Lawyer Listings Add, Update, or Remove Listings

Subrogation and Medical Liens on a Settlement

Why an injured person does not keep the whole settlement - the right of health insurers, Medicare, Medicaid, ERISA plans, workers' compensation carriers and hospitals to be repaid from a recovery for the treatment they paid for, how each kind of lien is created and enforced, the rules that reduce them, and why the liens have to be resolved before the check is cashed.

Informational only - this is not legal advice. These definitions explain general legal vocabulary in plain English. They are not advice about your situation, reading them creates no attorney-client relationship, and the law differs from state to state and changes over time. For advice you can rely on, speak to a lawyer licensed in your state.

Looking for a lawyer rather than a definition? Skip to the state-by-state list of law firms for this.

What it means

When a person is injured by someone else and a third party pays for the treatment, that payer usually has a right to be reimbursed from whatever the injured person recovers from the wrongdoer. The right goes by different names - subrogation, reimbursement, a lien, a right of recovery - and rests on different sources, but the effect is the same: a portion of the settlement or verdict belongs to the payer, must be identified and resolved, and cannot lawfully be ignored. A settlement that looks large at the mediation table can shrink substantially once the liens are paid, and a lawyer who disburses to the client without satisfying a known lien can be personally liable for it.

The sources differ in strength. Medicare's right of recovery is federal and nearly absolute: the parties must report a settlement with a Medicare beneficiary, Medicare must be repaid its conditional payments (reduced by a share of the attorney's fees and costs), and it can pursue the beneficiary, the lawyer and even the paying insurer for what it is owed. Medicaid recovers under state statutes required by federal law, but its lien is limited to the part of the recovery that represents medical expenses. A self-funded ERISA employee health plan may enforce reimbursement provisions written into the plan document, often without the reductions state law would impose, and most such plans claim first-dollar reimbursement; an insured plan or an individual policy is governed by state law, which in many states applies a made-whole rule (no reimbursement until the injured person is fully compensated) or a common-fund rule (the payer shares the fee), or both. A workers' compensation carrier has a statutory lien on a third-party recovery for benefits paid, plus a credit against future benefits. Hospital-lien statutes in most states let a hospital that treated an accident victim file a lien directly against the recovery, sometimes for its full billed charges rather than the negotiated rate. Veterans Affairs, military health plans and state crime-victim funds have their own recovery rights.

Resolving the liens is part of the case. The lawyer identifies every payer, obtains an itemized claim, audits it for treatment unrelated to the accident, and negotiates: many payers accept a reduction for attorney's fees and for the risk and costs of the case, and most will compromise where the recovery is limited by policy limits or the injured person's own fault. Medicare and Medicaid have formal processes and appeal rights for that. Where the settlement is small relative to the medical bills, the ordering of payments - liens, then fees and costs, then the client - can leave the client with little, which is a fact the lawyer should explain before a settlement is accepted, not after. In a case involving future Medicare-covered treatment, the parties may need to set aside part of the recovery for that treatment so that Medicare's interest is protected.

Where this comes from

Medicare's recovery right is the Medicare Secondary Payer statute, 42 U.S.C. § 1395y(b)(2), with the regulations at 42 C.F.R. part 411, subpart B, and the mandatory reporting requirement at § 1395y(b)(8). Medicaid recovery is required by 42 U.S.C. § 1396a(a)(25) and § 1396k and limited to the medical portion of a recovery by Arkansas Department of Health and Human Services v. Ahlborn, 547 U.S. 268 (2006), and Wos v. E.M.A., 568 U.S. 627 (2013), with Gallardo v. Marstiller, 596 U.S. 420 (2022), extending it to amounts for future medical care. ERISA plan reimbursement is enforced under 29 U.S.C. § 1132(a)(3) as construed in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (2006), US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013) (plan terms override equitable defenses; the common-fund rule fills a gap), and Montanile v. Board of Trustees, 577 U.S. 136 (2016) (the fund must still be traceable); FMC Corp. v. Holliday, 498 U.S. 52 (1990), holds that state anti-subrogation laws do not reach self-funded plans. Workers' compensation liens, hospital-lien acts and the made-whole and common-fund doctrines are each state's own. Military and VA recovery is the Federal Medical Care Recovery Act, 42 U.S.C. §§ 2651-2653.

When people hire a lawyer for this

Lien resolution is one of the main things an injury lawyer does that a client never sees, and a client should ask at the start who paid for the treatment, whether the lawyer will negotiate each lien, and how the fee is charged on the lien reductions. Anyone on Medicare or Medicaid should tell the lawyer at the first meeting, because the reporting and repayment rules are federal and a settlement that ignores them can be unwound. A person settling a small claim without a lawyer should get the health insurer's reimbursement demand in writing before signing anything, since the release usually makes the injured person responsible for every lien.

Worried about the cost? A lawyer can be hired for one part of a case only (limited-scope representation), may be paid from what a claim recovers (contingency fee), or may be free through a pro bono program or legal aid; a court can also waive its own filing fees.

Find a lawyer for this in your state

Choose your state to see law firms for this in the city where we list the most; your city may be under “other cities”, A to Z.

Alabama (Montgomery)
+1 other city
- Birmingham
Alaska (Anchorage)
Arizona (Chandler)
+6 other cities
Arkansas (Little Rock)
California (Los Angeles)
+21 other cities
- Anaheim
- Bakersfield
- Chula Vista
- Fontana
- Irvine
- Long Beach
- Oxnard
- Riverside
- Sacramento
- San Bernardino
- San Diego
- Santa Ana
- and 9 more with fewer listed firms
Colorado (Aurora)
+2 other cities
- Colorado Springs
- Denver
Connecticut (Bridgeport)
Delaware (Wilmington)
District of Columbia (Washington)
Florida (Orlando)
+12 other cities
Georgia (Atlanta)
Hawaii (Honolulu)
Idaho (Boise)
Illinois (Chicago)
+1 other city
- Aurora
Indiana (Indianapolis)
+1 other city
- Fort Wayne
Iowa (Des Moines)
Kansas (Kansas City)
+1 other city
- Wichita
Kentucky (Lexington)
+1 other city
- Louisville
Louisiana (Baton Rouge)
+2 other cities
- New Orleans
- Shreveport
Maine (Portland)
Maryland (Baltimore)
Massachusetts (Boston)
Michigan (Detroit)
Minnesota (Saint Paul)
+2 other cities
- Minneapolis
- Rochester
Mississippi (Jackson)
Missouri (Kansas City)
+1 other city
- St. Louis
Montana (Billings)
Nebraska (Lincoln)
+1 other city
- Omaha
Nevada (Henderson)
+3 other cities
New Hampshire (Manchester)
New Jersey (Newark)
+1 other city
- Jersey City
New Mexico (Albuquerque)
New York (New York City)
+2 other cities
- Buffalo
- Rochester
North Carolina (Durham)
+5 other cities
North Dakota (Fargo)
Ohio (Columbus)
+3 other cities
Oklahoma (Tulsa)
+1 other city
- Oklahoma City
Oregon (Portland)
Pennsylvania (Philadelphia)
+1 other city
- Pittsburgh
Rhode Island (Providence)
South Carolina (Columbia)
South Dakota (Sioux Falls)
Tennessee (Nashville)
+1 other city
- Memphis
Texas (Houston)
+12 other cities
Utah (Salt Lake City)
Vermont (Burlington)
Virginia (Norfolk)
+3 other cities
Washington (Seattle)
+2 other cities
- Spokane
- Tacoma
West Virginia (Charleston)
Wisconsin (Madison)
+1 other city
- Milwaukee
Wyoming (Cheyenne)

Related terms

Other entries in the same area of law, each written from the same primary sources.

Assumption of Risk and Liability WaiversThe defense that a person who knowingly took on a danger cannot complain of it - and the signed waiver that tries to make that agreement explicit before the gym, the ski slope or the trampoline park.
Comparative and Contributory NegligenceRules that decide what happens to a claim when the injured person was also partly careless - and they differ sharply from state to state.
Contingency FeeA fee arrangement in which the lawyer is paid a percentage of what is recovered, and is paid no fee if nothing is recovered.
Damages in a Personal Injury ClaimThe categories of loss an injured person can be compensated for - the bills and lost earnings, the pain and the lost enjoyment of life - plus the separate and rarer category meant to punish, and the state caps that limit some of them.
Dog Bite LiabilityWho pays when a dog injures someone - the strict-liability statutes most states have and what they cover, the older "one-bite" rule that survives in the rest, negligence and leash-law claims that exist under either, the defenses of trespass and provocation, landlord and keeper liability, how homeowners' insurance responds, and the dangerous-dog proceedings that run alongside the civil claim.
Dram Shop and Social Host LiabilityWhen a bar, restaurant, liquor store or private host can be held responsible for injuries caused by someone they served alcohol to - the statutes that create the claim in most states and the very different standards they set (visibly intoxicated, under the legal drinking age, or both), the states with no claim at all, social-host rules for minors, what must be proved, the notice requirements, and who can sue.
Emotional Distress Claims (IIED and NIED)When the law compensates psychological harm on its own, without a physical injury - the intentional-infliction tort and its "outrageous conduct" threshold, the negligent-infliction claim and the limits states put on it (the impact, zone-of-danger and bystander rules), the proof a claim needs, and how these differ from the emotional-distress damages that ride on any ordinary injury claim.
Independent Medical ExaminationAn examination by a doctor chosen and paid for by the other side - routine in injury, disability and workers' compensation claims, and not treatment.
Insurance Bad FaithAn insurer's duty to deal fairly with its own policyholder - and the separate claim that arises when it does not.
Joint and Several LiabilityWhat happens when more than one person is responsible for the same injury - the traditional rule that each is liable for the whole judgment, the modern rules in most states that limit it by share of fault or by type of damages, contribution between defendants, the effect of settling with one of them, and why the rule decides who actually pays when one defendant is uninsured or bankrupt.
Loss of ConsortiumThe claim of a spouse - and in some states a child or parent - for what an injury to a family member took from the relationship itself: companionship, affection, household services and the marital relationship, what has to be proved, why it is derivative of the injured person's claim, and how it is pleaded, valued and settled.
NegligenceCarelessness that the law treats as a legal wrong because it fell below the level of care a reasonable person owed to someone else.
Negligence Per SeThe rule that breaking a safety statute - running a red light, serving alcohol to a minor, violating a building code - can itself establish that the defendant was careless, without the jury deciding what a reasonable person would have done.
Premises LiabilityThe responsibility of whoever owns or controls property for injuries caused by its condition - the slip on the wet floor, the broken stair, the unlit car park - and the rules that make the visitor's reason for being there matter.
Product LiabilityA claim against the maker or seller of a product that injured someone because of how it was designed, how it was made, or what it failed to warn about - and the federal rules that can shut some of those claims down.
Res Ipsa LoquiturThe doctrine that lets an injured person prove negligence from the accident itself when the cause is unknown but the event is one that does not ordinarily happen without carelessness - its elements, the exclusive-control requirement and how it has loosened, what the doctrine does procedurally (an inference, or a presumption shifting the burden), and where it is and is not used.
Strict LiabilityLiability for harm without any showing of carelessness - the rule for abnormally dangerous activities, for defective products in most states, and, under many state statutes, for the owner of a dog that bites.
Suing the Government for an Injury (Tort Claims Acts)Why an injury caused by a government employee or a public property defect follows different rules - sovereign immunity and the statutes that waive it, the written claim that must be presented to the agency before any lawsuit and the short deadline for it, the exceptions that keep immunity (discretionary functions, most intentional torts, certain activities), damage caps, and the no-jury and no-punitive-damages rules.
Vicarious Liability (Respondeat Superior)The rule that makes an employer liable for harm its employee causes while doing the job - the reason the trucking company, the hospital or the delivery firm is the defendant, and the reason "independent contractor" is fought over so hard.
Workers' CompensationThe state no-fault system that pays medical care and part of lost wages for an injury at work without any proof of fault - and, in exchange, takes away the right to sue the employer, though not the right to sue anyone else who caused it.
Wrongful Death ClaimA claim brought by surviving family members or an estate when someone dies because of another party's wrongful act.

« All glossary terms

Part of the LawyerLand plain-English legal glossary. Definitions are written from primary sources - statutes and court rules - and each entry states the authority it rests on, or says plainly when the doctrine is state law with no national rule.

If you cannot afford a lawyer, civil legal aid programs provide free help with many of these problems: civil legal aid programs by state.

Related free reference tools: statute of limitations for a personal-injury claim, by state, quoted from each state's official text - part of LawyerLand's legal reference tools.