How medical liens are verified and cleared on a Michigan personal injury settlement — FAQ

Disclaimer: I am not a lawyer and this is not legal advice. This article explains common Michigan procedures and options to help you understand the process and decide whether to consult a lawyer.

Detailed answer: Overview of the process

When you settle a personal injury claim in Michigan, medical providers, health insurers, Medicare, and Medicaid (and sometimes special programs or employers) may assert liens or subrogation claims against the settlement to recover payments they made for your treatment. Clearing those claims before or at settlement prevents later demands, lawsuits, or attempts to recoup money from you.

Step 1 — Identify potential lienholders

• Common lienholders: medical providers (hospitals, doctors), private health insurers, ERISA plan administrators, Medicare, and Medicaid (MDHHS).
• If you had health insurance or received government benefits, you should expect subrogation or recovery claims.
• Your attorney (or you, if not represented) should request a written list of all payors and providers who may have a claim.

Step 2 — Request written verification and itemized bills

• Ask each claimant for a written lien statement or demand letter showing:
• – Specific services provided and dates
• – Amounts paid and why they claim reimbursement
• – Any contractual discounts, write-offs, or payments already applied

Step 3 — Verify validity under Michigan law and contracts

• Not every bill becomes an enforceable lien. Validity depends on the payer’s contract rights, statutory authority, and whether proper notice or court approval is required.
• Michigan’s no-fault and personal-protection rules can affect medical payments in auto cases; see Michigan’s No-Fault statutes (Mich. Comp. Laws § 500.3101 et seq.) for background on personal protection benefits and coordination of benefits: https://www.legislature.mi.gov/mcl?MCL=500.3101.
• If Medicare or Medicaid paid for care, federal or state recovery rules often create stronger collection rights (see Medicare Secondary Payer and MDHHS third-party recovery links below).

Step 4 — Determine amounts that are negotiable vs. mandatory

• Private providers and insurers often negotiate (discounts are common). They may accept a percentage of billed charges or a lump-sum compromise.
• Medicare demands for conditional payments must be resolved through the Medicare Recovery process. Medicare can demand repayment for conditional payments made on your behalf (see Medicare process below).
• Medicaid (MDHHS) may have statutory recovery rights; the state can assert a claim against settlements to the extent it paid benefits.

Step 5 — Negotiate, obtain releases, and allocate settlement proceeds

• Typical practice: your attorney negotiates reductions with lienholders and obtains written payoff figures or releases before settlement.
• Sometimes, parties place contested amounts in escrow while disputes are resolved so the settlement can proceed without exposing the claimant to later claims.
• Do not sign a general release and take funds before resolving lienholders; a full release can allow payors to pursue you later if liens remain unpaid.

Step 6 — Close out formal procedures

• After payoffs, get written lien releases or satisfaction letters from each claimant and save them in your file.
• If court approval of settlement is required (for minors or certain structured settlements), ensure lien issues are addressed in the court papers so the court-approved distribution clears those claims.

Special processes to know

Medicare conditional payments (Medicare Secondary Payer)

If Medicare paid for treatment related to the injury, Medicare may seek repayment for conditional payments. You or your attorney should request a conditional payment report from the Medicare Recovery Contractor and then submit a settlement notification and a demand for a final conditional payment amount. The Medicare process:

1. Request conditional payment amount after tentative settlement.
2. Negotiate or pay the final conditional payment amount to obtain a release from Medicare.

More on the Medicare process: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Program-for-APortal and https://www.medicare.gov.

Medicaid / MDHHS recovery

MDHHS can assert recovery for medical assistance the state paid. Contact Michigan Department of Health and Human Services (MDHHS) Third Party Liability/Recovery unit to request a demand and to learn negotiation options. MDHHS information: https://www.michigan.gov/mdhhs.

Private insurer and provider subrogation

Private health plans and providers typically assert contractual subrogation or liens. Most will provide a written demand and often accept negotiated global payoffs. ERISA plans may have strong contractual recovery rights; ERISA litigation can affect timing and negotiation strategy.

How long does the process take?

There is no single answer. Typical timelines (estimates):

• Identification and written verification from most private providers: 2–8 weeks.
• Negotiation and payoffs with private providers or insurers: often 4–12 weeks, depending on willingness to compromise and complexity.
• Medicare conditional payment finalization: typically 3–12 months. In complex cases or where appeals/disputes arise, it can take longer.
• Medicaid/MDHHS resolution: often 1–6 months, depending on review queues and whether negotiations occur.
• If disputes go to litigation or require formal court resolution, expect months to years depending on complexity.

Because government payors (Medicare/Medicaid) are often slower and may require formal clearance, attorneys commonly place contested funds in escrow to allow a client to settle the liability case while preserving funds for payoffs. Using escrow or court-supervised distribution prevents delay of the overall case due to a single slow lienholder.

Practical checklist for claimants in Michigan

1. Compile all medical bills, Explanation of Benefits (EOBs), and health insurance correspondence.
2. Notify your health insurer and any government payor about the claim and settlement talks; request payoff figures in writing.
3. Ask providers for itemized bills and lien statements.
4. Do not sign a full-release or accept settlement funds until lien resolution or safe escrow arrangements are in place.
5. Consider hiring an attorney experienced in Michigan PI liens — they can often obtain larger net recovery for you even after paying lienholders.

Resources and links

• Michigan Legislature — No-Fault Act (background on PIP benefits): https://www.legislature.mi.gov/mcl?MCL=500.3101
• Michigan Department of Health and Human Services (MDHHS): https://www.michigan.gov/mdhhs
• Medicare Secondary Payer and conditional payment information: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Program-for-APortal and https://www.medicare.gov
• Michigan Legislature homepage (search statutes and specific acts): https://www.legislature.mi.gov

When to talk to an attorney

Speak with a Michigan personal injury attorney experienced with lien, subrogation, Medicare, and Medicaid recovery if:

• You have multiple lienholders or large medical bills;
• Medicare or state Medicaid is involved;
• Providers refuse to provide itemized bills or a payoff figure;
• You are unsure how a negotiated payoff will affect your net recovery.

Final practical tips

• Keep meticulous records of all communications and written payoff letters.
• Insist on written releases after payment to avoid future collection attempts.
• Use escrow or court-approved distribution when any lien amount is disputed.
• Remember timelines vary; plan settlement expectations with possible government payor delays in mind.

If you want, provide limited facts about your situation (who paid your medical bills, whether Medicare/Medicaid is involved, whether an insurance company already submitted a demand), and I can explain likely next steps and what documents you should gather before contacting a Michigan attorney.