Detailed Answer
Before you disburse settlement funds in Virginia, you must identify and resolve any hospital or insurer liens. Liens secure repayment for medical or insurance payments made on your behalf. Follow these steps to stay compliant with Virginia law and protect your client’s recovery.
1. Conduct a Comprehensive Lien Search
Request itemized bills and records from every medical provider involved in the treatment. Review your client’s insurance policies for MedPay or Personal Injury Protection (PIP) coverage. Consult public lien records maintained by the county clerk or the Virginia Department of Health. Early identification prevents surprises at closing.
2. Identify Statutory Hospital Liens
Virginia’s Hospital Lien Act (Va. Code §§ 8.01-66.1 et seq.) grants hospitals a lien on settlement proceeds when a patient is treated for injuries caused by another party. Confirm which providers recorded liens and the amount claimed.
3. Confirm Medicaid and Medical Assistance Liens
If your client received Medicaid, the Commonwealth may assert a lien for benefits paid. Under Va. Code § 32.1-325.5, you must notify the Department of Medical Assistance Services and allow time to file a lien. Calculate the lien amount based on the medical assistance disbursed.
4. Address Insurer Subrogation Rights
Insurers that paid medical expenses—such as auto MedPay or PIP—often have subrogation rights. Review policy terms and any subrogation letters. Determine whether the insurer’s claim attaches and whether you can negotiate for a reduction. Document all communications.
5. Provide Formal Notice and Demand
Under the Hospital Lien Act, you must send each lienholder a copy of the demand for payment and of any settlement documents at least 30 days before disbursement. Follow the statute’s notice requirements to avoid invalidating the lien.
6. Negotiate or Litigate Lien Amounts
Often, hospitals and insurers are willing to negotiate. Use itemized bills to dispute excessive charges. If lienholders refuse a reasonable reduction, consider filing a motion to adjudicate lien fairness in circuit court.
7. Obtain Satisfactions and Releases
Once liens resolve, secure written releases or satisfaction certificates from each holder. File them with the clerk’s office to clear the title. Only then should you disburse funds to your client and any remaining claimants.
Helpful Hints
- Start lien searches early to avoid delays at closing.
- Keep detailed records of all notices and communications.
- Use lien-resolution specialists for complex hospital claims.
- Negotiate reductions based on usual and customary rates.
- Consult the Virginia statutes directly for specific deadlines.
- Confirm that all releases are properly recorded with the clerk.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to address your specific situation.