Understanding Medical Liens and How They Affect Your Settlement in Tennessee

Short answer: A medical lien is a claim by a healthcare provider, hospital, or government payer to be paid from any settlement, judgment, or award you receive for an injury. In Tennessee, liens can reduce the amount of money you ultimately get from a personal injury settlement. You should identify all possible liens early, get itemized bills, and negotiate or resolve liens before closing your case to protect your net recovery.

Detailed answer — what a medical lien is, how it works in Tennessee, and what to do

What is a medical lien?

A medical lien is a legal claim against money you recover from a third-party (for example, an at-fault driver or a negligent business) for medical treatment paid for or provided to you because of the injury. The lien gives the provider or payer a right to be paid from your settlement or judgment before you receive the remaining proceeds.

Who can file a medical lien?

• Hospitals and medical providers who delivered emergency or inpatient care.
• Private health insurers and workers’ compensation insurers through subrogation or contractual reimbursement rights.
• Tennessee Medicaid (TennCare), which has a right to recover payments it made on your behalf.
• Federal programs like Medicare, which may seek reimbursement under federal law if it paid for care.

Where to find Tennessee law and government guidance

State statutory language and rules vary; for Tennessee statutes and to search for lien-related rules, use the Tennessee Code online at the Tennessee General Assembly website: https://www.capitol.tn.gov/. For TennCare (Medicaid) recovery rules see the Tennessee state site: https://www.tn.gov/tenncare.html. For Medicare’s recovery and the Medicare Secondary Payer rules, see the Centers for Medicare & Medicaid Services: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-overview.

How a medical lien affects your settlement:

1. Reduces your net recovery: Liens are paid from the settlement proceeds before you get paid. The more liens and higher the billed amounts, the less money remains for you.
2. May create negotiation points: Providers or payers often accept less than the billed amount. Negotiations can lower the lien amount, increasing your net recovery.
3. Can delay closing: Liens should be identified and resolved or escrowed at settlement. Unresolved liens can expose you to future claims and slow disbursement of funds.
4. May involve government repayments: TennCare and Medicare have statutory subrogation/recoupment rights. Their procedures and required documentation differ from private providers and can require formal claims processing.

Typical process in a Tennessee injury case

1. Immediately obtain copies of all medical bills, statements, and insurance explanations of benefits (EOBs).
2. Ask providers for written statements of liens and any policies about accepting reduced payoffs or settlements.
3. Identify government payers (TennCare, Medicare) and notify them. TennCare recovery is handled through state channels; Medicare recovery must be handled per federal rules.
4. Negotiate reductions with private providers and insurers. Many providers accept a percentage of billed charges or accept payment from the settlement escrow.
5. Insist on a written release when a provider agrees to accept a reduced amount. Get a signed lien release or satisfaction before final disbursement.
6. If a lien remains in dispute, consider placing the disputed portion in an escrow account or seeking a court order resolving priority and validity before disbursing funds.

Special considerations

• Medicare: If Medicare paid for treatment, it will often require reimbursement from the settlement. The Medicare Secondary Payer (MSP) rules are federal and typically require you or your attorney to report the settlement to Medicare’s Recovery Contractor and protect Medicare’s interests. See CMS guidance: CMS — Coordination of Benefits and Recovery.
• TennCare (Medicaid): Tennessee’s TennCare may place a lien or assert recovery rights for medical expenses it paid. TennCare has its own recovery processes—contact TennCare or your attorney early: TennCare.
• Workers’ compensation: If your injury also involves a workers’ comp claim, the workers’ comp payer may have a priority or lien against third-party recoveries; Tennessee’s workers’ compensation rules and lien priorities can affect negotiation and distribution.
• Attorney’s fees and costs: In many Tennessee personal injury cases the attorney’s contingency fee and litigation costs are deducted before lien resolution, but some liens claim entitlement to be paid before attorney fees. Your retainer should explain how lien payments will be handled.

What you should do, step-by-step

1. Collect documentation: Get all medical records, itemized bills, and EOBs.
2. Notify your attorney: Provide copies immediately so they can identify lien claimants and begin negotiations.
3. Ask for lien statements: Request written lien statements and contact information for each claimant.
4. Negotiate reductions: Many providers will accept less—ask for written releases when they agree.
5. Address government payers formally: Follow TennCare and Medicare procedures exactly; failing to do so may reduce your recovery and trigger penalties.
6. Protect yourself at settlement: Do not disburse funds until liens are resolved, released, or escrowed. Ask the court or opposing counsel to put disputed funds in escrow if necessary.

Helpful hints

• Start early. Identifying liens after you sign a settlement can create costly surprises.
• Get everything in writing. Written lien releases are your strongest protection.
• Ask providers for a global reduction. Many hospitals/medical groups have set reduction programs for settlement payoffs.
• Don’t ignore government payers. TennCare and Medicare take repayment seriously and have different rules than private providers.
• Consider escrow. If a lien is disputed, put the disputed portion in escrow rather than paying and hoping for reimbursement later.
• Read your retainer. Make sure your attorney explains how liens, fees, and costs will be paid from any recovery.
• If you are uninsured at the time of treatment, providers may be more willing to accept a reduced payoff.
• If you suspect improper or excessive billing, ask for itemized bills and audit them—duplicate or unrelated charges can sometimes be removed.

When to get legal help

If you have multiple lien claimants, governmental payers involved, or a large settlement, you should consult an attorney experienced in Tennessee personal injury and lien resolution. An attorney familiar with Tennessee procedures can help negotiate reductions, follow TennCare or Medicare processes, and protect your net recovery. If you do not have an attorney, consider seeking one early—most personal injury attorneys work on contingency and can help handle complex lien issues.

Resources

• Tennessee Code and statute search: https://www.capitol.tn.gov/
• TennCare (Tennessee Medicaid) recovery information: https://www.tn.gov/tenncare.html
• Medicare recovery / MSP guidance: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-overview

Disclaimer: This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. Laws and procedures change, and every case is unique. Consult a licensed Tennessee attorney for advice tailored to your situation.