"When Do I Get Paid? Understanding Liens on Your Settlement.
Why Your Settlement Check Isn't Always What You Expect: A Guide to Liens
One of the most common questions personal injury clients ask after a case resolves is simple: "When do I get my money?" It's an understandable question. A settlement is often the result of months, sometimes years, of litigation, negotiation, and patience. But before that settlement check can be issued, there is frequently one more step that has to happen first: resolving liens.
What is a lien?
In simple terms, a lien is a legal claim against your settlement proceeds. It usually comes from a government agency or an insurance company that paid benefits on your behalf, most often medical treatment related to your injury, and is seeking reimbursement out of your recovery.
This means the gross settlement amount, even after attorney's fees and case expenses, is not always the amount you walk away with. Before an attorney can release your proceeds, they have to account for and pay any valid liens against the recovery. Not every lien is automatically valid. Some liens include unrelated charges, and sometimes there is a legitimate dispute about whether a lien is enforceable at all. But when a lien is valid and directly related to the injury being claimed, it has to be resolved before funds can be distributed.
Common types of liens in personal injury cases
Medicare.
If Medicare paid for treatment related to your injury, it has a statutory right to be reimbursed. These are known as conditional payments: Medicare pays on the condition that it will be repaid if another party, such as the defendant or its insurer, later compensates you for that same claim. If a Medicare lien exists and isn't paid, Medicare can pursue the attorney directly, which is why these liens are always taken seriously. Reporting a case to Medicare, then waiting for a final conditional lien amount, is a process that takes real time, even after a case has already settled.
Medicaid.
Similar to Medicare, Medicaid is a public benefits program, and if it paid for treatment connected to your case, it will seek reimbursement. Medicare often reduces its lien by roughly a third to account for attorney's fees and costs. Medicaid typically does not offer that same reduction and generally seeks full reimbursement of what it paid.
Workers' compensation.
If you were injured on the job and received workers' compensation benefits, the carrier will assert a lien against any related third party lawsuit. Importantly, you need written permission from the workers' compensation carrier before accepting a settlement in that third party case, to make sure their interests are protected. If the settlement isn't enough to fully satisfy the comp lien, your attorney may be able to negotiate a reduced payoff with the carrier.
Private health insurance.
Most health insurance plans include a subrogation provision, often buried in the summary plan description you received when you enrolled. This provision allows the insurer to seek reimbursement for benefits it paid if you later recover money from a third party for the same injury. If this type of lien goes unpaid, an insurer can withhold future benefits until it's resolved. Whether a specific health insurance lien is enforceable can vary, so it's worth discussing with your attorney rather than assuming it must be paid in full.
Why this process takes time, and why it's worth the wait
After a case settles, it's natural to want your money right away. But lien resolution can take weeks, sometimes months. Attorneys have to formally request a final lien amount from each lien holder, and agencies like Medicare and Medicaid are often understaffed relative to the volume of claims they handle. There isn't much to do at that stage besides following up persistently.
This isn't just red tape. It protects you. The alternative, receiving your settlement and then being asked to repay money weeks or months later because a valid lien wasn't accounted for, is a far worse outcome.
What you can do to help the process
Tell your attorney about every source of benefits you've received related to your injury: Medicare, Medicaid, workers' compensation, or private health insurance. Provide claim numbers and a copy of your insurance card early, so your attorney can start the reimbursement inquiry well before your case resolves.
There's also a strategic reason to get lien amounts early: they can strengthen your negotiating position. A lien is a hard, documented economic number that has to be repaid out of the settlement. All else being equal, a case with a $100,000 medical lien is worth more in negotiations than an identical case with no lien, because that repayment obligation is factored into what it will actually take to make the client whole.
A good personal injury attorney identifies these liens early and uses them as part of the settlement strategy, not as an afterthought once the check is ready to be cut.
Liens can be frustrating and confusing, and they can delay a settlement client is anxiously waiting for. But when they're identified early and resolved carefully, they protect the client's outcome both during negotiations and after the case is closed.
If you have questions about a pending settlement or a lien on your case, our office is here to help. We represent clients throughout New York City and New York State in personal injury matters.
Kramer, Dunleavy & Ratchik. Real bow ties, real results.
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