Lien Management Best Practices

A personal injury lien is a legal right to receive a portion of the plaintiff’s settlement, typically to reimburse third parties for services rendered. Lienholders can include the state and federal government, health insurance companies, medical providers and third-party medical funding companies, like Gain.

In a single personal injury case, there may be multiple lienholders. Health insurance companies, for example, may issue a lien against the at-fault party to recover any money they spend on treatment as a result of an accident. This is known as subrogation, or the substitution of one person or group by another in respect to a debt or insurance claim, accompanied by the transfer of any associated rights and duties.

Insurance providers with subrogation claims can seek repayment from plaintiffs settlements; although, it is important to note, some states prohibit subrogation clauses altogether in health insurance policies. Medical providers who provide medical treatment may also issue a lien on a case and provide services under a letter of protection (LOP), which states that the balance of all unpaid medical bills will be paid upon resolution of the personal injury case.

In short, any group, organization or entity that provides services on contingency to a plaintiff, no matter what they are, can become a lienholder in that plaintiff’s case.

Lien Confirmation

Because there can be so many lienholders in an individual case, it is important for lienholders to confirm their lien agreements with the plaintiff’s attorney. Even after a lien agreement has been signed and put on file, which means something different for every firm, it is important for lienholders to confirm their liens and to follow-up on the case regularly. Because personal injury cases can take months or years to settle, proactive and diligent lien management is critical.

Not only can there be dozens of lienholders in any one case, any one plaintiff attorney can be working on a number of personal injury cases. And, despite digital transformation efforts within the industry, oftentimes, plaintiff attorneys are still relying on paper filing, verbal conversations and outdated computer systems. Ultimately, it is up to the lienholder to follow-up on what they are owed. Often, a case may settle without all lienholders being properly informed of the settlement.

In brief, here is how lien confirmation works:

The lienholder confirms the attorney is a reliable escrow agent and that there is a legal agreement in place for the lien.

Within a few days or a week of services being provided, the lienholder confirms the following with the plaintiff’s attorney: the plaintiff’s name, the service provider’s name, the type of servicing (financing, surgery, etc.), the date services will be or have been provided, and that all of this information, i.e. the lien, is on the plaintiff’s file.

Confirming and tracking the status of a lien is essential to ensure proper recovery. As a lienholder, it is a good idea to create a regular follow-up schedule and to be diligent about confirming the lien is still associated with the plaintiff’s file.

At Gain, we have developed an AI-powered platform to track and manage all LOPs and liens. Because a lien can be arranged before services are provided, the lien is not officially in place until it is executed on all sides. Meaning, service providers can obtain written acknowledgement of their liens ahead of services being provided, whether that be medical services or funding to plaintiffs, but they do not technically have a lien until services are actually provided.

It is not uncommon for plaintiffs or service providers to change their minds or alter provisions of the services after a lien agreement has been verbally discussed, which is why confirmation and follow-up after the fact is necessary. A lien has been fully executed when service has been provided, for example the plaintiff has received treatment or has been advanced money.