How liens on a personal injury recovery work in New York

Summary: A lien is a legal claim someone may assert against the money you receive from a personal injury settlement or verdict. Liens can come from medical providers, health insurers (including Medicaid or Medicare), workers’ compensation, and others who paid for care or benefits related to your injury. These claims can reduce the amount you actually get. This article explains common lien types in New York, how they affect your recovery, and practical steps to protect your settlement.

Detailed answer: what a lien is and common New York lien types

A lien gives a creditor a right to be paid from the proceeds of your settlement or judgment before you receive the money. Liens attach to the compensation you obtain for the same accident or injury for which the creditor paid. In New York, common liens after a personal injury include:

• Medical provider liens: Hospitals, doctors, or clinics sometimes assert a lien to recover unpaid bills when they treated you for an injury. New York Lien Law governs certain provider liens; see New York Lien Law for statutory text and explanations: https://www.nysenate.gov/legislation/laws/LIE.
• Health insurer subrogation and reimbursement: Private insurers that paid medical bills may have subrogation or contractual reimbursement rights to be repaid from any settlement. Insurers often demand a portion of the proceeds to recoup payments.
• Medicaid (and other public benefit) liens: If New York Medicaid paid for your medical care or long-term services, the Medicaid program can require repayment from your settlement. Information about Medicaid third-party liability and recovery is available from the New York State Department of Health: https://www.health.ny.gov/health_care/medicaid/.
• Medicare conditional payment claims: If Medicare paid for treatment, the federal government (or its recovery contractor) may seek reimbursement from your settlement. See Medicare’s work on conditional payments and recovery: https://www.cms.gov/.
• Workers’ compensation liens: If you received workers’ compensation benefits for an on-the-job injury, the Workers’ Compensation Board may have a lien or reimbursement claim against a third-party recovery. See the New York State Workers’ Compensation Board: https://www.wcb.ny.gov/.
• Attorney charging lien or retainers: Your attorney may assert a charging lien for unpaid fees and costs against the recovery. That lien arises from the attorney-client relationship and usually requires written retainer terms.

How liens affect your net recovery

Liens reduce the money that lands in your pocket. Common effects include:

• Lower net proceeds: Total liens and fees are deducted from gross recovery, leaving you the remainder.
• Priority disputes: Multiple claimants may assert rights to the same funds. Priority can depend on statute, contract, or the order of court-approved claims.
• Settlement holdbacks: A defendant or insurer may refuse to fully release settlement funds until lien issues resolve. That can delay or change how funds are distributed.
• Negotiation and reduction: Many lienholders will negotiate for less than the full billed amount—especially where the claimant’s recovery is limited. Hospitals and insurers commonly accept reduced payoffs.

Typical process when a lien exists

1. You give a demand and settlement paperwork to the defendant’s insurer.
2. Known lienholders submit statements of their claims (amount owed, basis, documentation).
3. Your attorney requests payoff statements and negotiates with lienholders to reduce claims where possible.
4. If lienholders refuse to negotiate, your attorney may ask a court to allocate the settlement or hold disputed funds in escrow until resolution.
5. After payoffs, your attorney pays fees and costs, and you receive the net balance.

Key New York legal considerations

New York law recognizes various mechanisms for recovering payments made on your behalf and for asserting liens against recoveries. The New York Lien Law addresses liens and related procedures; review the statute here: https://www.nysenate.gov/legislation/laws/LIE. For public benefit repayment obligations, see New York State Medicaid guidance at: https://www.health.ny.gov/health_care/medicaid/. For workers’ compensation considerations, consult the New York State Workers’ Compensation Board: https://www.wcb.ny.gov/.

Note: specific statutory rules, time limits, and remedy procedures vary by the type of lien. A provider’s ability to assert a lien and its enforceability may depend on billing, notice, and how the treatment related to the injury was documented.

Practical steps to protect your recovery

Take these actions early and proactively to limit lien impact:

• Notify your attorney of all medical providers, insurers, and benefits programs that paid on your behalf.
• Ask for written payoff or lien statements from each potential lienholder. These should state the precise claim, legal basis, and amount.
• Check whether any public benefit program (Medicaid, Medicare) paid so you can address their recovery claims promptly.
• Negotiate aggressively. Many hospitals and insurers accept reductions when a claimant’s recovery is limited.
• Where lien allocation is contested, consider asking the court to approve the settlement and direct distribution from the registry or require escrow of disputed amounts.
• Keep clear records: bills, explanation of benefits (EOBs), correspondence, and retainer agreements.

When you should get a lawyer

If lien claims exist or you expect them, get an attorney experienced in New York personal injury settlements and lien resolution. A lawyer can:

• Obtain and evaluate lien statements.
• Negotiate reductions or seek formal judicial allocation.
• Protect client funds by requesting escrow or court approval when necessary.
• Ensure statutory repayment obligations (Medicaid/Workers’ Comp) are properly addressed so future claims don’t arise.

Helpful hints

• Always request written lien/payoff statements—verbal promises are not enough.
• Start lien resolution early; delaying gives lienholders time to assert stronger positions.
• Document which medical bills relate to the injury and which do not—only bills causally related are typically recoverable by lienholders.
• Ask whether a public-benefit program has a statutory claim; programs often require formal notification and a proper payoff demand.
• If you are offered a structured settlement or periodic payments, determine whether lienholders will take a lump-sum recovery or accept alternative arrangements.
• Know your attorney’s fee and how costs will be paid from the gross recovery before you sign a retainer.

Where to find more information: New York Lien Law: https://www.nysenate.gov/legislation/laws/LIE. New York State Medicaid: https://www.health.ny.gov/health_care/medicaid/. New York State Workers’ Compensation Board: https://www.wcb.ny.gov/. For federal Medicare recovery matters: https://www.cms.gov/.