FastCounsel

1. Identify and verify the lien

First, confirm who claims a lien and on what legal basis. Common categories:

• Statutory hospital or provider liens (filed under Vermont law).
• Contractual liens in provider agreements.
• Health-plan or insurer subrogation claims (including ERISA plans).
• Medicare or Medicaid conditional payment demands.

Ask the lienholder for a written, itemized statement showing dates of service, CPT or billing codes (if available), billed amounts, payments received, adjustments, and the current amount claimed. Verify that the lien was filed or served according to Vermont procedures. You can search Vermont statutes and lien rules at the Vermont Legislature website: https://legislature.vermont.gov/statutes/search?search=lien.

2. Determine priority and statutory rules

Different liens have different priorities. For example, a properly filed statutory hospital lien may have priority over some other claims, but priority rules and filing requirements vary. Confirm whether any Vermont statute governs the specific lien type; use the Vermont statutes search above and discuss findings with counsel. If a statute is cited, follow its notice, filing, and enforcement provisions carefully.

3. Gather settlement and coverage information

Providers often demand full billed amounts, but insurers and courts expect lien amounts to be reasonable and tied to what was actually paid or allowable under customary rates. To negotiate, assemble:

• The proposed settlement amount and how it will be allocated (past medicals, future medicals, pain & suffering, lost wages).
• Insurance coverage limits and available policy proceeds.
• Records of payments by third-party payors and patient responsibility balances.
• Information about Medicare or Medicaid involvement (see Medicare conditional payment rules at https://www.cms.gov/).

4. Negotiate a reduction

Most lien reductions occur by agreement. Common negotiation strategies:

• Ask for an itemized bill and proof of assignment or lien documentation.
• Argue for reduction to the provider’s actual collection or allowable rate, rather than the gross billed amount.
• Propose a percentage of the settlement (for example, splitting medicals pro rata with attorney fees and costs, or using a set percentage of the net recovery). Courts often view large liens that consume most of a plaintiff’s recovery as unreasonable.
• If Medicare/Medicaid may have paid, obtain a conditional payment amount or a Medicaid demand to avoid later recoupment claims.

Get any reduction agreement in writing and include a full release of lien language specifying the exact amount paid, who will be paid, and that the lienholder releases any claim to additional settlement proceeds.

5. If negotiation fails: seek court intervention

If the lienholder refuses a reasonable reduction and the lien materially impairs the settlement, you can ask a Vermont court to approve the settlement and determine lien priority or reasonableness. Typical steps:

1. File a motion or petition in the appropriate Vermont court asking the court to approve the settlement, allocate proceeds, and determine the lien amount or validity. In some cases, you may need to deposit disputed funds into court escrow while claims are litigated.
2. Provide the court with full documentation: the settlement agreement, lien statements, itemized medical bills, proof of payments, and any correspondence showing attempts to compromise.
3. Ask the court to enter an order approving a proposed reduction or directing distribution of funds. Courts balance the lienholder’s legal right to recover against the claimant’s entitlement to retain a portion of a common fund and fairness considerations.

Because procedures and required filings vary by court and by the type of lien, consult local court rules or an attorney. Vermont statutes and the Vermont Judiciary website are good starting points: https://www.vermontjudiciary.org/.

6. Protect against government payor recoupment

If Medicare or Medicaid paid for medical care, those agencies may assert a right of recovery. Before settling, check Medicare conditional payment records and resolve or escrow the conditional payment amount. Federal rules require survivors and claimants to address Medicare’s lien risk. See CMS guidance at https://www.cms.gov/.

7. Final steps: releases and documentation

Once you obtain agreement or a court order, do the following:

• Obtain a signed release from the lienholder stating the lien is satisfied when payment is made.
• Disburse settlement funds exactly as ordered or agreed (pay lienholder first if required, then outstanding medicals, attorney fees, costs, and client net recovery).
• Keep complete records of payments, releases, and court orders to prevent future claims.

Hypothetical example

Jane is injured in Vermont and reaches a $50,000 settlement. A hospital claims a $30,000 lien (billed amount). Jane’s attorney requests an itemized bill and shows that the hospital’s negotiated/allowable rate with insurers would be $12,000 and that no insurer paid more than $10,000. The hospital agrees to reduce the lien to $12,000 in exchange for prompt payment and a release. The settlement is allocated and distributed after the hospital signs the release. If the hospital refused, Jane could have moved the Vermont Superior Court to approve a reduced lien or deposit the disputed amount into court escrow while litigating the claim.

Helpful Hints

• Request an itemized bill and proof of lien in writing as soon as possible.
• Document all communications with lienholders and insurers.
• Confirm whether the lienholder accepted any payments from other sources (insurance, Medicare, Medicaid).
• Consider placing disputed funds in escrow or seeking a court order to protect the settlement while disputes are resolved.
• Watch for federal issues (Medicare, Medicaid, ERISA) that require separate procedures and possible repayment demands.
• Get any negotiated reduction in writing and obtain a full release before disbursing funds.
• Consult a Vermont attorney experienced in personal injury and lien resolution to evaluate court filing options and local practice.
• Check Vermont statutes and court rules for filing, notice, and enforcement requirements: https://legislature.vermont.gov/statutes.