FastCounsel

Detailed Answer

If you are about to settle a personal injury claim in Michigan, you must identify and resolve any medical liens before distribution of settlement money. A medical lien means a health care provider, insurer, or government program claims a portion of your recovery to be repaid for medical treatment related to the injury. Common lienholders include hospitals, doctors, ambulance companies, private health insurers (subrogation), Medicare, and Michigan Medicaid (MDHHS).

Follow these practical steps to find and resolve liens:

1. Collect all medical providers and bills. Gather every medical bill, provider name, account number, and dates of service. Ask your treating providers for itemized bills and statements that show unpaid balances. This creates a paper trail you and your settlement administrator or attorney will need.
2. Check health insurance and no‑fault coverage. If you have private health insurance, review Explanation of Benefits (EOBs) and insurer correspondence for subrogation or reimbursement claims. For automobile accidents, Michigan’s no‑fault system can affect who paid and who has a claim for reimbursement. For general information about Michigan statutes and codes, see the Michigan Legislature website: https://www.legislature.mi.gov/.
3. Search government liens (Medicare and Medicaid). Medicare or Medicaid may have conditional payment or recovery rights. Before settling, check whether Medicare has paid any conditional medical costs; CMS requires notification and may seek reimbursement. Visit the Centers for Medicare & Medicaid Services: https://www.cms.gov/ and Michigan Department of Health and Human Services for state Medicaid information: https://www.michigan.gov/mdhhs/.
4. Ask for written lien statements or subrogation demands. Request from each provider or insurer a written statement that identifies the amount claimed, the basis for the claim, the relevant account or policy number, and the person to contact for resolution. These documents are essential for negotiation and for verifying whether amounts are duplicative or already paid.
5. Verify balances and possible reductions. Medical bills frequently include higher “chargemaster” amounts than a provider will accept in a settlement context. Many providers will accept a reduced lump‑sum payoff if you or your attorney negotiate. Also verify whether the provider already accepted payment from your insurer; duplicate claims sometimes occur.
6. Identify statutory or contract priorities. Some liens or reimbursement claims take priority (for example, certain governmental liens or workers’ compensation employers). Review any policy subrogation language and, if applicable, workers’ compensation liens. If your claim involves Medicare or Medicaid, federal and state recovery rules may apply.
7. Negotiate written payoff agreements. Before disbursing settlement funds, obtain a written lien release or payoff letter from each claimant. A payoff letter should state exactly how much will be accepted to release the lien and confirm that no further claim will be made against the settlement proceeds. Keep copies of every release and invoice.
8. Allocate the settlement in writing. If your settlement agreement contains a breakdown (e.g., money for medical expenses, lost wages, pain and suffering), use that allocation to show how much was intended for medical costs. Clear allocation can help limit some subrogation claims and is often required by insurers or government payors when evaluating recoverable amounts.
9. Escrow disputed amounts when necessary. If a lienholder claims an amount you dispute, consider placing disputed funds in escrow or obtaining a court order before distributing the remainder. This protects you from later claims while allowing you to complete the transaction.
10. Use an attorney when liens are complex. If multiple providers, Medicare/Medicaid, ERISA plans, or workers’ compensation liens are involved, an attorney experienced in Michigan personal injury settlements can negotiate reductions, structure releases, and handle required notices. Attorneys also commonly handle required reporting to Medicare’s systems and to private subrogated insurers.
11. Document final releases and disbursements. After payment, get written confirmation that liens are satisfied and make sure releases are recorded or filed if necessary. Keep all records in case a provider later claims an unpaid balance.

Relevant state resources: Michigan’s legislative site lists statutes and codes for laws that may affect liens and insurance matters: https://www.legislature.mi.gov/. For state Medicaid recovery rules and contacts, see MDHHS: https://www.michigan.gov/mdhhs/. For federal Medicare conditional payment questions and reporting, see CMS: https://www.cms.gov/.

Timing and special considerations

• Minor settlements or conservatorships: Michigan law and court rules often require court approval for settlements involving minors or incapacitated persons. The court will review lien resolution and may require funds to be held or disbursed under supervision.

• Workers’ compensation: If the injury is covered by workers’ compensation, the employer or insurer may have a lien or reimbursement claim. These claims follow separate rules and may reduce the personal injury recovery.

• ERISA and private plan subrogation: If a private ERISA plan paid your medical bills, it may assert subrogation rights. ERISA plans often have the power to recover from settlements; the plan’s terms and recent case law affect how much the plan can recover. Challenges to ERISA subrogation require careful legal analysis.

• Medicaid estate recovery: Michigan may seek recovery from settlements in certain circumstances. Contact MDHHS if Medicaid paid benefits related to the injury.

Helpful Hints

• Start early: identify potential lienholders as soon as you consider settlement to avoid surprises at closing.
• Get everything in writing: demand letters, payoff quotes, releases, and allocation clauses reduce later disputes.
• Check for duplication: multiple providers may bill for the same service. Verify EOBs and payments before paying a lienholder twice.
• Negotiate: many hospitals and providers accept significantly less than billed amounts for one‑time lump‑sum payments.
• Escrow disputed funds rather than paying a questionable claim outright.
• Report Medicare conditional payments promptly; failing to do so can cause CMS to seek repayment later.
• Document the settlement allocation; clear allocation between medicals and non‑economic damages can limit some reimbursement claims.
• Consider using a qualified attorney when multiple lien claims, government payors, or complex subrogation issues are present.