Your health insurance covers medical issues that occur naturally, like your annual check-up or a visit for the flu. However, when you need medical treatment because of someone else’s negligence, your health insurance may pay your bills up front — but then has the additional right to be reimbursed from your personal injury settlement. This is where health insurance subrogation liens come in.
What Is a Subrogation Lien?
When you’re injured in an incident, and another party is at fault, your private health insurance, Medicare/Medicaid, or even workers’ compensation might pay your medical bills up front. Later, when you receive a settlement or judgment from the at-fault party, those insurers often have a right to be paid back for the expenses they covered.
That right is called subrogation, and practically, it serves as a form of reimbursement for your insurance company.
An important distinction between a subrogation lien and other types of liens is that your insurer cannot place a lien on your home, car, or other assets. The lien is only against a personal injury recovery.
Why Does This Happen?
Most insurance policies include language that essentially says:
“If we pay your medical bills for an injury caused by someone else, and you recover money from that person, you must repay us from your recovery.”
This ensures that the person ultimately responsible for your injuries — not your insurer — pays the cost of your medical care.
How It Works in Practice
- Your insurer pays your incident-related medical bills.
- Your insurer asserts a subrogation lien — a legal claim against your settlement for the amount it paid.
- You recover financially for your personal injury case with the at-fault party (or their insurance company).
Your attorney negotiates with the lienholder to reduce or settle the lien before distributing the funds.
Negotiating or Reducing Liens
Your attorney can often:
- Challenge unrelated charges that shouldn’t be part of the lien.
- Negotiate reductions, especially when your total recovery is limited.
- Apply the “common fund” doctrine, which means the lienholder may have to reduce its claim to account for your attorney’s efforts and fees.
Each type of subrogation lien has its own set of rules governing how much it can be reduced and the reasons for such reduction. Some liens, such as self-paid ERISA liens, are more challenging to negotiate than other traditional health insurance liens.
Why It Matters
If you ignore a subrogation lien, the insurer can pursue repayment directly — sometimes even from you or your attorney. Also, they have the right to terminate your health insurance coverage.
Properly handling liens ensures:
- You comply with the law and your policy.
- You keep as much of your settlement as possible.
Lien obligations are important to address, and ensuring proper handling of subrogation liens protects you and your recovery.
Understanding the subrogation process highlights the need to hire an experienced attorney. If you’ve been injured, Johnson Jensen has the experience to help you navigate the recovery process with confidence.
Call us at 317.785.7574 or visit our website to learn how we can help.