Liens on Personal Injury Settlements in South Carolina: How They Affect Your Recovery

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney. See full disclaimer.

Quick answer

A lien on a personal injury recovery is a legal claim by someone (a medical provider, insurer, or a government program) against the money you receive from a settlement or jury award. Liens reduce the amount you actually receive because the lienholder can demand payment from your settlement. In South Carolina, common lienholders include health insurers (including ERISA plans), Medicaid (state/federal), Medicare (federal), workers’ compensation carriers, and sometimes hospitals or other providers who assert an unpaid-bill claim.

Detailed answer — How liens work and how they can affect your recovery in South Carolina

What a lien does

A lien does not change who is at fault for the injury. Instead, it creates a legal right to be paid from the proceeds of any settlement or judgment you obtain. When a lienholder is valid, the settlement fund is typically used to pay the lien before the injured person gets the remaining net amount.

Common types of liens you may face in South Carolina

  • Medicaid (SCDHHS) recovery: If Medicaid paid for medical care connected to your injury, the state may seek reimbursement from your recovery. State Medicaid programs also participate in estate recovery for certain beneficiaries. (See South Carolina Department of Health and Human Services: https://www.scdhhs.gov/)
  • Medicare and Medicare Secondary Payer (MSP) claims: If Medicare paid treatment, federal law gives Medicare the right to be repaid from settlements. CMS enforces these rights and requires you (and typically your attorney) to report and resolve Medicare’s interest before settlement release. See the CMS recovery resources: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Recovery
  • Private-health-insurer subrogation or reimbursement claims: Private ERISA-plan or non-ERISA insurers that paid your medical bills may assert a contractual right to be reimbursed from your recovery. ERISA plans follow federal law, which can affect how their claim is enforced. U.S. Department of Labor general ERISA guidance: https://www.dol.gov/general/topic/retirement/erisa
  • Workers’ compensation liens: If you received workers’ compensation benefits for the same injury, the employer or insurer often has a statutory lien for part of any third-party recovery.
  • Provider/hospital liens and judgment liens: In some cases hospitals or doctors may assert an unpaid-bill claim or obtain a judgment and then record a lien against a recovery or property. South Carolina recognizes mechanisms to claim payment from a settlement or judgment fund.
  • Attorney charging liens: Your attorney may have a charging lien or contractual right to be paid out of the recovery for contingency fees and costs.

Priority: who gets paid first

Priority depends on the type of lien and the legal basis. Federal law often gives Medicare a strong recovery right. Medicaid and state liens may have priority under state or federal rules. Private insurers’ rights depend on contract language and whether ERISA applies. Courts also enforce attorney charging liens. Because priority rules vary, you should identify all potential lienholders early in the case so your settlement is structured to address competing claims.

How liens affect what you actually receive

Examples of effects:

  • If you settle for $100,000 and Medicaid paid $20,000, Medicare claims $15,000, and your attorney’s contingency fee is 33% ($33,000), the final net amount after negotiating or paying liens may be substantially less than the headline settlement.
  • Some liens can be negotiated or reduced. Others (especially federal government liens) may be harder to reduce and may require formal processes to resolve before settlement funds are released.
  • If you ignore a lienholder’s claim, the lienholder may sue you or your attorney, place a hold on settlement funds, or file a judgment lien against property purchased with the recovery.

Specific South Carolina considerations

South Carolina claimants should take these steps locally:

  • Notify any public benefits program (Medicaid/SCDHHS) and check whether they have filed a recovery claim. SCDHHS homepage: https://www.scdhhs.gov/
  • Ask insurers and medical providers for written lien or subrogation statements and demand detailed, itemized records of what they paid.
  • Confirm whether an insurer is an ERISA plan. ERISA changes the rules about how and where an insurer may enforce its claim.
  • Preserve settlement funds in escrow if there are unresolved liens so money is not disbursed until all claims are resolved.

What your attorney should do (and what you can do if you don’t have an attorney)

  • Identify all potential lienholders early and get written payoff figures or lien letters.
  • Verify the validity and amount of each lien — ask for itemized bills and supporting documents.
  • Negotiate reductions whenever possible. Many hospitals, private insurers, and state agencies will accept less than the billed or claimed amount in a compromise.
  • Structure the settlement (e.g., allocate damages to future medicals, consider Medicare Set-Aside if applicable) to protect future benefits and to satisfy federal cost-recovery rules.
  • Use escrow or interpleader if payees cannot agree and you need the court or a neutral holder to protect the funds while disputes are resolved.

Timing and paperwork

Resolving liens often requires specific notices, releases, and payoff letters. Federal programs like Medicare require notifications and may impose penalties for noncompliance. Plan for extra time before settlement to clear lienholder demands so the funds are not delayed or at risk.

Hypothetical example (simple)

Maria injures her back in a car accident in South Carolina. Her case settles for $60,000. Medicaid paid $10,000 for emergency care; her private insurer claims subrogation of $5,000; her attorney’s contingency fee is 30% ($18,000), and costs are $2,000. After negotiating Medicaid down to $7,000 and the insurer to $3,500, the math looks like this:

  • Gross settlement: $60,000
  • Attorney fee (30%): -$18,000
  • Attorney costs: -$2,000
  • Medicaid payoff: -$7,000
  • Insurer payoff: -$3,500
  • Net to Maria: $29,500

That net figure is what she can use for non-medical damages, future needs, and living expenses.

Helpful hints — practical steps to protect your recovery

  • Document all medical payments and benefits you received. Get itemized bills and payment records from providers and insurers.
  • Ask for written lien statements and exact payoff amounts from each claimant early in the case.
  • Do not sign a final settlement without confirming all lienholders’ positions in writing.
  • If Medicare paid any bills, report the settlement to Medicare’s Coordination of Benefits/Recovery office and obtain a conditional payment letter before settlement. CMS resource: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Recovery
  • Ask whether your private insurer is governed by ERISA — if so, the plan may have strong enforcement tools; get counsel familiar with ERISA subrogation rules. DOL ERISA info: https://www.dol.gov/general/topic/retirement/erisa
  • Preserve settlement funds in escrow or request a structured settlement if you have significant future medical needs.
  • If you receive public benefits, contact SCDHHS to learn about Medicaid’s recovery process and to request payoff information. SCDHHS: https://www.scdhhs.gov/
  • Consider hiring a South Carolina personal injury attorney experienced in handling lien/prioritization issues. If you cannot afford a lawyer, ask about legal aid or county bar referral services.

Where to find more information

Search South Carolina statutes and rules: https://www.scstatehouse.gov/code.php. For state Medicaid information: https://www.scdhhs.gov/. For federal Medicare recovery rules and guidance: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Recovery. For ERISA/general insurer subrogation: https://www.dol.gov/general/topic/retirement/erisa

Bottom line

Liens can substantially reduce the money you get from a personal injury settlement. Different lienholders operate under different legal rules — some federal, some state, and some contractual. Identify potential liens early, demand written payoff information, and obtain legal help to negotiate and structure the settlement so you receive the maximum lawful net recovery.

Disclaimer: This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. Laws change and every situation is different. For advice about your specific case under South Carolina law, consult a licensed South Carolina attorney.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney. See full disclaimer.