Detailed Answer
Before you can distribute settlement funds in a Michigan injury case, you must identify and resolve any outstanding hospital or insurer liens. Michigan law lets hospitals and auto no-fault carriers secure reimbursement from your verdict or settlement. Following these steps protects you from future claims and ensures you comply with statutory deadlines.
1. Conduct a Lien Search
Begin by reviewing your client’s medical records, insurance policies, and no-fault coverages. Then send written inquiries to each health provider and insurer. Ask for itemized statements and lien statements for all services related to the incident.
2. Obtain Official Lien Statements
Under the Michigan Hospital Lien Act (MCL 339.2701 et seq.), hospitals may file liens against any civil recovery. Request a lien statement showing:
- Total billed charges
- Amount paid
- Outstanding balance
- Date of lien filing
Link to MCL 339.2701: MCL 339.2701
3. Verify Lien Validity and Priority
Check that each hospital lien meets statutory requirements: the provider filed within six months of the last treatment date (MCL 339.2712) and properly notified all parties. Also confirm any no-fault insurer’s subrogation claim under Michigan’s No-Fault Act (MCL 500.3148). Prioritize liens by statutory rank.
4. Negotiate or Satisfy Liens
Many providers accept reduced payoffs. Send a written settlement offer and request a “lien reduction letter.” For auto no-fault insurers, contest unreasonable charges and negotiate around allowable fee schedules.
5. Secure Lien Releases
After payment, obtain a formal release from each lienholder. Under MCL 339.2716, hospitals must release liens within 30 days of full payment.
6. Finalize Disbursement
With all liens satisfied and releases in hand, allocate net settlement proceeds per the settlement agreement. Keep records of payoff letters and lien releases in your client’s file to protect against future claims.
Disclaimer: This article does not provide legal advice. Consult a qualified attorney for advice on your specific situation.
Helpful Hints
- Track all billing statements from the date of injury to settlement.
- Follow up in writing and keep copies of all lien correspondence.
- Work with providers known to negotiate lien amounts.
- Monitor statutory deadlines to avoid lien invalidation.
- Keep organized records of lien releases to prevent future disputes.