understanding and strategy for lien claims as a matter of course will prevent you from undue stress at the end of a case, and also from having an irate client who is wondering where their portion of the settlement is, and why they cannot close out their case.

Negotiating Tips

Now to the nitty gritty. The Guide discusses various considerations to take into account when negotiating lien claims, including:

  • Read the contract.
  • Narrow the claim.
  • Reduce for unrelated and unreasonable charges and obtain credit for co-pays.
  • Reduce for actual recovery of medical bills.
  • Reduce to the statutory cap.
  • Reduce for proportionate share of the statutory cap where appropriate.
  • Reduce for comparative fault.
  • Reduce for made whole.
  • Reduce for common fund.

 

Additionally, the Guide has been updated with information regarding the role of equitable defenses in the context of ERISA liens, in light of the 2013 U.S. Supreme Court case, US Airways v. McCutchen, which held that in a reimbursement action under ERISA based on an equitable lien by agreement, the ERISA plan's terms govern, and equitable principles will not override the language of the contract. However, if the plan is silent on the issue off attorney's fees, the Court held that the common fund doctrine fills the gap.

Remember, however, that these tips are meant to highlight general concepts only. The law and commentary on liens is extremely complicated, extensive, and continually evolving, so it is imperative to conduct up-to-date research for the specific law of your jurisdiction.

On those same lines, it is important to recognize when you are in over your head. There are skilled practitioners who specialize in this area of law, and there may be times when it is prudent, or possibly necessary, to bring someone else on board. Do so before it is too late.

We hope these tips will assist you in your negotiations, but as the Guide states, the overarching consideration to keep in mind is that common sense and courtesy should prevail in your negotiating endeavors. Of course, it may not work in every case, but often the best results come because you involve the lien claimant early on, build rapport, and appeal to their common sense to find a resolution that everyone can live with.

*Every case has unique facts and requires independent research. This article and the referenced Guide are intended to highlight general tips, and are not meant as an exhaustive discussion, nor a guarantee of a particular result.*