Detailed Answer

Short answer: A lien on a personal injury settlement is a legal claim by a third party (commonly a health care provider, an insurer, or a government benefits program) against some or all of the money you receive from a settlement or judgment. Liens reduce the cash you walk away with unless they are paid, negotiated, or legally defeated.

What a lien is and why it matters

A lien is a recorded or asserted legal right to payment from a particular source of funds. In a personal injury case, the source of funds is usually the settlement or court award. Common lienholders include:

• Medical providers and hospitals who treated you and claim they are owed payment from your recovery.
• Your health insurer (including employer health plans). Through subrogation or contractual reimbursement terms, an insurer may demand repayment from your settlement.
• Medicare or Medicaid (state/federal health programs) that paid for your care and seek recovery under federal law.
• Your own attorney, who may have a charging or retaining lien to secure payment of fees and costs from your recovery.

How liens typically work in Washington

Washington law recognizes the general ability of providers and payers to assert liens or reimbursement claims against a plaintiff’s recovery. The exact procedures and enforceability can depend on the type of lien and whether the payer is an ERISA plan, a state Medicaid program, Medicare, or a private insurer. Federal law can control some claims (for example, ERISA-governed plans and Medicare), while state law and contract terms often govern others.

Useful official resources:

• Washington Revised Code of Washington (RCW) and administrative rules: https://apps.leg.wa.gov/rcw/
• Medicare coordination of benefits and recovery: https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery
• Washington Health Care Authority (Medicaid/Apple Health) information: https://www.hca.wa.gov/
• ERISA (federal rules that affect employer plans) — U.S. Department of Labor, Employee Benefits Security Administration: https://www.dol.gov/agencies/ebsa

How a lien could affect your recovery

Liens can reduce your net recovery in several ways:

• Direct reduction: The lienholder may be entitled to be paid a portion or all of your settlement dollars. For example, a hospital may assert a claim for outstanding medical bills and demand payment from settlement proceeds.
• Priority disputes: When multiple lienholders exist (medical providers, insurers, Medicare), you might need to allocate funds to satisfy some liens first. Priority can become a contested issue and may require negotiation or court resolution.
• Increased legal costs: Resolving liens often requires negotiation and documentation, which can increase attorney fees and costs from your case.
• Settlement delays or holdbacks: Opposing parties (or your own attorney) may insist on placing part of your settlement in escrow until liens are resolved, delaying your access to funds.
• Risk of later lawsuits: If you accept a settlement without addressing a valid lien, the lienholder (or a subrogee) could sue you later to collect, putting you at risk of additional liability.

Typical categories and special rules

Below are key categories and what makes each different:

• Private health insurer or ERISA plans: Many employer health plans have contract language or subrogation rights allowing them to be repaid from a third-party recovery. ERISA plans are often governed by federal law, which provides strong enforcement tools. Expect formal demand letters and a requirement to document how much the plan paid. Negotiation is possible; the plan may accept less than its full claim.
• Medicare and Medicaid (Apple Health): These programs have statutory recovery rights. Medicare can require repayment of conditional payments made on your behalf and will issue a demand for conditional payments tied to your settlement. Medicaid agencies also assert recovery rights under federal and state rules. Because federal law applies to Medicare/Medicaid, these claims often must be handled precisely to avoid penalties. Use the CMS and Washington HCA resources above to verify amounts and procedures.
• Medical provider or hospital liens: Providers may assert liens either by contract or under state law. Their ability to perfect a lien and the procedures to enforce it vary; some providers will record a lien or provide a written lien statement to the defendant’s insurer or to your attorney.
• Attorney liens: Your lawyer may have a charging lien (to secure fees and costs out of the recovery). Typically, fee arrangements are governed by your written contingency agreement and professional rules. Discuss with your attorney whether fees will be calculated on gross or net recovery and whether their lien will attach before other claims.

Practical steps to protect your recovery

1. Get a full itemized accounting of all medical bills and payments related to the injury.
2. Ask each insurer or provider for a written statement of any claimed lien or subrogation amount, including documentation of payments made.
3. Do not sign a release that ignores or admits to liens without confirming how they will be paid. Insist on a settlement agreement that identifies lien resolution procedures or requires lien waivers.
4. Consider asking for a holdback or escrow of disputed funds while you resolve lien claims so you can get the remainder of the settlement immediately.
5. Attempt to negotiate reductions. Many providers and insurers will accept less than the full billed or claimed amount (for example, accepting a percentage of billed charges or a proportionate share after attorney fees).
6. If Medicare or Medicaid may have paid, promptly check Medicare’s conditional payment records and follow CMS procedures to request a final conditional payment amount; failing to resolve Medicare claims can cause future demands or offsets.
7. Work with your attorney to confirm whether any lienholder is subject to federal ERISA preemption (this affects how claims are enforced and disputed).

Short example

Hypothetical: You settle a car crash case for $50,000. Your medical bills total $20,000, of which an ERISA employer plan paid $10,000 and a hospital claims the remaining $10,000. Your attorney’s contingency fee is 33% (about $16,500). If the ERISA plan asserts full repayment and the hospital demands full payment, and you pay both in full, your net after attorney fees could be only a few thousand dollars. But if you negotiate with the plan and hospital (or obtain a proportional reduction), you might lower repayment obligations and increase your net recovery. Medicare or Medicaid claims could further complicate the numbers and timing.

When you should get help

If any of these apply, consult a Washington personal injury attorney experienced with lien/subrogation issues:

• Multiple lienholders claim rights to your recovery.
• Medicare or Medicaid is involved and has made payments for your care.
• An insurer or provider demands repayment that seems excessive or undocumented.
• Your settlement is delayed because of unresolved liens.

Disclaimer: This information is educational only and is not legal advice. It does not create an attorney-client relationship. For advice about a specific situation in Washington state, consult a licensed Washington attorney.

Helpful Hints

• Document everything: keep copies of all medical bills, insurance Explanation of Benefits (EOBs), and letters about claimed liens.
• Get demands in writing: ask any entity claiming a lien to provide written proof of the amount and legal basis for the claim.
• Don’t ignore Medicare/Medicaid: federal programs often have strict timelines and formal processes for recovery.
• Negotiate early: many lienholders will accept a negotiated reduction rather than going to court.
• Ask about net vs. gross fees: confirm whether your attorney’s fee applies before or after lien payments—this affects how much you actually receive.
• Consider escrow: if parties won’t agree on lien resolution, ask to place disputed funds in escrow while you sort claims out.
• Get releases: once liens are paid or resolved, obtain written lien releases so you don’t face later claims.