Detailed Answer
When you recover a personal injury settlement in Texas, various creditors can assert liens against your recovery before you receive net proceeds. A lien is a legal claim that secures a debt out of settlement funds. Understanding common lien types helps you plan and negotiate effectively.
1. Medical Provider and Hospital Liens
Under Texas Property Code Chapter 55, hospitals and certain medical providers can file a statutory hospital lien on settlement proceeds for care related to your injury. See Tex. Prop. Code § 55.001-.010. To enforce this lien, the provider must timely record a lien affidavit in the county where treatment occurred.
2. Health Insurer Subrogation and ERISA Liens
If a private health plan or automobile insurer paid your medical bills, it may seek reimbursement (subrogation) from your settlement. Employer-sponsored plans governed by the Employee Retirement Income Security Act (ERISA) can assert federal liens. ERISA plans often require you to reimburse payments for injury-related care.
3. Medicare and Medicaid Liens
Federal law makes Medicare a secondary payer. Under 42 U.S.C. § 1395y, Medicare can claim reimbursement from your settlement for medical expenses it covered. Texas Medicaid also has lien rights under Tex. Hum. Res. Code § 32.035. The Texas Health and Human Services Commission enforces Medicaid liens for individuals over age 55 or in long-term care.
4. Workers’ Compensation Liens
If you receive workers’ compensation benefits for an on-the-job injury and also pursue a third-party claim, your employer or its insurer may file a lien for repayment. See Tex. Lab. Code § 408.102.
5. Child Support and Family Law Liens
Past-due child support or spousal maintenance obligations give rise to liens on settlement proceeds. Under the Texas Family Code, the Title IV-D child support program can withhold from personal injury settlements and assert a lien. See Tex. Fam. Code § 157.602.
6. Federal and State Tax Liens
The IRS or the Texas Comptroller may record liens for unpaid taxes. A Federal Tax Lien (26 U.S.C. § 6321) attaches to any right to settlement proceeds. State tax liens follow similar rules under the Texas Tax Code.
Before finalizing a settlement, your attorney should obtain and review lien statements, challenge improper liens, negotiate reductions, and ensure all valid claims are paid. This process safeguards your net recovery.
Helpful Hints
- Obtain lien statements early: Request subrogation and provider lien records as soon as liability is clear.
- Review billing details: Verify that charges are injury-related and correctly documented.
- Negotiate lien reductions: Many providers accept reduced pay-out percentages.
- Check Medicaid and Medicare claims: Confirm those liens before settlement deadlines.
- Consult an attorney: A knowledgeable Texas personal injury lawyer can structure your settlement to address liens properly.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney about your specific situation.