Setareh Law
December 4, 2025
Winning your personal injury case brings relief after months of fighting for compensation, but then your health insurance company sends a letter demanding repayment for medical bills they covered. Many accident victims face shock when they discover their settlement must satisfy health insurance liens before they receive any money, reducing what seemed like fair compensation into a fraction of what they expected.
At Setareh Law, we protect our clients’ financial recovery by negotiating with health insurers to reduce liens and maximize the money you actually receive. Understanding how health insurance liens work helps you prepare for settlement discussions and avoid surprises when it’s time to collect your compensation.
What Are Health Insurance Liens?
A health insurance lien gives your health insurance company the legal right to recover money they paid for your medical treatment after an accident caused by someone else. When you receive medical care after a car accident, your health insurance pays your providers according to your policy terms. However, most health insurance policies include subrogation clauses that allow the insurer to seek repayment from any settlement or verdict you receive from the at-fault party.
The theory behind subrogation is straightforward. Your health insurance shouldn’t pay for injuries another person caused when that person’s insurance should cover the costs. Once you recover compensation from the responsible party, your health insurer asserts a lien to reclaim what they paid. Different types of health insurance create different types of liens with varying rules about when and how they must be repaid.
Different Types of Health Insurance Liens
There are several different types of health insurance liens. These are as follows:
Private Health Insurance Liens
Private health insurance companies assert liens under ERISA, the federal Employee Retirement Income Security Act. ERISA plans include most employer-sponsored health insurance and must be repaid when you settle your personal injury claim. These liens often contain language requiring full reimbursement regardless of how much you recover or whether you receive full compensation for your injuries.
Medicare and Medicaid Liens
Federal law requires Medicare beneficiaries to repay Medicare from personal injury settlements. Medicare tracks the medical expenses it pays related to your injury and asserts a lien for those amounts. California’s Medicaid program, Medi-Cal, operates similarly and maintains a lien on your settlement for benefits it provided. Both programs have sophisticated tracking systems and will pursue repayment aggressively.
Health Maintenance Organization Liens
HMOs often have different contractual arrangements than traditional insurance plans. Some HMO liens mirror ERISA requirements, while others may be subject to California’s Made Whole Doctrine, which provides more protection for injured parties. The specific terms of your HMO contract determine your repayment obligations.
How Liens Reduce Your Settlement
Health insurance liens directly decrease the amount you receive from your settlement. If you settle a truck accident case for $100,000 and your health insurance paid $30,000 in medical bills, the insurer will claim $30,000 from your settlement. After paying your attorney’s fees and costs, the lien further reduces what remains for your own recovery.
The timing of lien resolution affects your ability to receive settlement funds. Insurance companies and Medicare won’t release settlement checks until all liens are satisfied or an agreement is reached about how they’ll be paid. This means you cannot access your compensation until lien negotiations conclude, sometimes adding weeks or months to the settlement process. In cases where medical bills exceed the available settlement funds, liens can consume the entire recovery, leaving injured victims with nothing despite winning their case.
Negotiating and Reducing Liens
California law provides some protection through the Made Whole Doctrine, which prevents health insurers from recovering their full lien amount if you didn’t receive full compensation for all your damages. If your total damages were $200,000 but you only recovered $100,000, the insurer shouldn’t take their full lien because you weren’t made whole. Attorneys can negotiate with lien holders to reduce the amount owed based on this principle.
Federal ERISA plans may be exempt from California’s Made Whole Doctrine, but many ERISA plans will still negotiate reduced repayment amounts. The negotiation considers factors like the strength of your liability case, the percentage of total damages you recovered, and attorney’s fees and costs. For motorcycle accident cases or other claims involving serious injuries, the gap between total damages and recovery often provides leverage to reduce liens significantly.
Get Help Protecting Your Settlement From Health Insurance Liens With Setareh Law
Insurance companies don’t reduce liens automatically, and attempting to negotiate without legal representation often results in paying more than necessary. The personal injury attorneys at Setareh Law have recovered over $250 million for California accident victims while protecting their settlements from excessive liens. Our 60 years of combined experience includes negotiating with health insurers, Medicare, Medi-Cal, and ERISA plans to reduce what our clients must repay. We’ve earned over 400 five-star reviews by maximizing the compensation our clients actually receive after all liens are satisfied.
We handle all personal injury cases on a contingency fee basis, which means you pay nothing unless we recover compensation for your injuries. If you’re facing health insurance liens that threaten to consume your settlement, we can fight to reduce those liens and protect your financial recovery. Contact us today for a free consultation about your personal injury case and lien issues.
