Personal Injury - April 14, 2025 by Horwitz, Horwitz & Associates

What is a lien in a personal injury case?

In the context of a personal injury case, a lien is a legal claim against any settlement or judgment you receive. This claim is typically made by a third party, such as a healthcare provider, an insurance company, or a government agency, that has paid for your medical treatment or covered other costs related to your injury. The lien allows the third party to recover the money they paid on your behalf once you receive your settlement or award.

Understanding what a lien is and how it affects your case is essential, as it can influence the amount of compensation you ultimately receive. 

Below, our Chicago personal injury attorneys at Horwitz, Horwitz & Associates will explain what you need to know about liens in personal injury cases.

Types of liens in personal injury cases

Below are the types of liens you are most likely to encounter in a personal injury case.

Medical liens

Medical liens are the most common type of lien in personal injury cases. Healthcare providers who treat you after the injury place them. In many cases, doctors, hospitals, or physical therapy clinics may provide services and agree for you to pay them out of the settlement or judgment once you resolve your case. This can apply to any medical provider, including emergency rooms, specialists, and long-term rehabilitation centers.

Health insurance liens

If you have health insurance, your insurer may pay for some of your medical bills in the interim. However, once you resolve your personal injury case and receive a settlement, your insurance company may file a lien to recover the amount they paid for your treatment. This lien ensures that they get reimbursed, even though you’re the one receiving the settlement. 

Some health insurers will reduce their lien based on the final settlement amount, but they’ll often try to collect the full amount they paid out.

Workers’ compensation liens

In cases involving workplace injuries, if you receive benefits from a workers’ compensation insurer, they may place a lien on your settlement. This is because, under workers’ compensation law, the insurance company has provided benefits for your injury. Therefore, they’re entitled to reimbursement if you receive additional compensation through a third-party lawsuit, such as a personal injury claim against someone other than your employer.

Government liens

Sometimes, government agencies like Medicaid or Medicare may have paid for your medical treatment related to the injury. These programs often file liens to recover the funds they disbursed. The federal government can aggressively pursue reimbursement from a personal injury settlement, and you must address their liens carefully.

How liens affect your settlement

Any liens on the settlement will affect the amount you can ultimately take home after a personal injury case. Our attorneys will calculate your total recovery after you win your case or reach a settlement agreement. However, we must pay off any liens before you receive the remaining amount.

For example, let’s say you’re awarded $100,000 in a personal injury settlement. You have $20,000 in medical bills, and your health insurance company has placed a lien for $10,000 on your settlement. After subtracting the lien, the total amount available to you is reduced by $10,000, leaving you with $90,000 before other expenses, such as attorney fees and court costs.

Negotiating liens

One of the key roles our Chicago personal injury lawyers will play in your personal injury case is negotiating liens on your behalf. Many times, it’s possible to reduce the lien amounts by negotiating with the lien holders. We might be able to convince your healthcare provider or insurance company to accept a lower payment than what they initially demanded, especially if your settlement amount is lower than expected.

In cases where multiple liens are involved, we’ll prioritize paying them off in the proper order, making sure we follow the law and each lien holder’s requirements.

What happens if I don’t pay my liens?

If you don’t properly address a lien, it can cause significant complications. A lien holder can legally pursue payment, and if you don’t pay them from your settlement, they can take further legal action to collect the money. This could involve garnishing your wages, placing a lien on your property, or taking you to court. 

This is why retaining our experienced team to handle these matters is critical. We’ll ensure that liens are paid correctly and reduce the risk of financial complications down the road.

Contact our Chicago personal injury attorneys at Horwitz, Horwitz & Associates today

After a personal injury accident, the last thing you need is the added stress of dealing with complex financial matters. If you’re facing liens on your potential settlement, contact our experienced lawyers at (800) 985-1819 or online. We can help you protect your financial recovery and fight for the compensation you deserve.