What Is a Lien on Settlement Proceeds and Who Can Put a Lien Against You?

What Is a Lien on a Personal Injury Settlement?

A lien refers to a third party’s legal right to take part of or all of the settlement proceeds from your personal injury claim. The third-party files a request for the lien during the lawsuit and the judge will approve or deny it.

Once a judge approves a lien, the person or entity holding the lien gets paid from your settlement before you do. Be aware that someone can put a lien on your settlement that’s not related to your injury. Common examples of this include unpaid child support and taxes.

If a lien is approved, there is little you or an attorney can do. It’s considered a debt that legally must be paid.

Who Can Put a Lien Against You?

So, who exactly can put a lien on settlement proceeds? These are the 4 most common sources of liens relating to your injury.

Government-Based Benefit Providers – VA, Medicaid, and Medicare

If Medicare or Medicaid covers your medical bills after your injury, they will probably request a lien on settlement proceeds. These are a type of subrogation lien and the Centers for Medicare and Medicaid Services (CMS) administers them. 

A CMS lien takes priority over all other liens, but you only have to pay if they request it. There is a 6-year statute of limitations on these types of liens.

Healthcare Providers

The most obvious source of a lien is your healthcare provider. Hospitals, clinics, and physicians can force you to pay a lien by making you sign a lien agreement or letter of protection before they treat you. They may also request a lien depending on your state’s laws.

The medical lien statute of limitations in California is 4 years.

Private Insurance Providers

Your private health insurance or auto insurance will also place a lien on your settlement if they cover treatments for you. Double-check your private insurance policies to see when and how they may place a lien on settlement proceeds.

Worker’s Comp Insurance

Finally, if you were injured at work, you’re likely using worker’s compensation insurance to cover your bills.

Let’s say you file a personal injury claim and receive a settlement against a party that is not your employer. Your employer may place a lien on your proceeds to cover the medical treatments paid for under worker’ comp.