Detailed Answer — How to Get a Medical Lien Reduced and Approved in Texas

Short answer: The basic process is (1) identify and verify any medical lien, (2) gather billing and payment records, (3) calculate what the lienholder can legally claim, (4) negotiate a reduction with the lienholder (often in writing), and (5) obtain a written release or court determination before distributing settlement funds. If a lienholder will not negotiate, you may need a court filing (declaratory judgment, interpleader, or contested hearing) to determine lien validity or amount.

Key legal reference: Texas has a statutory hospital-lien scheme. See Texas Property Code, Chapter 55 (Hospital Liens) for the rules about perfecting and enforcing a hospital lien: Tex. Prop. Code Ch. 55.

Step-by-step process

1. Identify all potential lien claimants

Ask your attorney or the settlement administrator for any liens, subrogation claims, or assignments. Common lienholders include hospitals, ambulance services, providers who placed a lien under the Hospital Lien Act, and government programs (e.g., Medicaid/CHIP) that have recovery rights.

2. Confirm whether the lien is valid and was properly perfected

Not every bill becomes an enforceable lien. For hospital liens, check that the lien was filed and perfected according to the Texas Property Code, Chapter 55. If a lien was not properly perfected, it may be unenforceable against the settlement.

3. Collect documentation

Obtain an itemized statement of charges, any insurance Explanation of Benefits (EOB), proof of payments or write-offs, and the lien claim documentation (notice of claim, affidavit, or recorded lien). These documents let you see what was billed, what insurers paid, and what remains claimed.

4. Determine what the lien can realistically recover

Look at actual payments and adjustments. Many providers bill a high “chargemaster” rate then accept reduced amounts from insurers. The amount a provider can fairly demand from a settlement often reflects what was actually paid or the reasonable value of services — not the full list price. If a government payor (Medicaid) or Medicare may have a recovery right, follow that agency’s repayment process.

5. Negotiate a reduction in writing

Negotiate early and in writing. Common negotiation points include:

• Reduction to a percentage of billed charges (or to a set dollar amount).
• Reduction based on insurer write-offs or Medicare/Medicaid allowable rates.
• Allocation agreement among lienholders, the injured party, and the attorney (who pays what portion of fees/costs).
• Agreement that the lienholder will accept a lesser amount in full satisfaction and provide a written release.

6. If the lienholder refuses, consider court resolution

If negotiations fail, your options include filing a declaratory-judgment action to fix lien amount, interpleader (if a neutral stakeholder holds the settlement), or asking the court to approve a settlement and resolve competing claims. A court can determine lien validity or issue a distribution order. Your attorney can advise the best path for your facts.

7. Get a written lien release or court order before funds move

Do not disburse settlement proceeds until you have either (A) a written satisfaction/release from each lienholder, or (B) a court order directing how to distribute the funds. Paying out without a release risks later collection against the injured party.

8. Document the distribution and preserve records

Keep a permanent record: settlement agreement, lien reductions/ releases, EOBs, disbursement checks, and court orders. If anyone tries to revive a lien later, this documentation is your protection.

Hypothetical example

Assume a client settles a car-accident claim for $50,000. Medical bills total $60,000, and the hospital claims a lien for $60,000. The client’s attorney has a 33% fee agreement. After reviewing bills and insurer EOBs, the attorney shows the hospital the insurer accepted $18,000 as payment-in-full from secondary coverage and Medicare rates would allow $12,000. The hospital agrees to accept $15,000 to release the lien. After attorney fees and reasonable costs are paid, the client receives the remainder.

When you need court involvement

Common situations requiring court approval include:

• Competing lienholders who cannot agree.
• Disputes about whether a lien was properly perfected.
• Settlements involving minors or conservatorships that require judicial approval of distribution.
• When a government payor asserts a statutory recovery right and will not negotiate.

Relevant Texas law

Hospital liens in Texas are governed by Texas Property Code Chapter 55. That chapter explains who may claim a hospital lien, how to perfect it, and the effect of a properly perfected lien. Read the statute here: Tex. Prop. Code Ch. 55.

Helpful Hints

• Get copies of all medical bills and insurer EOBs early. You cannot negotiate without them.
• Ask for an itemized statement showing self-pay amounts, insurer payments, and write-offs.
• Use insurer-paid rates and Medicare allowable rates as leverage in negotiations.
• Get every agreement in writing and require a clear release language that states acceptance is in full satisfaction of the lien.
• If a lienholder provides a reduction, confirm they will not re-file or attempt to collect later.
• Keep settlement funds in escrow until lien releases or a court order exist.
• If a government program (Medicaid) is involved, contact the appropriate agency to learn the repayment procedure and conditional payment rules.
• Consider hiring an attorney experienced in lien resolution — negotiations and court actions are technical and time-sensitive.

Final notes and disclaimer

This article explains typical steps Texans take to reduce and obtain approval for medical liens in personal-injury settlements. It is educational only and not legal advice. Laws change and every case has unique facts. For advice about your specific case and to protect your rights, consult a licensed Texas attorney promptly.