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Medical Lien After Car Accident: What You Need To Know

Your No-Fault car insurance company cannot file a medical lien after a car accident to get reimbursed from your recovery against the at-fault driver for pain and suffering compensation and excess medical and wage loss benefits for money your insurance company spent on your No-Fault PIP benefits.

Specifically, the No-Fault law states:

“A subtraction from personal protection insurance benefits must not be made because of the value of a claim in tort based on the same accidental bodily injury. . . . A subtraction or reimbursement is not due the claimant’s insurer from that portion of any recovery to the extent that recovery is realized for noneconomic loss as provided in section 3135(1) and (2)(b) or for allowable expenses, work loss, and survivor’s loss as defined in sections 3107 to 3110 in excess of the amount recovered by the claimant from his or her insurer.” (MCL 500.3116(1) and (4))

What is the rule for a medical lien after a car accident?

The general rule for a medical lien after a car accident is that an auto accident victim’s No-Fault auto insurance company is not entitled to reimbursement from the victim’s tort claim recovery for what the insurer has paid out to the victim in No-Fault personal protection insurance benefits.

A victim’s tort claim recovery is obtained as a result of the victim suing the at-fault driver who caused the car crash for pain and suffering compensation, “excess” healthcare bills, “excess” wage loss benefits and other economic damages.

Can an insurance company ever get a medical lien after a car accident?

Under very, very limited circumstances, an auto insurance company may be able to seek reimbursement for what it has paid out in No-Fault benefits.

This right to reimbursement is effectuated through what’s called a “lien” and this right can be exercised only in the following situations:

  • When reimbursement is sought from “a tort claim arising from an accident that occurred outside” of Michigan.
  • When reimbursement is sought from “a tort claim brought in this state against the owner or operator of a motor vehicle” that was “uninsured” at the time of the crash.
  • When reimbursement is sought from “a tort claim brought in this state based on intentionally caused harm to persons or property.” (MCL 500.3116(2))

Time for filing a medical lien after a car accident

In the event that the circumstances permit this type of lien medical lien after motor vehicle crash against a victim’s tort claim recovery, the No-Fault insurance company has only “1 year after payment has been received by a claimant upon a tort claim” to file a lawsuit to enforce “its rights of recovery or indemnity” or “reimbursement.” (MCL 500.3146)

Are there any limits to be aware of? 

No-Fault insurance companies can only seek reimbursement for duplicative PIP benefits that an auto accident victim has received from the negligent driver. If an injured person brings a personal injury tort lawsuit against another driver and receives only non-economic damages (compensation for pain and suffering, disfigurement from scarring and surgery, physical disability, etc.), then the No-Fault insurer is not entitled to reimbursement of a medical lien after a car accident because none of the compensation received is duplicative.

However, if a personal injury tort lawsuit or settlement includes compensation for PIP benefits that have already been paid by an insurance company, then that insurer can seek recovery of whatever amount of the settlement or trial verdict reflects that duplicative compensation.

Injured and need a lawyer? Call Michigan Auto Law

If you have been injured in a motor vehicle crash and you have questions about your legal rights, you can call toll free anytime 24/7 at (866) 886-9668 for a free consultation with one of our experienced auto accident attorneys. You can also get help from an experienced attorney by emailing [email protected] or you can use the chat feature on our website.