Negligence Lawsuits and Health Insurance Liens

When we speak to a potential client, we always ask:

  • “Is your loved one receiving Medicare or Medicaid benefits?”
  • “Is your health insurance provided by your employer?”
  • “Were you injured on the job?”

The answers affect every case we file.


If you are 65-years-old or older, then you are entitled to Medicare insurance coverage through the federal government. Often without your knowledge or notice, Medicare will be billed for and pay for a portion of your medical care and treatment. Medicare may even pay for a portion of your nursing home stay.

In any lawsuit you file where you seek repayment for medical care necessary as a result of another’s negligence, Medicare has a right to seek repayment for the services they paid for on your behalf.

Example: Edna, age 65, falls on an open can of soup at her local grocery store. The store manager calls 911 when Edna is unable to walk and the ambulance arrives. The rescue squad takes Edna to Local Community Hospital where Edna is evaluated in the emergency room. She is admitted to the hospital when her doctors realize she has fractured her right hip and requires surgery. Edna has surgery and two days after surgery she is discharged to a nursing home for rehab after the hip surgery.
If Edna files a lawsuit against the grocery store for negligence and personal injury and recovers $25,000, Medicare will seek repayment of any monies paid on her behalf for injuries related to the fall. Under Federal law, Medicare does not have to provide Edna notice that they plan on seeking repayment. See 42 CFR §411.26.

But how much will Medicare seek in repayment?

Sadly, we cannot answer that question for Edna or her family. Each lien is determined on a case by case basis. By law, Medicare should reduce their demand, taking into consideration there were costs with filing a lawsuit or seeking a settlement (including attorneys’ fees, expert’s fees, etc.).

But what if the ambulance bill was $400; Emergency Room $2000; Surgery $8000; Four day hospital Stay $7000; and twenty days in the Nursing Home getting rehab, $4000. Medicare will have paid at least $21,400.00 for Edna’s care, and effectively can take almost every penny of her $25,000 settlement after attorneys’ fees and costs.

Therefore, we warn clients from the beginning that there may be a potential lien on the settlement proceeds and we will not know how much until the end.


In Virginia, and most other states, programs exist to provide health care for those who cannot afford it. There is no age limit to Medicaid, but rather an income cap.

Medicaid also has a right to seek repayment for monies paid on behalf of a beneficiary. If you file a lawsuit against a nursing home, doctor, or even as a result of a car accident, and if Medicaid paid for a portion of your care, they will seek repayment.

Here is the real-kicker: both Medicaid and Medicare can seek repayment on the same lawsuit. So if Edna in the above example was on disability or had an income qualifying her for Medicaid benefits, Medicare could seek a lien for the $21,400 it paid, and Medicaid could do the same if it paid any of her related bills.

Other Possible Liens

If you receive health insurance benefits through your employer as a result of a qualified ERISA plan, the plan will likely be entitled to reimbursement if you are successful in pursuing a claim against a negligent party.

It is very important to discuss these issues with your attorney.


Our office staff spends weeks after a case has concluded trying to work with Medicare and Medicaid on liens. Sometimes they are more than we anticipate and on good days, they are less. But the existence and amount of liens is always a factor in our discussions on whether to take a case.

If you know the lien could be overwhelming, sometimes legal action is not the appropriate choice.

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