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  • Writer's pictureReza Yassi

Defendant's Liability & Repayment in Medical Liens for Personal Injury Cases

Defendant's Liability & Repayment in Medical Liens for Personal Injury Cases

The intricacies of medical liens, specifically those involving Medicare and Medicaid, serve as a vital facet of personal injury litigation. This article aims to shed light on two critical aspects of medical liens: the potential liability defendants face and the repayment of these liens upon recovery. Recent court rulings provide valuable insights into these areas, shaping the landscape of medical lien litigation today.

Legal Obligations of Defendants:

Defendants, particularly insurers, must understand the potential liability they could face when dealing with Medicare and Medicaid liens. Awareness of these potential liabilities can influence their settlement approach and payment strategy.

According to Section 111 of the Medicare Medicaid SCHIP Extension Act, insurers must report when a settlement occurs and are responsible for reimbursing Medicare. Failure to disclose a settlement or repay a lien can give rise to a cause of action which can result in double damages.

In Wilson v. State Farm Mut. Auto. Ins. Co., the defendant insurer, agreed to a settlement with the plaintiff, but the plaintiff refused to cooperate with the insurer’s efforts to obtain information regarding the plaintiff’s medical lien. The defendant delayed compensation until it determined the amount of the lien. Upon receiving the lien information, the defendant satisfied and compensated the plaintiff. While the plaintiff asserted the defendant was acting in bad faith by failing to pay the plaintiff promptly, the court ruled in favor of the defendant as it deemed this course of action reasonable, safeguarding the defendant from potential liability.

The Pro Rata Repayment of Medical Liens:

Another key aspect of medical liens in litigation is the repayment of those liens upon recovery. The Medicaid Act precludes state agencies from imposing liens on portions of settlements not attributable to past medical expenses. That means that even if the total settlement is larger than the lien amount, a plaintiff must only repay the amount in the settlement allotted to past medical expenses.

In Arkansas Dept. of Health and Human Services v. Ahlborn, the Supreme Court ruled that Medicaid could only recover the part of a settlement representing past medical expenses, not the full amount paid by Medicaid. Similarly, in Wos v. E.M.A., the Supreme Court overruled North Carolina's statute, which arbitrarily assumed one-third of settlement proceeds to be compensation for past medical expenses.

Clarification on Repayment:

These court rulings clarify the amount due from plaintiffs in the event of a settlement. Understanding that repayment is explicitly tied to the portion of the payment allocated to past medical expenses can provide valuable insight to both plaintiffs and defendants.


Understanding medical liens in personal injury litigation is crucial. In these cases, both plaintiffs and defendants can benefit from a knowledgeable attorney. If you're faced with medical lien concerns, Yassi Law offers the expert advice and assistance needed to handle your case effectively.


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