The Short Answer
If Medicare or Medicaid paid for your medical care and you later receive a settlement or jury award in an injury case, both programs have a legal right to be reimbursed from that recovery. This is called a statutory lien, and it attaches automatically — you cannot simply keep the full settlement and ignore it. Your attorney is legally obligated to satisfy these liens before distributing your settlement funds, and if they don't, they can be held personally liable. The lien amount can sometimes be negotiated down, but it cannot be eliminated entirely.
There are two types of financial medical payment assistance provided by the federal and state governments. One is Medicare, which was enacted in 1965. Medicare is a federal agency that pays medical care for elderly (usually over the age of 65), the disabled and other limited classes of medical recipients.
In contrast, Medicaid is usually a state run, but federally sponsored, program that provides financial medical assistance to low income families or individuals.
Medicare and Medicaid usually pays for medical care in the event the injured person is eligible for Medicare or Medicaid assistance and is unable to pay their medical expenses. Medicaid and Medicare are secondary payers and will pay only after private insurance has been exhausted.
In a medical malpractice case, both Medicare and Medicaid have a statutory lien on any recovery from a jury award or a settlement with the defendant in which Medicare or Medicaid has provided payment for the injured person’s medical care.
In other words, Medicare and Medicaid will be paid back any money they have spent to provide medical care to the injured person from the injured person. They will demand under federal and state law this money to be paid back from the settlement or jury award in the medical malpractice case.
Usually the attorney representing the injured person has the legal obligation to reimburse Medicare and Medicaid for any monies they have paid for the care of the injured person. If the attorney does not pay this amount from the settlement or jury award, the attorney is personally liable for the lien.
In conclusion, the law states Medicare and Medicaid must be reimbursed for any money they have provided for the care of an injured person in a medical malpractice case.
Key Takeaways
- Medicare and Medicaid both hold statutory liens on any injury settlement or jury award where they paid for the injured person's medical care.
- These programs are secondary payers, meaning they only step in after private insurance has been exhausted.
- Your attorney carries the legal responsibility to repay Medicare and Medicaid directly from your settlement — failure to do so makes the attorney personally liable.
- The lien applies to both settlements and jury verdicts, not just one or the other.
- Medicaid is state-administered but federally funded, so both state and federal law govern how its lien must be repaid.
- You should account for Medicare and Medicaid liens early in your case, as they can significantly reduce the net amount you actually receive.
Attorney Insight
The mistake I see most often is clients assuming their settlement check is entirely theirs the moment a case resolves — they're blindsided when Medicare or Medicaid claims a substantial chunk of it. These liens don't negotiate themselves, and waiting until the settlement is finalized to address them can delay your payout by weeks or months. Experienced personal injury and workers' comp attorneys in North Carolina will identify and begin working on lien reduction early in the case, not as an afterthought. If your attorney hasn't mentioned Medicare or Medicaid reimbursement obligations before settlement discussions begin, that's a conversation worth having immediately.
