Detailed answer

If you receive money from a personal injury settlement in Massachusetts, third parties who paid for your medical care (hospitals, doctors, insurers, MassHealth/Medicaid, Medicare, ambulance companies, rehab providers, etc.) may claim a lien, subrogation, or reimbursement right against the settlement. Clearing those claims before releasing settlement funds protects you from later lawsuits and from having to repay money out of pocket.

Step-by-step process (what typically happens)

1. Identify potential lien holders. Gather all providers and payers who treated or paid for your injuries: hospitals, physicians, urgent care, ambulance, rehab, private insurers, MassHealth (Massachusetts Medicaid), and Medicare.
2. Get full medical records and itemized bills. Your attorney requests itemized bills and records from each provider. Itemized bills show dates of service, CPT codes, and gross charges—necessary to evaluate any asserted lien.
3. Ask each potential claimant for a written statement of its claim. Request: basis for the claim (lien, subrogation, assignment), dates of service, amount claimed, any payments made by insurers, and contact information for the claims department or attorney representing them.
4. Check insurance payments and contractual write-offs. Providers’ bills often include large “list” charges that are reduced by insurer payments or contractual adjustments. You are only responsible for the net balance to the extent the law or contract requires reimbursement.
5. Determine priority and legal basis. Some claims (MassHealth, Medicare) have statutory subrogation or recovery rights; private health insurers may have contractual subrogation or equitable liens. Hospital statutory lien rules and MassHealth recovery rules can affect priority and process (see Massachusetts statutes and MassHealth guidance links below).
6. Negotiate reductions where appropriate. Most providers will accept less than the billed amount. Negotiation strategies include documenting insurer write-offs, showing inability to collect more from you personally, and using customary settlement-splitting practices (e.g., reduced percentage demands). A lawyer experienced with health-care liens can often negotiate substantial reductions.
7. Resolve Medicare and MassHealth claims early. Federal Medicare has the Medicare Secondary Payer (MSP) rules and may seek conditional payment reimbursement; CMS typically requires submitting a demand for conditional payments and may take weeks to months to issue a final amount. MassHealth has statutory recovery rights and a recovery unit—contacting them early avoids later surprise claims.
8. Obtain written releases and signed lien satisfactions. Before disbursing settlement funds, obtain a written release or lien satisfaction from each claimant. For MassHealth/Medicare, obtain written confirmation of the final amount to be paid and a release or assignment satisfaction.
9. Escrow and orderly disbursement. Commonly, settlement proceeds are placed in escrow with clear written instructions: attorney fees, litigation expenses, lien payments, and net recovery to the client. The escrow agent or settlement payer should not release funds until all release documents are in hand.
10. Record and retain documents. Keep copies of final lien releases, receipts, and the settlement statement. These documents protect you from future collection attempts.

Hypothetical example (illustrates key steps)

Hypothetical facts: You settle a car-crash case for $50,000. The treating hospital billed $30,000 and a private insurer already paid $12,000. MassHealth paid $6,000 for some of your care.

How this commonly plays out:

• Attorney obtains itemized bills and insurer explanations of benefits (EOBs).
• Hospital’s claim is reduced to a net amount because the insurer’s payment created contractual write-offs—hospital often will accept a negotiated lump sum (for example, 25–50% of its billed balance) depending on leverage.
• MassHealth will review and submit a demand for reimbursement for the $6,000 it paid; MassHealth’s recovery unit may negotiate or accept payment from settlement proceeds but will require written confirmation of the final resolution.
• After negotiating or paying reduced amounts, the attorney obtains signed releases, places funds in escrow, pays the claimants, and disburses the remainder to you.

Relevant Massachusetts law and government resources

Massachusetts statutes and state agencies govern some types of claims (MassHealth recovery; hospital responsibilities). Helpful official links:

• Massachusetts General Laws, Chapter 111 (public health and hospitals): https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXIV/Chapter111
• MassHealth (Massachusetts Medicaid) chapter and program information: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXVI/Chapter118E and MassHealth agency information at https://www.mass.gov/orgs/masshealth
• Medicare conditional payment and recovery guidance (federal CMS): https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery

Who usually has stronger claims?

Priority depends on the nature of the payer and contract/statute:

• MassHealth and Medicare have statutory recovery/subrogation rights and often stricter procedures—deal with them early.
• Private insurers generally assert contractual subrogation or reimbursement. Their enforceability can depend on plan language and whether ERISA applies.
• Hospitals and providers may assert liens or equitable claims; the enforceability and amount often depend on state rules, whether the provider already accepted insurer payments, and whether the provider recorded any lien.

Common pitfalls to avoid

• Do not pay lien claims without a signed release—an oral promise or partial payment can still leave you vulnerable.
• Don’t ignore MassHealth or Medicare demands—these agencies can pursue recovery after you receive funds.
• Avoid disbursing settlement funds until the amounts and releases are confirmed in writing.

How long does lien clearance take?

Timing varies by complexity and the claimant:

• Simple cases (one private provider, no government payers): 2–8 weeks if the provider issues a prompt written demand and negotiates quickly.
• Multiple private providers and insurers: 4–12 weeks is common while itemized bills and EOBs are obtained and negotiations occur.
• Involving MassHealth: 6–20 weeks is typical because MassHealth submits a recovery demand and may take time to review the settlement and issue a final amount.
• Involving Medicare: 3–12 months or longer. Medicare’s conditional payment and final demand process can be slow; you must obtain a final conditional payment demand or resolution from the CMS recovery contractor to avoid future liability.
• Disputes or litigation over liens: If a claimant sues to enforce a lien or the matter requires a court ruling, timeline can stretch many months to a year or more.

Bottom line: allow at least 60–90 days for typical multi-lien cases; plan for several months if MassHealth or Medicare are involved or if claimants dispute the amounts.

Helpful hints

• Hire an attorney early—clearing liens is technical and attorneys routinely handle escrow, negotiation, and communications with MassHealth and CMS.
• Gather itemized bills, EOBs, insurance cards, and any assignments or lien notices you received—these speed verification.
• Ask claimants for an itemized written demand and the statute or contract they rely on before negotiating.
• Preserve proof of insurer payments and contractual write-offs—these often reduce what a provider can legitimately claim.
• For MassHealth and Medicare, get written final payoff amounts and a release before any distribution.
• Use an escrow or settlement administrator to prevent accidental premature disbursement of funds.
• Don’t sign releases that waive your right to sue other responsible parties—make releases narrowly targeted to the paid claimant.
• Keep copies of all releases and receipts permanently—agencies and providers sometimes return months later to seek additional recovery.