If you’ve been in a car accident, your first focus should be on healing from your injuries. Unfortunately, getting help for car crash injuries comes at a price. In America, the average total medical costs after an accident can range anywhere from $20,000 to $100,000.
Some people believe that this is no big deal because the victim can file a personal injury claim. If they win, they get to keep all the money they get in a verdict or settlement, right?
Not exactly.
In an Alabama personal injury claim, hospitals, insurance companies, and medical providers can use liens and subrogation to recover the money they spent on your care. If you’re not familiar with these terms – don’t worry. This article will give you an overview of how liens and subrogation work in Alabama car accident cases.
What’s a lien?
Simply put, a lien gives people (called lien holders) a legal claim against someone else’s property. A good example is a mechanic’s lien. If a person goes to get their car repaired and they don’t pay, the mechanic can keep the car until they do. That’s basically how liens work – they give someone a right in property to help them secure payment.
What’s subrogation?
Subrogation is a big word, but its meaning is simple. Unlike a lien, where the issue is between two people, subrogation gives a third party – usually an insurance company – a right in money or property.
For example, you move into a brand-new home. Your next-door neighbor’s bonfire spreads to your house and damages it. If you file a claim against your homeowner’s insurance, the insurance company can sue the neighbor to recover the amount paid to you for the damages to your home. (Lawyers call this a subrogation claim.)
Why liens and subrogation matter in personal injury cases
Both liens and subrogation give a person or company the right to recover money paid on your behalf. In auto accidents, issues around liens and subrogation most often concern medical bills.
Let’s assume that “V” is hurt in a car accident and taken to the hospital. The hospital will provide care. If V does not have health insurance (or their insurance information cannot be found or verified) the hospital will use what is known as a “hospital lien.” This lien gives the hospital the right to collect the amount paid on V’s care from any amount V collects in her personal injury claim against the other driver. So, if V had $12,500 in medical bills and recovered $25,000 in the personal injury case, the lien will give the hospital the right to take the $12,500 that it paid for V’s medical care.
On the same note, if V had health insurance, subrogation would apply. If V’s health insurance covered her $12,500 in medical bills, the health insurance company could file a subrogation claim against the driver who hit V to recover the money it spent on her injuries.
However, it’s important to note that insurance companies don’t always sue the other driver. Sometimes, they go after the funds that the driver paid to the car crash victim in the personal injury case. So, an injured person who plans to keep the entire injury award could be in for a nasty shock after the settlement or verdict if they don’t know how subrogation or liens will affect their recovery.
Why are liens and subrogation allowed?
You’re probably wondering if liens and subrogation are fair. After all, they take money from an injured person. But believe it or not, they’re there to prevent unfairness.
Think about it like this: A personal injury case is supposed to put a victim in the same place that they were before the car accident. So, if V paid $12,500 in car accident medical bills out of her own pocket, she’d be entitled to 100% of the settlement or verdict money. But if the insurance company or hospital paid the medical bills on V’s behalf, they have the right to get the money back. Otherwise, V would get $25,000 – $12,500 paid for her benefit from the insurance company and $12,500 from the settlement or verdict even though she spent no money. The rules regarding liens and subrogation are there to make sure that people don’t get “two bites at the apple,” so to speak.
Liens and subrogation in Alabama personal injury cases
An older Alabama law gave hospitals an automatic lien against personal injury claim proceeds if they had provided care for an accident victim within one week of the car crash. This law made it very difficult for injured people to challenge inflated hospital bills. Also, it gave hospitals little reason to bill insurance companies. So, car accident victims lost more money than necessary.
But in 2019, Alabama changed its liens and subrogation law. The new law says that hospitals must include the amount paid and any price reductions based on the hospital’s contract with the insurer. Also, if a hospital learns that a car crash patient has insurance after it’s already filed a lien, the hospital must bill the patient’s insurance company. Both of these changes allow injured persons to keep more of their settlements and verdicts.
Can Alabama personal injury lawyers help with liens and subrogation?
Absolutely. Insurance laws are complex. Alabama’s laws on liens and subrogation are complicated. An experienced personal injury attorney can help people injured in auto accidents reduce the amount owed in a lien or subrogation. Experienced personal injury lawyers can:
- Determine whether lien holders properly filed (“perfected”) their liens.
- Fight inaccurate bills (double-billing, incorrect billing, etc.).
- Consider special issues arising with government-run insurance programs like Medicare and Medicaid.
- Investigate the amount paid by each person or company.
- Guide you through the process so you know what to expect.
Getting an experienced personal injury attorney is a must for anyone dealing with lien holders or subrogation claims.
Questions about liens or subrogation in Alabama?
Hopefully, you now have a better understanding of how liens and subrogation work in an Alabama personal injury case. If you have more questions or need help fighting against a lien or subrogation claim, please contact Collins Law, LLC. April H. Collins, a Birmingham personal injury attorney, works on auto accidents, trucking accidents, and many more personal injury cases. Collins Law, LLC will work hard on your personal injury claim and help you get the compensation you deserve. Call (205) 588-1411 or click here to schedule a free consultation.