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What is a Subrogation Lien and Why Do I Need to Reimburse My Insurance Company From My Settlement?

What is a Subrogation Lien and Why Do I Need to Reimburse My Insurance Company From My Settlement?

Personal Injury Claim and SubrogationInsurance companies enter into a contract with their insureds. In this contractual relationship, both parties benefit and rightly so. But when your insurance company pays for your loss, they may legally recover a portion, or all of their losses paid on your behalf by way of subrogation.

A subrogation lien is the process an insurance company uses to seek reimbursement from the responsible third party for money it has paid on the behalf of the insured. However, the English common law “Made Whole” doctrine provides that insurers and creditors shall not be made whole prior to their insured being made whole.

Indiana statute IC 34-51-2-19, commonly known as the Lien Reduction Statute, adds teeth and parameters to the common law doctrine. It states in part:

If a subrogation claim or other lien or claim that arose out of the payment of medical expenses or other benefits exists in respect to a claim for personal injuries or death and the claimant’s recovery is diminished:

(1) by comparative fault; or

(2) by reason of the uncollectibility of the full value of the claim for personal injuries or death resulting from limited liability insurance or from any other cause; the lien or claim shall be diminished in the same proportion as the claimant’s recovery is diminished.

Lien Reduction Statute: Recovery Lessened by Comparative FaultCall Charlie Ward at 317-639-9501

If the tortfeasor (party responsible for your damages) proves or is able to prove that you were, for example, 20% at fault for your damages, and your automobile insurance company paid the limits of your medical payment portion of your policy, totaling $10,000, your insurance company would be required under Indiana statute to reduce their medical payment subrogation lien by a minimum of 20% or $2,000. Based on the facts and the full set of circumstances surrounding your claim, a further reduction may be requested by your experienced personal injury attorney.

Lien Reduction Statute: Recovery Lessened by Uncollectibility of Injury or Death Claim

When you have finished treatment with your providers and it is felt that your condition cannot be improved further, you and your attorney will discuss and assign a reasonable value to your claim for damages based upon medical billings, loss of wages (past and future), future surgeries and treatments, impairment rating, pain and suffering and all other losses you may have incurred.

The following is an example of Uncollectibility:

Your claim is reasonably valued at $500,000. You settle for the limits of the responsible party’s liability insurance of $100,000. Therefore, 80% of your claim is uncollectible. In this example, both your auto insurance company and your health insurance company would be required by statute to reduce their lien by 80%. Under extreme circumstances, an experienced personal injury lawyer may be able to negotiate a further reduction of the lien amount or request waiving of the lien.

A Person Who Acts As His Own Lawyer…

In most circumstances it would be imprudent to endeavor to settle a claim for injuries without the advice and counsel of an experienced personal injury and wrongful death lawyer. Attorneys who represent injured or deceased persons on a daily basis are knowledgeable of current legislation, amended statutes, federal codes, and case law that will affect their client’s case and financial recovery.

Don and Charlie Ward have more than 85 years of combined experience in personal injury law involving motorcycle, automobile, bus, trucking and pedestrian accidents and wrongful death claims. Call Charlie Ward today at 317-639-9501 for a free consultation and evaluation of your claim.

Ward & Ward Law Firm
728 S Meridian St
Indianapolis, IN 46225
317-639-9501

Learn more about Indiana’s Comparative Fault Law.

The Indiana Hospital Lien Statute May Affect the Compensation You Receive for Your Auto, Motorcycle, Semi Tractor-Trailer Accident or Personal Injury Claim for Damages

History of Hospital Lien StatuteCall Charlie Ward at 317-639-9501

Indiana’s Hospital Lien Statute, IC 32-33-4, is designed to legislatively protect the financial interests of treating hospitals in accidents involving injury. When an injured party is taken to the hospital following a car, motorcycle, pedestrian or trucking accident, hospital administrators may instruct their attorneys to file a lien for hospital charges against any action, suit or claim which may be brought by the patient against the party or parties responsible for their injuries. The hospital is given a period of 180 days after patient discharge to file the lien with the county recorder’s office and an additional 10 days to serve notice by registered mail upon the Indiana Department of Insurance, claimant and claimant’s attorneys.There are several exceptions to Indiana’s Hospital Lien Statute including distributions paid from the supplemental state fair relief fund. For a list of others, see IC 32-33-4-3(b)(3).

How does the hospital statute affect your claim?

  1. Hospitals are given up to 180 days to “perfect” or file a hospital lien. An experienced personal injury attorney will not begin negotiating a claim until the hospital has asserted their lien or 180 days have lapsed without the hospital perfecting its lien.
  2. The statute provides that the claimant shall receive no less than 20% of their settlement. However, the hospital may pursue recovery of any remaining unsatisfied balance by any other legal means necessary.
  3. Payments made by health insurance shall be deducted from the total amount due. However, the hospital may assert a claim over and above payments received notwithstanding applied discounts contracted with health insurance carriers. If the hospital lien has not been fully satisfied after disbursement from proceeds of the settlement, the hospital may use any legal means necessary to recover the outstanding balance.

Update on Hospital Lien Statute

Since this article was written, the Hospital Lien Statute has been changed by legislators with the help of dedicated attorneys and the Indiana Bar Association. Medicare recipients have also benefitted under the new legislation.

Financial Effects of Hospital Lien Statute and Your Lawyer

An outstanding hospital lien, the result of a catastrophic injury, can bring about financial ruin at a time when wits are required to piece lives back together emotionally and physically. An experienced personal injury attorney will negotiate with all parties involved to secure a full hospital release before settlement is made. The attorneys of Ward & Ward, Charlie Ward and Don Ward, have over 80 years of combined experience in dealing with personal injury and wrongful death claims. We understand personal injury law and work on behalf of our clients to successfully resolve their legal claims.

Call Charlie Ward today for a free consultation at 317-639-9501.

Charlie Ward