What is a medical lien and how does it affect my settlement?

A lien is a right to be paid from your recovery, and several kinds can attach to the same case.

Provider liens under a letter of protection. Health insurance reimbursement rights, where the plan paid and claims repayment from a third-party recovery. Medicare and Medicaid, which have federal and state reimbursement rights. Hospital liens in some jurisdictions. Workers' compensation liens where applicable.

How it works. The settlement pays liens first, then fees and costs, then you. A settlement that sounds substantial can produce a modest net once liens are satisfied, which is the single most common source of client disappointment.

Liens are frequently negotiable. Providers, health plans, and government programs all reduce liens in appropriate circumstances — particularly where the recovery is limited relative to the damages. That negotiation is real work and it can materially change the net.

What to do: identify every lien early, before settling. A lien discovered after a release is signed is a problem with no good solution.