In North Carolina, the insurer’s check goes to your lawyer’s trust account. After the funds clear, your attorney deducts approved fees and case costs, pays any lawful liens (like medical provider or Medicaid claims), and then pays you the net settlement by check or wire. If a minor is involved or the claim is for wrongful death, the court may need to approve the settlement and direct how and when money is released.
After settlement, your attorney must deposit the insurance check into a client trust account and wait for the bank to clear the funds. Your lawyer then resolves any statutory or contractual claims against the recovery, including health care provider liens and certain benefit program reimbursements. North Carolina law limits and prioritizes some of these claims, which often increases your net payout. If the settlement includes a child’s claim, a judge usually must approve the compromise, and the court can require the funds to be held or restricted for the child’s benefit until adulthood.
Example: Suppose you settle for $30,000. Your fee agreement sets a 33⅓% fee, case costs are $500, and you have $6,000 in qualifying medical provider bills. North Carolina law caps provider payments so that medical lien claimants cannot take more than one-third of the total settlement after attorney fees have priority. Your lawyer applies the cap, pays valid liens (which may be negotiated down), and then issues you the remaining net.
Trust account deposit and clearance: Your lawyer must deposit the insurer’s check into a client trust account and wait until funds are collected before disbursing. This protects you from charge-backs.
Attorney fee and costs: Your attorney deducts the agreed fee and reimbursed case costs per your written fee agreement. Fees have priority over certain medical liens under North Carolina law.
Medical provider liens (clinics, hospitals, EMS): Providers with proper notice have statutory rights to payment from personal injury settlements, but their total share is capped so they cannot take more than one-third of the settlement. Your attorney must balance these claims with your fee and can often negotiate reductions when documentation supports it.
Public benefit liens: North Carolina Medicaid has a statutory claim to a portion of your settlement when it paid accident-related bills, subject to statutory limits and allocation rules. Workers’ compensation carriers may also have a lien on third-party settlements that must be addressed through the statute or by agreement.
Minor settlements: When a child’s claim is settled, a judge typically must approve the settlement and direct how funds are safeguarded. The court may order deposit with the clerk or a restricted account, and withdrawals usually require court approval. For funds paid to the clerk under specific authority, the clerk may hold certain amounts for the child’s benefit and release the balance when the child turns 18.
Wrongful death settlements: The personal representative receives the funds, pays limited last-illness and burial expenses as permitted by statute, and distributes the balance to heirs. Beneficiaries’ shares are set by law rather than by the decedent’s will.
Release and check: You sign the settlement release; the insurer issues the check payable to you and your law firm.
Deposit and clearance: Your attorney deposits the check into the trust account and waits for the bank to confirm collected funds (often 3–10 business days).
Lien resolution: Your lawyer confirms and resolves statutory medical liens and any required reimbursements (for example, Medicaid) and may negotiate balances within legal limits.
Closing statement: You review and sign a written disbursement statement that itemizes the gross settlement, attorney fee, costs, each lien/payment, and your net.
Payment to you: The firm issues your net funds by firm check or wire per your instructions.
Special cases:
Minor claims: Your attorney seeks court approval. A judge’s order may direct deposit to the clerk or a restricted account and govern any early withdrawals for the child’s needs. Funds are typically released to the child at age 18 absent further court orders.
Wrongful death: The personal representative accounts for the settlement and distributes as the statute directs. Some courts require or accept filings to document payments for limited last-illness expenses and distribution to heirs.
N.C. Gen. Stat. § 44-49 and § 44-50: Create and limit health care provider liens on personal injury settlements. Attorney fees are paid first, and total medical lien payments cannot exceed one-third of the settlement.
N.C. Gen. Stat. § 108A-57: Gives North Carolina Medicaid a statutory claim on settlements when it paid accident-related bills, with allocation rules and limits.
N.C. Gen. Stat. § 97-10.2: Governs workers’ compensation liens and credits when an injured worker recovers from a third party.
N.C. Gen. Stat. § 1-402: Requires judicial approval for compromises that affect a minor’s rights, ensuring a judge reviews and approves the settlement.
N.C. Gen. Stat. § 7A-111: Authorizes the clerk of superior court to receive and manage certain funds payable to minors (with dollar limits and safeguards) and to allow withdrawals only in the child’s best interest.
N.C. Gen. Stat. § 28A-18-2: Controls wrongful death claims and how proceeds are used and distributed, including limits on payment of last-illness expenses from wrongful death recoveries.
Do not disburse before clearance: Your funds should not be released until the bank confirms collected funds in the trust account.
Undisclosed medical balances: Failing to disclose known accident-related treatment or balances can delay payment and risk later collection. Tell your lawyer about every provider.
One-third cap misunderstanding: The one-third cap limits what qualifying medical lien claimants can receive from the settlement, but it does not erase your private balances. Your lawyer may still negotiate remaining balances with providers.
Medicaid or workers’ comp liens: These have special statutes. Your net cannot be finalized until these are resolved or waived as allowed by law.
Minor funds access: Using a child’s settlement funds without a court order can violate the judgment and trigger consequences. Expect strict paperwork and receipts for any approved withdrawals.
Wrongful death vs. personal injury: Wrongful death proceeds follow statutory distribution to heirs and may not pass under a will. This changes who receives funds—and when.
Bring your ID and preferred payment instructions (check or wire) to your closing meeting.
Keep all EOBs and provider bills; they help your lawyer verify and reduce charges.
Ask for a written closing statement and keep it with your records; it shows exactly how every dollar was disbursed.
If your claim involves a child, expect an approval hearing and plan ahead for restricted accounts or deposits with the clerk.
Procedures and lien rules can change. Confirm timelines and requirements early, especially for Medicaid or workers’ compensation cases.
If you’re resolving a settlement and want to understand fees, liens, and how and when you’ll be paid, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-313-2737.
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.
