Short Answer

North Carolina Medicaid (DHHS) can claim reimbursement from your injury settlement for accident-related medical bills it paid. By statute, DHHS’s recovery is limited to the portion of your settlement allocated to medical expenses and, in any event, no more than one-third of the total recovery. If you and DHHS cannot agree on the amount, you can ask a Superior Court judge to allocate the settlement among damages (medical expenses, lost wages, pain and suffering) and set Medicaid’s share. You should hold settlement funds in trust and resolve the lien before disbursing money.

How North Carolina Law Applies

When Medicaid pays for accident-related treatment, North Carolina law gives the Department of Health and Human Services (DHHS) a statutory lien and subrogation right against your recovery from the at-fault party. The lien reaches only the part of your settlement that represents payment for medical expenses and is capped at one-third of the total settlement. After major U.S. Supreme Court decisions (including Ahlborn and Wos, a case from North Carolina), state law allows you to negotiate with DHHS or ask the court to decide what portion of your settlement represents medical costs. In practice, you will gather proof of all damages (medical bills, wage loss, and noneconomic harms), present liability and insurance-limit challenges, and either reach a compromise with DHHS or file a motion in Superior Court for an allocation order. A leading North Carolina practice guide notes that DHHS’s lien is separate from ordinary provider liens and that wrongful death recoveries have distinct payment rules and caps for medical bills (see discussion of G.S. 108A-57 and G.S. 28A-18-2 in the cited references).

Key Requirements

• Medicaid paid for treatment tied to your accident (dates of service, providers, and amounts must be accident-related).
• DHHS’s lien attaches to your settlement or judgment and must be resolved before disbursement.
• DHHS’s recovery is limited to the portion of the settlement allocated to medical expenses and, at most, one-third of the total settlement.
• You may request a court allocation if there is no agreement about the medical-expense portion.
• Settlement funds should be held in a trust account until the lien is satisfied.
• Wrongful death settlements follow different statutory rules for paying medical/burial costs and interacting with public benefit claims.

Process & Timing

1. Request an official lien statement: Ask DHHS (Third Party Recovery) for an itemized list of Medicaid payments related to the accident.
2. Audit the lien: Verify that each charge is tied to the crash, remove duplicates, and exclude unrelated care. Gather insurance EOBs and provider write-offs.
3. Build your allocation file: Document the full value of your claim—medical expenses, wage loss, pain and suffering, future care needs—and any liability issues, policy limits, or contributory negligence concerns that affected settlement value.
4. Negotiate with DHHS: Propose an allocation and reduced payoff supported by your documentation. Address attorney’s fees/costs and limited insurance proceeds.
5. If no agreement, file in Superior Court: Move for an allocation of the settlement to determine the medical-expense portion and Medicaid’s share. Give DHHS notice and be prepared to present evidence on damages and liability.
6. Obtain the order and pay DHHS: After the court sets the amount (subject to the one-third cap), pay DHHS from trust and disburse remaining funds.

What the Statutes Say

• North Carolina General Statutes § 108A-57 — Medicaid subrogation/lien on third-party recoveries; limits and allocation.
• North Carolina General Statutes § 108A-59 — Assignment and enforcement of Medicaid recovery rights.
• North Carolina General Statutes § 44-49 and § 44-50 — General medical provider lien rules (distinct from Medicaid’s statutory lien).
• North Carolina General Statutes § 28A-18-2 — Special rules for wrongful death proceeds (medical and burial expense limits), which interact differently with public benefit claims.
• North Carolina General Statutes § 108A-70.5 — Medicaid estate recovery framework (separate from a settlement lien during life).

Exceptions & Pitfalls

• Do not disburse settlement funds before resolving the Medicaid lien; doing so risks personal liability.
• Do not assume an arbitrary fraction controls; if the lien seems too high relative to nonmedical damages, seek a court allocation.
• Wrongful death vs. personal injury: Wrongful death recoveries have statutory caps for medical/burial payments and different distribution rules; Medicare’s reimbursement rules also differ.
• Estate recovery is different: After a beneficiary’s death, Medicaid may assert claims against the estate under separate statutes.
• Confirm accident-related charges only: Remove unrelated or non-compensable items, and ensure provider write-offs/adjustments are accounted for.
• Policy limits and liability disputes matter: Show how contributory negligence risks or low policy limits reduced the settlement to support a lower Medicaid share.

Helpful Hints

• Ask DHHS for an updated, itemized lien ledger before you finalize settlement disbursements.
• Keep a clean audit trail—EOBs, billing ledgers, and correspondence—to support every requested reduction.
• Line up affidavits (or testimony) on damages for a court allocation hearing, including nonmedical harms and liability risks.
• Coordinate Medicaid with other liens (Medicare, TRICARE, private plans) to avoid double payment and prioritize payoffs correctly.
• Maintain settlement funds in your lawyer’s trust account until the Medicaid lien is paid or released.

Sources & References

• 2024 North Carolina Clerks Manual (School of Government), Chapter 2-6, Wrongful Death Proceeds discussion, pp. 275–279 (Medicaid lien reference under G.S. 108A-57 and interaction with wrongful death medical/burial caps).
• North Carolina Estate Administration Manual, Supplemented 10th Edition (NC Bar Association CLE, 2024), Chapter IX at pp. 321–322 (Medicaid Estate Recovery overview, G.S. 108A-70.5), and Chapter IX at pp. 673–674 (wrongful death proceeds, medical/burial limits, and public benefit reimbursement context).

Disclaimer: This article is general information about North Carolina law, not legal advice. Reading it does not create an attorney‑client relationship.

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If you’re dealing with a Medicaid lien on a North Carolina car accident settlement, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-313-2737.