Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
When you negotiate a personal injury settlement in Michigan, various parties may assert legal claims—known as liens—against your recovery. These liens ensure certain expenses are repaid before you receive your net award. Common liens under Michigan law include:
1. Hospital and Medical Provider Liens
Under the Michigan Hospital Lien Act (MCL 333.20161), licensed hospitals and some physicians can record a lien for unpaid treatment related to your injury. They must file within 60 days after your discharge or last billed service. This lien attaches to any settlement funds up to the outstanding balance.
2. Medical Assistance (Medicaid) Liens
If you received Medicaid benefits for your injury, the Michigan Department of Health and Human Services can assert a lien under MCL 400.60. This lien applies to any settlement or judgment amounts. The state must be reimbursed for medical costs paid on your behalf.
3. Medicare Liens
Under federal law (Medicare Secondary Payer Act), Medicare has a right to recovery if it paid for your injury-related care. The Centers for Medicare & Medicaid Services (CMS) will issue a conditional payment demand. You must resolve CMS’s claim before distributing settlement proceeds.
4. Private Health Insurer Subrogation
Many private insurers include subrogation clauses in your policy. If they paid your medical bills, they can demand reimbursement from your personal injury recovery. The insurer typically negotiates the lien amount before settlement.
5. No-Fault Insurance (PIP) Reimbursements
Michigan’s No-Fault Act (MCL 500.3148) provides Personal Injury Protection (PIP) benefits for auto-related injuries. Your auto insurer may seek repayment of PIP benefits paid once you obtain a third-party recovery.
6. Workers’ Compensation Subrogation
If you received workers’ compensation for the same injury, the employer’s carrier may claim reimbursement under MCL 418.827. This lien must be satisfied from your settlement before you receive the balance.
7. Child Support and Alimony Liens
The Friend of the Court can place a lien on your settlement for unpaid child support or alimony under MCL 722.711. These domestic relations liens take priority over many other claims.
8. Attorney’s Charging Lien
Your attorney generally has a charging lien for unpaid fees and costs under MCL 550.157. This lien secures payment of contingency fees directly from the recovery.
9. Federal Tax Liens
If you owe federal income taxes, the IRS can file a lien against your assets, including settlements. A federal tax lien attaches when the IRS assesses and files a Notice of Federal Tax Lien.
Understanding these liens helps you plan for the net amount you’ll receive. Review each claim, verify amounts, and negotiate reductions where possible.
Helpful Hints
- Request lien payoff statements in writing before you settle.
- Check filing deadlines: many liens expire if not recorded timely.
- Negotiate lien reductions, especially with medical providers.
- Allocate settlement amounts clearly (e.g., medical vs. pain and suffering).
- Keep detailed records of all benefits your insurer or provider paid.
- Consult a qualified attorney to address complex subrogation issues.