What a medical lien is and how it can affect your settlement in New Mexico

Short answer: A medical lien is a legal claim by a health-care provider, hospital, or insurer to be paid from the money you recover in a personal-injury settlement or judgment. Liens reduce the money you get from a settlement unless they are negotiated, paid off, or otherwise resolved before distribution. This article explains the common types of medical liens under New Mexico practice, how they usually affect settlements, and practical steps to protect your recovery.

Disclaimer: This article is educational only and is not legal advice. Laws change and facts matter. Consult a licensed New Mexico attorney for advice tailored to your situation.

What is a medical lien?

A medical lien is a claim on proceeds from a personal-injury recovery (settlement or verdict) for the purpose of collecting medical bills. Liens arise in several ways:

• Provider or hospital lien: a hospital or provider may place a lien on any recovery for treatment related to the injury.
• Health insurer or Medicaid subrogation/assignment: an insurer or the state Medicaid program (New Mexico Human Services Department) can assert a right to reimbursement for payments it made on your behalf.
• Medicare conditional-payment recovery: where Medicare paid certain services, Medicare may require repayment out of settlement proceeds.
• Worker’s compensation or other government liens: other programs sometimes have lien or subrogation rights.

How do liens attach and what priority do they have?

Generally, a lien attaches when a provider files or asserts its right before distribution of settlement proceeds. Priority and enforcement rules differ by type of lien:

• Hospital/provider liens: Many providers will file a written lien or send a letter to the claims administrator or to you asserting a lien against any recovery arising from the injury. Whether the lien is enforceable, and the required form and deadlines, depend on state law and the type of provider.
• Medicaid and state health care liens: New Mexico’s Human Services Department (HSD) may seek reimbursement when Medicaid benefits were paid. HSD maintains procedures to assert third-party liability and to recover conditional payments; contact HSD and request a payoff statement. See the New Mexico Human Services Department: https://www.hsd.state.nm.us/.
• Medicare: If Medicare paid medical bills, the Centers for Medicare & Medicaid Services (CMS) can seek repayment of conditional payments. CMS maintains a process to request a conditional payment history and a demand. See Medicare recovery/conditional payments: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Recovery/ConditionalPayments.

How will liens affect your settlement amount?

Liens can reduce the net amount you receive in several ways:

• Direct deduction from gross settlement: Some lienholders insist on payment from the gross recovery (before attorneys’ fees and costs), which can reduce your attorney’s net fees and lower your share.
• Payment from net recovery: Other lienholders accept payment from the claimant’s net share after fees and costs. Whether a lienholder must accept payment from net or gross depends on statute, contract, or negotiation.
• Priority disputes: Competing lienholders (e.g., a hospital and Medicaid) may fight over who gets paid first; this can delay distribution and increase fees.
• Settlement leverage and allocation: Defendants sometimes contest liability for certain medical care. How the settlement is allocated among medical bills, lost wages, and pain and suffering can affect how much lienholders can demand.

Practical steps to handle medical liens

Addressing liens proactively protects your recovery and speeds resolution. Steps commonly taken in New Mexico cases include:

• Identify all potential lienholders: Ask providers, insurers, and HSD for written statements showing whether they have paid or intend to seek reimbursement related to the injury.
• Obtain written payoff statements: Request itemized payoff letters showing the exact amount they say is owed and whether they will accept a reduced lump-sum payoff.
• Check Medicare/Medicaid status: If Medicare or Medicaid paid, request a conditional-payment history or demand letter and follow the agency’s process for resolution. (See CMS conditional payments link above and contact HSD: https://www.hsd.state.nm.us/.)
• Negotiate: Many providers will accept less than full billed charges (especially hospitals). Negotiation often reduces lien amounts significantly.
• Escrow or interpleader: If lien disputes exist at settlement, place disputed funds in escrow or use an interpleader/escrow arrangement so the case can settle while lienholders litigate claims to the funds.
• Allocation in release: Use careful release language and settlement allocation (medical vs. pain and suffering) to limit what lienholders can claim — but only under guidance from counsel.
• Document everything: Keep copies of bills, payments, correspondence, payoff letters, and lien releases for later proof.

How New Mexico attorneys typically handle liens

Attorneys commonly do these things for injured clients:

• Require defendants/insurers to place settlement funds in escrow until liens are resolved.
• Get formal payoff statements and negotiate reductions with hospitals and providers.
• Resolve insurer and government subrogation claims through negotiation or, if needed, motion practice to challenge improper liens.
• Coordinate with specialists (Medicare consultants, Medicaid recovery units) to obtain accurate repayment figures and avoid later demands.

Timing and deadlines to watch

Missing deadlines can harm your position:

• Providers may have to file liens or assert claims within specific timeframes to preserve rights. Check the New Mexico statutes and rules for any statutory deadlines. For general New Mexico statutes, see: https://www.nmlegis.gov/.
• Medicare and Medicaid have processes and deadlines for conditional-payment demands and for disputing amounts. Start those processes early.
• Settlement documents should not be signed or funds released before lien resolution unless your attorney advises otherwise.

When to involve a New Mexico attorney

Talk to an attorney as soon as possible if you have unpaid medical bills related to an injury and you expect a settlement. An attorney can:

• Identify all lien claims against your recovery.
• Negotiate with lienholders to reduce payoffs.
• Structure settlement paperwork to protect your share.
• Handle escrow or interpleader filings if lienholders fight over the money.

Helpful Hints

• Don’t ignore bills or lien notices: respond and request written payoff statements.
• Ask each provider: “Will you accept a reduced lump-sum payoff?” Many will — especially if you can pay promptly.
• Get any agreed payoff in writing and a signed lien release once payment is made.
• If you received Medicaid, contact New Mexico Human Services Department early to get a statement of the repayment amount and the process to resolve it: https://www.hsd.state.nm.us/.
• If Medicare paid, request a conditional payment history through CMS before settlement: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Recovery/ConditionalPayments.
• Keep settlement communications clear: demand written payoff letters from all lienholders before agreeing to release funds.
• Consider placing disputed lien amounts into an escrow account so you can obtain the personal portion of the recovery while disputes are resolved.

If you want specific guidance about New Mexico lien statutes or how a particular lien will apply to your settlement, consult a licensed New Mexico attorney. For general access to New Mexico laws and statutes, use the New Mexico Legislature website: https://www.nmlegis.gov/. Again, this article is informational and not a substitute for legal advice.