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What Is a “Lien” on a Personal Injury Case?

Personal Injury

A lien is the legal right of a third party to take part or all a settlement amount from your personal injury claim. The third-party will file the request for the lien during the lawsuit, and the judge for the case will approve or deny it. 

After the lien is approved by a judge, the entity or person holding the lien receives a payment from the settlement before the person it is awarded to. It is possible for someone to put a lien on a settlement, even if it is unrelated to the injury. Some of the most common examples of when it is possible to have a lien placed are for unpaid taxes or child support. 

If the lien is approved by the judge, there are a few things that you or your South Dakota personal injury lawyer can do. Approval means that the debt is required to be paid by law. 

Who Is Allowed to Put a Lien Against Your Personal Injury Settlement?

You may wonder who can put a lien on the settlement proceeds you may receive. While there are several entities that can do this, the four most common are listed here. 

Government Based Benefit Providers 

This includes the VA, Medicare, and Medicaid. If Medicare or Medicate is covering your medical costs after you are injured, they will likely request a lien on the proceeds of your settlement. When this happens, it is a type of subrogation lien, and the CMS (Centers for Medicare and Medicaid Services) are responsible for issuing them. 

The CMS lien will take priority over any other lien that is issued. While this is true, you only must pay if the CMS requests that you do. These types of liens also have a six-year statute of limitations. 

Healthcare Providers 

Another source of a lien, and one that is more obvious, is your healthcare provider. Physicians, clinics, and hospitals can force you to repay a lien by having you sign a lien agreement or even a letter of protection before you receive treatment. 

Private Insurance Providers 

Your auto insurance or private health insurance may put a lien on the settlement you receive if they are paying for the treatments on your behalf. Be sure to re-read your private insurance policies to see how and when a lien may be placed on the proceeds you receive from your settlement. 

Workers’ Compensation Insurance 

If you suffered an injury at work, chances are workers’ compensation benefits are covering your costs. For example, if you file a personal injury claim and then get a settlement against someone who isn’t your employer, your employer may put a lien on the proceeds to cover the medical services or treatment that are paid from workers’ compensation. 


When it comes to liens on your personal injury settlement, there are more than a few factors to consider. You may also have questions about the process. While your personal injury lawyer can help you better understand how personal injury law works, some answers to the most common questions are also found here. 

Why is there a lien if you paid your health insurance deductible and premium?

This is one of the most common questions that is asked when liens are issued by a health insurance company. 

The premium is what you pay each month for health insurance coverage. However, this is the cost of the product and can’t be used to reduce the amount of the lien. The deductible is what you are required to pay out of your own pocket before your health insurance provider covers most eligible expenses. Health insurance companies cannot issue a lien for an amount that is paid out of pocket before satisfying the deductible. 

After paying the deductible on your policy, your health insurance provider starts to cover a certain percentage of the costs based on your plan details. The lien will be issued if the insurance company starts to cover costs after a patient meets their deductible or pays for prescriptions or treatment covered by the plan before the deductible has been satisfied. 

The lien can only be issued if the costs paid by a health insurance provider will cover treatment for the injuries that clients receive compensation for in personal injury settlements. If your personal injury claim is not successful, then you don’t owe your insurance company anything beyond your deductible costs and regular premium. 

What if you don’t want your lawyer to withhold the liens?

This is not an option since the law requires your lawyer to honor the lien. If the lien is not paid, then you and your attorney may be held financially responsible. Also, failure to pay a Medicare lien may result in interest and penalties along with the amount that is owed. With a health care lien, your insurance company may refuse to pay your future bills if the payment is not made. 

Why does lien negotiation take so long?

Insurance companies and the government may refuse to negotiate until the case has been settled. They want to know the total amount of the settlement to fully understand where they stand. Unfortunately, there are no penalties or a time schedule for insurance companies to respond to the lien. Some don’t make this a priority, which means that the specific timeline for this varies. 

Contact Our Legal Team for Questions about Personal Injury Settlement Liens 

When it comes to personal injury settlement liens, there are more than a few factors to consider. If you have questions or need help, contact our legal team. We can help you understand the situation you are in and provide you with the legal advice and guidance that you need. There’s no reason to try to handle these situations on your own when we are here to help. 

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