Detailed Answer
When you settle a personal injury case in New Jersey, medical providers and insurers may claim liens on your recovery to recoup payments for treatment. A medical lien gives a provider the right to payment directly from your settlement. Understanding how to identify, validate and negotiate these liens helps you maximize your net recovery.
1. Identify All Potential Liens
Begin by asking each medical provider—hospitals, physicians, therapists—for a written affidavit of lien and an itemized statement of services. In New Jersey, hospital and provider liens arise under N.J.S.A. 2A:53A-7, which requires providers to file notice within 90 days of treatment. If a provider misses the deadline or fails to comply with notice requirements, you can challenge the lien’s validity.
2. Verify the Lien Amount
Review each bill for duplicate charges, erroneous services or unsupported fees. Compare billed charges against New Jersey’s fee schedules and usual-and-customary rates. Also check for any payments made by Personal Injury Protection (PIP) carriers; New Jersey’s no-fault statute N.J.S.A. 39:6A-4 grants PIP carriers subrogation rights.
3. Negotiate Reductions
Many providers will accept a negotiated lump-sum payment that is less than the billed amount. Draft a demand letter summarizing your offer and citing your review of the bills. Highlight any challenges to the lien’s timeliness or validity. Providers commonly reduce liens by 20–50% to avoid litigation.
4. Allocate Your Settlement Funds
Work with your attorney to draft a settlement agreement and distribution statement. Allocate funds first to the reduced medical liens, then to attorney’s fees, case expenses, and your net recovery. Ensure the agreement includes a lien release clause specifying that payment satisfies the provider’s claim in full.
5. Obtain Written Releases
Before disbursing any funds, secure signed lien releases or satisfaction letters from each provider and PIP carrier. This protects you from future collection efforts. Keep all release documents in your settlement file.
Helpful Hints
- Start lien identification early—missing a deadline can forfeit your defense.
- Request detailed, itemized bills to spot errors or duplicate entries.
- Use certified mail when sending negotiation letters to establish proof of receipt.
- Consider enlisting a medical billing advocate to review complex statements.
- Always get lien releases in writing before final distribution of settlement proceeds.
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.