Detailed Answer
When you reach a settlement for a personal injury claim in Alabama, any medical providers who treated you can assert liens or outstanding bills against your recovery. Under Alabama Code § 35-11-210, hospitals and certain medical services have a lien on any judgment or settlement you obtain. To protect your net award and avoid future liability, follow these steps:
- Identify all medical lienholders. Request an itemized statement from each hospital, doctor, therapist, ambulance service or other provider. Ask your attorney to check your medical records and billing ledger for any unpaid balances or lien notices.
- Verify the validity and scope of each lien. Under Ala. Code § 35-11-210, a hospital lien must arise from services rendered at the request of a physician or attorney in connection with the injury. Confirm the lien’s filing date and service dates to ensure the provider complied with statutory deadlines.
- Obtain a lien payoff statement. Ask each lienholder for a written payoff letter showing the total amount due. Include any interest, costs or collection fees. This document lets you calculate how much of your settlement must go toward medical expenses.
- Negotiate reductions. Many providers will accept less than the billed amount. Use the threat of nonpayment if you settle without resolving liens. Providers often agree to write off a percentage—for example, 30–50%. Document any reduction in writing.
- Allocate settlement funds strategically. Structure your release to pay lienholders first from the portion of your settlement designated for medical expenses. Preserve damages for pain and suffering in a separate category to maximize your net recovery.
- Address Medicare and Medicaid liens. If Medicare or Medicaid paid for your care, you must obtain a conditional payment letter from the Medicare Secondary Payer Recovery Contractor. Pay Medicare’s share before releasing funds. Failing to do so can trigger future clawbacks.
- Obtain lien releases. After payment, secure a written release or satisfaction of lien from each provider. Keep these on file to avoid future claims on your settlement.
Applicable Alabama Statutes
- Ala. Code § 35-11-210 – Lien for hospital and medical services
Helpful Hints
- Start lien verification as soon as you file your claim to avoid last-minute surprises.
- Keep detailed records of all communications and written agreements with providers.
- Work with your attorney to draft a settlement agreement that clearly allocates funds and discharges liens.
- Consider hiring a medical lien resolution service if you have multiple providers.
- Always obtain final lien releases before distributing settlement proceeds.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For guidance on your specific circumstances, consult a qualified attorney.