Short Answer

In North Carolina, if Medicaid paid for treatment of your injury, the State has a statutory lien against your personal injury settlement for the amount it paid that is attributable to medical expenses. By law, the lien is limited to the medical-expense portion of your recovery and, absent a court order allocating a different amount, is capped at a set percentage of the total settlement (commonly up to one-third) and reduced to reflect attorneys’ fees and costs. You must resolve this lien before distributing settlement funds.

Understanding the Problem

You were hurt in North Carolina, received treatment while covered by Medicaid, and now you’re pursuing a settlement from the [STORE] for the slip-and-fall. You want to know: will Medicaid take part of my settlement, how much, and what can I do about it? This is the right question to ask because North Carolina law gives Medicaid repayment rights that must be handled before money is disbursed.

Apply the Law

North Carolina law gives the Department of Health and Human Services (through the Division of Health Benefits, Medicaid) a lien on any third-party recovery for injury-related medical payments Medicaid made on your behalf. The lien attaches only to the portion of your settlement that represents payment for medical expenses. If you, Medicaid, and the insurer can’t agree on that amount, a North Carolina Superior Court judge can allocate what portion of the settlement represents medical costs. Practically, Medicaid’s claim is capped by statute absent a different court allocation and is further reduced to account for attorneys’ fees and case costs. You must satisfy the lien before your lawyer disburses funds from trust.

Key Requirements

• Medicaid-paid, injury-related care: Medicaid must have paid for treatment tied to the accident for a lien to attach.
• Third-party recovery: You pursue or receive money from a liable party or its insurer for the same injury.
• Notice and verification: Provide Medicaid notice of your claim and request an official payoff so the agency can assert its lien amount.
• Cap and allocation: The lien is limited to the medical-expense portion of the settlement; absent a court allocation, a statutory cap (commonly up to one-third of the total recovery) applies.
• Fee/cost adjustment: Medicaid’s recovery is reduced to reflect reasonable attorneys’ fees and litigation costs.
• Resolve before disbursement: Funds should not be disbursed until the Medicaid lien is resolved by agreement or court order.

What the Statutes Say

• N.C. Gen. Stat. § 108A-57 (Medicaid third-party recovery lien) - Establishes Medicaid’s lien on third-party settlements and limits recovery to the medical-expense portion, with procedures for allocation.
• N.C. Gen. Stat. § 44-49 (Provider liens) - Recognizes medical providers’ liens, which often must be coordinated with a Medicaid lien.
• N.C. Gen. Stat. § 44-50 (Distribution of limited funds) - Governs how limited settlement funds are shared among lienholders and the injured person.

Analysis

Apply the Rule to the Facts: Medicaid paid for your ER care and follow-up after the [STORE] fall, so the State has a lien on your settlement for injury-related payments. Because your settlement compensates multiple things (medical bills, lost time, pain, headaches, blurred vision), only the medical-expense portion is available to Medicaid. If you and Medicaid disagree on that percentage, you can ask a Superior Court judge to allocate it; otherwise, the statutory cap will control, and Medicaid’s payoff will be reduced to reflect attorneys’ fees and costs.

Process & Timing

1. Who files: Your attorney. Where: Notify the N.C. Department of Health and Human Services, Division of Health Benefits (Medicaid) about your claim; if needed, file a motion in North Carolina Superior Court to determine the medical-expense allocation. What: Notice of claim and request for lien payoff; if disputed, a motion for allocation of settlement between medical expenses and other damages. When: Give notice early in the case and obtain a final lien amount before any settlement funds are disbursed.
2. Medicaid issues a lien amount after verifying injury-related payments. Your attorney negotiates any appropriate reductions and, if there’s a dispute about how much of the settlement represents medical expenses, schedules a short hearing for judicial allocation. This often takes a few weeks, depending on county dockets.
3. Upon agreement or court order, your attorney pays Medicaid from trust, pays other properly noticed lienholders, and then distributes the remaining settlement to you with a clear disbursement statement.

Exceptions & Pitfalls

• Only injury-related Medicaid payments are recoverable. Flag unrelated treatment so it isn’t included in the lien.
• Multiple liens compete for limited funds. Coordinate Medicaid’s lien with provider liens so distributions comply with North Carolina’s lien and allocation rules.
• No notice = delays and risk. Failing to notify Medicaid can stall settlement and trigger repayment demands later.
• Allocation matters. If pain and suffering dominate your damages, consider asking the court to allocate a fair medical-expense portion rather than defaulting to the statutory cap.
• Disbursement before resolution can create personal liability for improper payments. Keep funds in trust until Medicaid’s claim is finalized.

Talk to a Personal Injury Attorney

If you're dealing with a North Carolina injury settlement and Medicaid paid for your treatment, our firm can help you understand lien limits, allocations, and timing. Call us today at .

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.