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Injury victims usually call attorneys for obvious reasons: they want to know the value of their case and to make sure they get the maximum settlement. Recent changes in the law however have created another problem that needs to be dealt with. Whether the injury victim is represented by counsel or not, they will likely have to pay back thousands of dollars in reimbursements. This can come as a surprise and a shock, but failing to understand the importance of these reimbursement claims can have some disastrous consequences.
Under the older common law, an injury victim was entitled to recover and pocket the entire amount of any settlement after the payment of attorney’s fees and costs. Over the years, the law has been amended. First, for example, the Virginia General Assembly created a lien for unpaid hospital and doctor bills. While this statute in particular does not require payment in full of all medical bills, it does “attach” to the personal injury claim requiring some payment.
Later, state law was changed to allow worker’s compensation carriers to seek reimbursement for medical bills and paid lost wages. Then, the federal government got into the game. The federal government pays the largest portion of medical bills in the country today through Medicare, Medicaid and federal employee health programs. The federal government realized the opportunity and further amended the law to require reimbursement if medical bills are recovered as a part of a personal injury case. Finally, the federal government loosened the laws governing certain self-insured (“ERISA”) employers to allow them to seek reimbursement.
Personal injury attorneys refer to these reimbursement claims as “liens” for a good reason: like a mortgage constitutes a lien on your house, so to these reimbursement claims attach to your personal injury claim. The failure to acknowledge and account for these liens can have serious consequences.
For example, even if a case is settled and “closed,” the party claiming a lien may still be able to go after you. The failure to acknowledge and adjust a lien can also result in the disruption of health insurance coverage, something that can be catastrophic in a world where health insurance is all but required.
Sadly, many unrepresented injury victims fail to acknowledge this reality. Even worse, they fail to recognize that most liens are negotiable. At the end of every case, the real measure of success is not the gross settlement but the adequacy of the net result. In other words, if you have accepted what you consider to be a sufficient settlement but fail to account for the interests of lien holders, you could win the battle but lose the war. Imagine settling your personal injury claim for a substantial six-figure amount but then learning that you owe the government more than that and that your health insurance benefits are effectively being suspended! Our office frequently expends substantial efforts both before and after your settlement to see that all claims and liens are properly accounted and adjusted. In many cases, we are able to obtain a reduction or write-off of liens enabling our clients to realize the full benefit of their settlement.
Personal injury law poses many traps for the unwary. Only by consulting with competent counsel can you assure that when you sign the final release, your interests are being fully protected.
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