Short Answer

In North Carolina, federal health programs like Medicare (and often TRICARE or the VA) usually must be repaid from your personal injury settlement for the medical bills they covered. Medicaid has a statutory lien too, but it is limited to the portion of your recovery that represents past medical expenses. North Carolina law also caps most provider liens so they cannot take more than 50% of your net recovery after attorney’s fees. Your own out-of-pocket co-pays and deductibles are not claimed by Medicare; they are typically part of your net recovery unless a separate provider balance remains.

Understanding the Problem

You’re finalizing a personal injury settlement in North Carolina and a federal health program says it has a lien for the medical bills it paid. You want to know how much of your settlement must go to that lien, what limits apply under North Carolina law, and whether you can be reimbursed for the co-pays and deductibles you paid out of pocket.

Apply the Law

Several layers of rules apply to settlement liens in North Carolina. First, federal programs (like Medicare) have a right to reimbursement for the amounts they paid that relate to your injury. Second, North Carolina statutes govern Medicaid liens and place limits on what can be collected. Third, North Carolina’s medical provider lien laws cap how much providers can take from your net settlement and require pro-rata reductions for attorney’s fees. Disputes about a Medicaid lien’s size can be brought in North Carolina courts for allocation to past medical expenses.

Key Requirements

• Identify the payor and what was paid: Confirm whether the lien is Medicare, Medicaid, TRICARE/VA, or a provider claim, and list the specific bills paid for accident-related care.
• Apply North Carolina’s lien caps for providers: Most provider liens together cannot exceed 50% of your net recovery after attorney’s fees, and providers must fairly share in fee reductions.
• Medicaid’s lien is limited to past medical expenses: Under North Carolina law, a Medicaid lien reaches only the portion of your settlement allocated to past medical bills; you may ask a court to decide that allocation if needed.
• Medicare seeks what it paid for your injury: Medicare typically recovers only its injury-related “conditional payments,” often reduced for procurement costs.
• Out-of-pocket co-pays/deductibles: These are not claimed by Medicare; they generally remain in your net unless a provider still has an unpaid balance subject to a lien.

What the Statutes Say

• North Carolina Gen. Stat. § 108A-57 (Medicaid liens) - Medicaid may recover from third-party payments, limited to the portion for past medical expenses; allocation may be determined by a court.
• North Carolina Gen. Stat. § 44-49 (Medical provider liens) - Creates liens in favor of providers for injury-related care and ties payment to recovery.
• North Carolina Gen. Stat. § 44-50 (Lien cap and fee sharing) - Caps combined provider liens at 50% of net after attorney’s fees and requires pro-rata reduction for fees.
• North Carolina Gen. Stat. § 135-48.37 (State Health Plan recovery) - Gives the State Health Plan reimbursement rights from third-party recoveries.

Analysis

Apply the Rule to the Facts: Because you are settling in North Carolina and a federal health program paid some of your accident medical bills, a portion of your settlement must go to repay what that program paid. If the lien is Medicare, repayment typically equals Medicare’s injury-related payments, less any standard reductions. If it is Medicaid, North Carolina law limits the lien to the part of the settlement that represents past medical expenses, and you can seek a court allocation if the medical share is disputed. Your own co-pays and deductibles are not claimed by Medicare and usually remain in your net unless a provider still has an unpaid balance subject to a North Carolina provider lien and cap.

Process & Timing

1. Who files: Your attorney. Where: Lien resolution is handled directly with the program or provider; any Medicaid allocation dispute can be brought in North Carolina Superior Court. What: Request the program’s payment summary and final demand (for Medicaid, coordinate with NC DHHS; for Medicare, request a final demand); apply North Carolina lien caps for providers. When: Medicare typically requires payment within about 60 days of its final demand to avoid interest; county timelines for court allocation can vary.
2. Negotiate reductions: Ensure providers apply the 50% cap after attorney’s fees and reduce their claims pro rata for fees. For Medicaid, consider a motion to allocate if the settlement covers pain and suffering, wage loss, or other damages beyond past medical bills.
3. Finalize disbursement: After receiving the program’s final payoff and resolving provider liens under North Carolina caps, your attorney issues the final settlement statement and disburses funds.

Exceptions & Pitfalls

• Don’t overlook which program paid: Medicare vs. Medicaid vs. TRICARE/VA can change how much is owed and how allocations work.
• Provider lien cap: Failing to apply North Carolina’s 50% cap after attorney’s fees (and pro-rata fee sharing) can overpay providers.
• Medicaid allocation: If the settlement includes non-medical damages, ask the court to allocate; otherwise you may pay more than required toward Medicaid.
• Interest and penalties: Medicare demands carry interest if not paid on time.
• Out-of-pocket confusion: Your co-pays/deductibles are not claimed by Medicare; however, unpaid provider balances may still be subject to North Carolina’s provider lien rules and caps.

Talk to a Personal Injury Attorney

If you're dealing with a settlement that includes Medicare, Medicaid, or provider liens, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.