Child Support Liens
Child support liens may attach to the proceeds of a personal injury settlement or judgment. If you receive a settlement or judgment and you owe past-due child support, the other parent or the Department of Health and Human Services may seek a lien against your recovery to satisfy your past-due child support obligations. Before a child support lien can attach, a court order must be issued stating that child support is, in fact, past due. The court order must also state the amount of child support past due. Either the parent or the Department of Health and Human Services can seek the court order. Additionally, the parent or Department of Health and Human Services will need to send a notice of the lien along with a certified copy of the court order to you, your insurance company, or your attorney in order to give notice. The lien will then attach once the notice and a copy of the certified court order are received.
It is important to note that a child support lien will not attach to a recovery that is less than $3,000. Therefore, if you recover only $2,999, the other parent or Department of Health and Human Services will not receive anything. Also, child support liens are subordinate to most other liens. In other words, medical provider liens, Medicare liens, and Medicaid liens will receive their portion of the proceeds first.
State Health Plan for Teachers and State Employees (SEHP)
On July 20, 2004, North Carolina legislation established a lien against personal injury recovery for any medical expenses paid by the State Health Plan for Teachers and State Employees. All state employees and their dependents covered by the health insurance program are subject to the liens. In other words, if you are a state employee and are covered by the insurance program, you may be obligated to reimburse the health plan for any medical expenses paid through settlement or judgment proceeds.
The lien is unique in that it is automatically perfected; therefore, no notice of the lien is required. Furthermore, the lien attaches to settlement or judgment proceeds on the date the health plan pays for the medical expenses. It is also important to note that the health plan may not recover more than 50 percent of the net proceeds (after attorney’s fees and costs are deducted, if applicable).
TRICARE is a governmental health care program that covers military personnel, retirees, and their families. The federal government has established a lien right against personal injury recovery for any medical expenses paid by TRICARE.
The federal government does not require TRICARE to give notice of any liens. Furthermore, the lien will attach once treatment is provided to the insured. Once the TRICARE lien is attached, you may be obligated to use most of your recovery proceeds to pay the lien, as TRICARE does not have a cap on how much of the recovery proceeds it can take. Furthermore, TRICARE will receive reimbursement before most other liens, including attorney’s fees. In other words, attorney’s fees are determined after TRICARE receives their portion of the recovery proceeds. TRICARE does allow for adjustments and can be reduced or waived if justice so requires. Therefore, it is always a good idea to hire an attorney to negotiate these types of liens.
Federal Employees Health Benefit Act (FEHBA)
FEHBA covers and regulates health benefit plans for federal employees. In North Carolina, Blue Cross Blue Shield covers the majority of federal employees under the plan. Within each plan of coverage lies a subrogation clause entitling the insurer reimbursement if someone else is found responsible for injuries. Basically, FEHBA coverage requires a contractual agreement to reimburse medical cost with personal injury settlement or judgment proceeds.
Determining FEHBA subrogation rights is very difficult as they directly conflict with North Carolina’s prohibition on subrogation provisions in healthcare plans. It is highly recommended that you speak with an attorney, as they will be best suited to navigate the complex maze of FEHBA reimbursement claims.
North Carolina Workers’ Compensation Liens
If you were injured at work by a person who does not work for your employer, your employer’s workers’ compensation insurance carrier likely has a lien on your recovery for your personal injuries. In other words, if your employer’s insurance pays for an injury, the lien is to guarantee that your employer or their insurance carrier will get paid back for the money paid for your medical treatment. North Carolina also allows for a Superior Court Judge to reduce or eliminate a workers’ compensation lien. The judge will look at what is “equitable” in making his or her decision. The Superior Court, however, may only reduce or eliminate the lien when there has been a final settlement agreement between you and the third party.
Federal Workers’ Compensation Liens
If you are a federal employee who was injured at work by a third party (someone who does not work for your employer) the federal government likely has a lien on your recovery for personal injury in the amount they paid for your medical treatment. The federal government will have priority on the recovery proceeds and may not waive or reduce the amount of the lien. The federal government, does, however, allow the injured party to receive at least 1/5 of the net recovery proceeds (after reasonable attorney’s fees are deducted, if applicable). Furthermore, you may not settle your case for less than the government’s workers’ compensation lien amount without prior written permission.
State Vocational Rehabilitation
As you are aware, accidents can affect one’s life significantly. When an accident causes temporary or permanent physical or mental disabilities, the injured party may receive aid through the Division of Vocational Rehabilitation Services. When an injured person receives assistance through the program, pursuant to a financial needs test, the state likely has a lien on any personal injury recovery. If no financial needs test was given, then the program will not likely be able to receive a lien on recovery proceeds.
As previously mentioned, once the proceeds of a personal injury case are received, the liens attached to the proceeds will receive their share. A rehabilitation lien receives their portion of the proceeds after attorney’s fees and costs are deducted; however, the lien does not allow the fees to exceed one-third of the amount recovered. Likewise, the amount of the lien is capped at one-third of the total amount. Furthermore, when the recovery proceeds do not fully cover the lien amount, state law allows for a total or partial waiver of the remaining balance. The waiver generally occurs when the Division of Vocational Rehabilitation finds that enforcement of the lien hinders the injured party’s rehabilitation.
Can I Refuse to Pay a Lien?
Medical liens and subrogation interests that are attached to your recovery from a personal injury case must be paid, when valid. Whenever there is a dispute as to the validity of a lien, the money should be placed aside until the lien’s validity is determined. A lien that is invalid does not have to be paid through the personal injury proceeds; however, you may still be obligated to pay those debts, when applicable. Determining whether you are obligated to pay a lien is a confusing process, and we recommend obtaining further information here.