After experiencing a personal injury, it can be very intimidating to hear the word 'lien' used by an insurance company. What does it really mean? How will it impact you? The personal injury attorneys at Lipkin & Apter have worked with clients throughout the state of Illinois and offer the following information to help you understand liens and your rights.
Imagine the following scenario:
While waiting in traffic at a red light, you get hit from behind and need medical treatment.
When all is said and done after your auto accident, your medical bills amount to $18,000. You speak with the insurance adjuster for the party that ran into you, and ask what you should do with your medical bills. You are surprised to learn that the defendant’s insurer will not pay the bills as they are incurred. Rather they will only consider payment of your medical bills at the end of your personal injury case. In the event of trial, this could mean waiting 2-3 years.
So you submit the bills to your own group health insurance provider (e.g. Blue Cross, Aetna, etc.) which pays the bills, but files a lien with your attorney for reimbursement, in the event you are successful with your case.
What does this mean?
A lien is a right by your insurance company to be reimbursed for payments it made on your behalf resulting from your accident. Why should you have to reimburse your own insurance company if you pay a monthly premium for health coverage?
Personal injury law does not permit anyone to receive a double recovery. You can’t have your health insurance provider pay your medical bills AND receive compensation from the defendant’s auto insurer that would include the amount of your medical bills (as well as, lost wages, pain and suffering, disability and other elements of provable damages).
If your insurance company has a right of reimbursement, how much will you have to repay? The answer is, not 100% of their payments. Under another legal doctrine called the Common Fund Doctrine, your insurance company will only be repaid if your attorney is successful in getting you compensation. In that event, your attorney is allowed to charge the insurance company a reasonable fee/expense, generally 33 1/3 % of the amount paid by the insurance company. In the example above, if your health insurance company paid $18,000 in medical bills, they would receive $12,000.
At Lipkin and Apter, this reduction is passed on directly to you, meaning that when we apply the Common Fund Doctrine, it is 100% for our client’s benefit. Assume a Lipkin & Apter attorney recovers a $75,000 settlement on your behalf, and your group health insurance provider has paid $18,000. You would receive $38,000 ($75,000 – 1/3 fee – $12,000), not $32,000 ($75,0000 – 1/3 fee – $18,000).
The experienced personal injury attorneys at Lipkin & Apter understand that it is the money you walk away with that counts most to you. Liens are an important part of that calculation. In any personal injury case, you should ask your attorney whether there are liens on your file. The earlier the better. That way, at the end of your case you will not be unpleasantly surprised by your “walk away” money.
The personal injury lawyers at Lipkin & Apter strive to involve our clients in all phases of the litigation process so that they can make informed decisions about their case. For more information about your personal injury rights, liens from insurance companies or to learn more about the experience our attorneys have working with clients across the state of Illinois, contact Lipkin & Apter. We offer free consultations for clients to help them and our legal team understand the complexities of each case.