FAQ: How do I get approval to reduce a medical lien in a Montana personal injury settlement?

Short answer: In Montana, getting a medical lien reduced typically means identifying and documenting the lien(s), requesting itemized billing and proof of perfection, negotiating a reduction with the lienholder, and—if necessary—asking the court that is approving your settlement to authorize a compromise of the lien and direct distribution of settlement funds. You should keep lienable funds in escrow until all lienholders have been satisfied or until a court orders distribution. This article explains each step and the practical steps to improve your chance of a successful reduction.

Disclaimer: This is general educational information and not legal advice. For case-specific guidance you should consult a qualified Montana attorney.

1. Understand what a “medical lien” means in Montana

A medical lien is a claim by a medical provider, hospital, insurer, or government health program against any recovery you obtain from a third party who caused your injury. Montana statutes and common law govern how liens are created, perfected, and enforced. Consult the Montana Code Annotated for statutes and the local rules that may apply: Montana Code Annotated (MCA) Table of Contents.

2. Identify every possible lien or subrogation claim

• Medical providers and hospitals (they may assert liens or seek payment directly).
• Private health insurers (subrogation or reimbursement claims).
• Government programs such as Montana Medicaid (state subrogation) or Medicare (federal conditional payment).
• Auto insurers with medical-pay coverages or worker’s compensation insurers if related to a workplace injury.

3. Gather the documents you need

Before negotiating, collect:

• All medical bills and itemized statements.
• Any written lien notices, lien filings, or recorded liens.
• Proof of payments already made (by you or an insurer).
• Your settlement agreement offer or demand and the draft settlement paperwork.

4. Check whether the lien is valid and properly perfected

Not every asserted lien will be valid. Common defenses include:

• The provider did not follow Montana filing or notice requirements.
• The bills are duplicative, unreasonable, or not tied to the injury from the incident that produced the settlement.
• Statutory limits or priority rules reduce or extinguish the claim.

Review the MCA and local case law to confirm perfection rules and your rights: Montana Code Annotated. If you have Medicaid or Medicare involvement, additional federal or state rules may apply.

5. Ask for proof and negotiate

Common, effective negotiation steps:

1. Send a written request for an itemized statement and a written statement of the lien amount and basis.
2. Ask for lien documentation showing how the amount was calculated and whether any contractual write-offs or insurance payments apply.
3. Explain the settlement size and ask for a reasonable compromise. Providers often accept a percentage of billed charges (or an amount tied to what the insurer would have paid) to close the file.

Be prepared to explain your net recovery after attorney fees, costs, and other liens—this often helps in negotiations.

6. Use escrow and conditional disbursement

Do not distribute settlement funds until liens are resolved. Typical practice:

• Place the disputed portion (or all funds) in an escrow account or with the court.
• Get written agreements from lienholders that a negotiated amount will be accepted in full satisfaction once paid.

7. If negotiations fail, ask the court to approve a compromise

If a lienholder refuses to reduce and the settlement involves court-supervised funds (for example, a compromise of a lawsuit, a minor’s settlement, or when a judge must approve distribution), you can ask the court to approve a compromise of the lien. Typical steps:

1. File a motion or petition asking the court to approve the settlement and to authorize payment of a reduced lien amount or placement of funds in escrow pending resolution.
2. Attach the settlement agreement, copies of the lien statements, itemized bills, evidence of negotiation, and a proposed order directing distribution.
3. Serve all lienholders and interested parties with notice of the motion and the hearing.
4. At the hearing, present why the proposed reduction is fair and reasonable (e.g., evidence of usual-and-customary fees, insurance write-offs, inability to collect more, and the claimant’s need to retain net recovery after attorney fees and costs).
5. If the court finds the compromise reasonable, it will enter an order approving the reduced payout and directing distribution—this provides protection from later claims by that lienholder.

Montana courts have equitable authority to resolve claims to settlement proceeds; review the applicable court rules and relevant Montana statutes at the Montana Code site: https://leg.mt.gov/bills/mca_toc/.

8. Special rules: Medicare and Montana Medicaid

If Medicare paid for any treatment, federal rules require identifying and resolving Medicare conditional payments and coordinating with the Medicare Secondary Payer process; failure to do so can result in penalties. For Medicare conditional payment issues see the CMS site: https://www.cms.gov/.

Montana Medicaid (Medical Assistance) may also assert a recovery/subrogation claim. Contact Montana Department of Public Health & Human Services for instructions on how state claims are handled: https://dphhs.mt.gov/.

9. Finalize releases and get written lien satisfactions

After payment, obtain recorded releases and lien satisfactions in writing from each lienholder. Keep these with your settlement records. Verify any recorded lien is formally released or satisfied in the county records if it was recorded.

10. Practical timeline and costs

• Negotiations can take days to months depending on complexity and number of lienholders.
• When court approval is sought, allow additional time for filing, service, and hearing (several weeks to months).
• Costs may include attorney fees, costs of escrow, filing fees, and, if necessary, fees to retain experts to challenge reasonableness of charges.

Helpful Hints

• Document everything in writing: every demand, offer, and communication with a lienholder.
• Ask for itemized bills and proof of any payments or write-offs before agreeing to any amount.
• Keep settlement funds in escrow while negotiating or until a court orders distribution.
• If Medicare or Medicaid may be involved, notify the appropriate agency early to determine conditional payment or subrogation amounts.
• Consider the net recovery after attorney fees when negotiating—lienholders are often willing to accept a reduced sum to avoid costly collection litigation.
• Get any agreement to reduce a lien in writing and signed by the lienholder stating the reduced amount fully satisfies the claim once paid.
• When in doubt, consult a Montana personal injury attorney who handles lien negotiations and court petitions for lien compromises.

When to hire a Montana attorney

If liens are large, multiple, or involve Medicare/Medicaid, or if a lienholder refuses reasonable negotiation, hiring an attorney experienced in Montana personal injury and lien law will save time and reduce risk. An attorney can file motions, arrange escrow, negotiate releases, and obtain court orders that protect your net recovery.

Reminder: This article is informational only and does not constitute legal advice. For advice tailored to your facts, please consult a qualified attorney licensed in Montana.