What is a Lien on a Personal Injury Lawsuit?

If you owe creditors– often healthcare providers– money from your personal injury, they may put a lien on your award. It stays on the settlement until the debt is paid. You cannot access the rest of the funds until it is resolved.

The effect of this on a personal injury settlement is that the award amount is reduced, often significantly. Sometimes, paying off the lien can result in the client receiving little or nothing out of the settlement.

The attorney has a duty to the client to let them know how a lien affects a settlement– before accepting a final offer. Once the calculation is made, the plaintiff’s lawyer can fight so that their client receives additional compensation to mitigate this.

If you were seriously hurt due to another party’s negligence, a New York City personal injury lawyer at Douglas and London could help you receive the maximum compensation for your injuries. We will also investigate whether your settlement has liens. Because they are often complicated, resolving them is not something clients should do by themselves.


Liens on a personal injury settlement are not that different from liens placed on real estate or other assets. The entity placing the lien has the right to repayment.

When it comes to a personal injury lawsuit, there is never a guarantee of a fair settlement or damages awarded by a jury. That means there is a risk that the entities owed money are not paid. These are known as contingent liens. Just as personal injury attorneys work on a contingency basis and do not receive payment unless their client receives compensation, lienholders also risk not receiving payment if the plaintiff is not compensated.  

Potential Lienholders

Lienholders, the parties to whom you owe part of your settlement, might include:

  • Hospitals, doctors, and clinics
  • Health or car insurance companies
  • Medicare or Medicaid
  • The Veterans Administration

Anyone injured in an accident who does not have health insurance coverage will likely have signed a letter of protection from the healthcare provider before receiving treatment. Most people are not in any condition after an accident to read the document in depth or ask questions. If possible, send a copy of the letter of protection to your attorney for review before signing it.

Even if the injured party did not sign a letter of protection, under New York law, healthcare providers have such lien rights. Accident victims on Medicare or Medicaid must know that these government programs have the legal right to place liens on personal injury settlements if either agency paid for their care.

Rather than have the client report the settlement to Medicare or Medicaid, your attorney’s office can file the report. Failure to report settlements to Medicare, Medicaid, or a private health insurer puts the plaintiff at risk of losing insurance coverage.

Lien Negotiations

There are circumstances under which an attorney may negotiate with lienholders to accept a lesser amount than they are owed. After all, lienholders want to get paid. A dedicated personal injury lawyer keeps the lienholders in the loop as the case goes forward. When they are kept up-to-date on the progress of the case and its assessed value, negotiation is more likely.  

While a lawyer can negotiate with a lienholder, once the judge approves the lien, the client must repay the debt at the stated amount.

Contact a New York Personal Injury Lawyer

After suffering a personal injury because of another’s negligence, it is crucial to seek legal representation as soon as possible. An experienced personal injury lawyer at Douglas and London will negotiate a fair settlement with the insurance company or the defendant. While most personal injury cases are settled, our seasoned trial lawyers will take your case to court when necessary.

Arrange a free consultation by calling or texting 24/7 or submitting our online contact form. We will review your claim, determine whether you have grounds for a lawsuit, and let you know your options.