Understanding Medicaid Liens in Indiana Personal Injury Settlements

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.

Detailed Answer

When you receive Medicaid benefits in Indiana and later recover money from a third‐party personal injury claim, the Indiana Family and Social Services Administration (FSSA) can assert a lien to recover the cost of those benefits. These liens ensure the state recoups medical costs before you keep the remaining settlement or judgment.

1. Legal Basis for Medicaid Liens

• Federal law (42 C.F.R. § 433.136–138) requires states to seek reimbursement from any third‐party recovery for medical assistance provided.
• Indiana codified this in the Indiana Code: Title 12, Article 15, Chapter 17.1 (see IC 12-15-17.1).

2. How the Lien Attaches

Under IC 12-15-17.1-5 (State Recovery), the FSSA automatically has a lien on any third‐party liability settlement or judgment that covers medical expenses. This includes settlements from car accidents, slip‐and‐fall cases, or medical malpractice claims.

3. Notifying FSSA and Verifying the Lien Amount

1. Once you have a case number or demand letter, notify the Medicaid Recovery Unit in writing.
2. Request an itemized statement of the Medicaid benefits paid and any administrative fees. This request triggers a calculation of the lien amount.
3. Compare the FSSA’s itemization to your healthcare records. Confirm dates of service, provider names, and billed amounts.

4. Negotiating or Disputing the Lien

If you believe the lien is too high or includes services unrelated to your injury:

• Engage in good‐faith negotiations. Indiana recognizes equitable reductions when full reimbursement would leave you with no net recovery after attorney fees and costs.
• If negotiation fails, you can request an administrative hearing under IC 12-15-17.1-12 (Dispute Resolution).

5. Allocating Attorney Fees and Costs

Indiana courts typically allocate settlement funds under the funds recovery doctrine. You first repay medical liens, then deduct reasonable attorney fees and litigation costs, and finally distribute the remainder to you. Clarify the division with opposing counsel and the FSSA before final distribution.

6. Final Distribution and Lien Release

1. Obtain a written payoff statement from Medicaid showing the exact lien amount.
2. Include a clause in your settlement agreement that reserves funds to satisfy the lien.
3. After payment, request a lien release letter from FSSA to clear title to your remaining recovery.

Helpful Hints

• Keep detailed medical and billing records to verify lien accuracy.
• Start lien verification early—delays can slow your settlement.
• Ask for an itemized statement of services and administrative charges.
• Negotiate a reduction if full reimbursement leaves you with no net recovery.
• Consider engaging counsel experienced in Medicaid subrogation and lien disputes.
• Document all communications with FSSA in writing.
• Confirm receipt of the lien release before disbursing your funds.