Disclaimer: This article does not constitute legal advice. It provides general information about New York law. Consult an attorney for guidance on your specific situation.
Detailed Answer
When you negotiate a personal injury settlement in New York, medical providers and insurers may assert liens or demand payment of outstanding bills from your recovery. Here’s how to address those claims effectively:
1. Identify All Potential Lienholders
- Private hospitals, urgent care centers, and physicians. They often ask you to sign an assignment of benefits giving them a right to payment from your settlement.
- Health insurers (including ERISA plans). They can seek reimbursement for amounts they paid under their subrogation rights.
- Government programs such as Medicare or Medicaid. They maintain statutory liens and must be repaid before you resolve your claim.
2. Obtain Written Lien Statements
Request an itemized, written statement from each provider or insurer showing:
- Exact charges and payments made
- Date and nature of each service
- Any discounts or write-offs
3. Review Reasonableness of Charges
Under New York Public Health Law §2805-u, courts cap excessive charges for diagnostic and treatment services in medical malpractice actions (PHL §2805-u). While that statute applies to malpractice, many judges use its guidelines to evaluate reasonableness in personal injury settlements. If a provider’s billed rate far exceeds customary local rates, you can negotiate a reduction.
4. Negotiate or Challenge Lien Amounts
- Negotiate directly: Ask providers to accept a percentage of their billed amount as full satisfaction.
- Move for court direction: If a lienholder refuses to negotiate, you can ask the court under CPLR §5049 for instructions on distributing settlement proceeds (CPLR 5049).
- Escrow funds: Place disputed lien amounts in escrow pending resolution, then release the rest of your settlement.
5. Structure Your Settlement Offer
Present your total settlement demand as a gross figure, then break out:
- Attorney’s fees (typically one-third of gross recovery)
- Lien payments (list each lienholder and proposed pay-out)
- Net amount to you
This transparent format helps insurers and opposing parties understand how you plan to allocate funds.
6. Obtain Lien Waivers and Releases
After payment, secure written waivers or releases from each provider and insurer. These documents confirm they won’t pursue you again for the same bills.
Helpful Hints
- Keep all medical records and bills organized. Detailed records strengthen your negotiating position.
- Get lien statements early. Providers sometimes have tight deadlines for asserting liens.
- Check government program lien notices. Medicare and Medicaid enforce strict repayment rules.
- Consider a settlement holdback. Reserve a small portion of proceeds for unexpected bills.
- Use plain-language letters. Clear, polite demands often lead to faster resolutions.
- Consult a personal injury attorney. They know local practices and can streamline lien negotiations.