Automobile Med Pay Liens Can't Bypass Insureds
When accident victims receive medical payments coverage from their own auto insurance policy to pay their medical bills, the auto insurance carrier is usually entitled to assert a contractual lien against the insured’s third party recovery. Under Indiana lien reductions statutes, plaintiffs can reduce med-pay liens by a pro-rata share of expenses and attorney fees. IND. CODE § 34-53-1-2. Under the Comparative Fault Act, Plaintiffs are also able to reduce med-pay liens by the same proportion that the plaintiff’s recovery was reduced by comparative fault or limited liability insurance. IND. CODE § 34-51-2-19. These statutory reductions can result in considerable reductions to med-pay liens and can help maximize the plaintiff’s net settlement by reducing his or her reimbursement obligations.
In an effort to circumvent their insured’s statutory lien reduction rights, some aggressive med-pay lien holders attempt to collect reimbursement of one hundred percent of their liens directly from the negligent third party’s insurance carrier. These overt attempts to bypass the lien holder’s insured are not permissible. As recognized by the Indiana Supreme Court in Erie v. George, 681 N.E.2d 183 (Ind. 1997), a med-pay carrier’s contractual claim for reimbursement does not allow it to assert a direct claim against the third party in the absence of permission from the plaintiff. For this reason, plaintiff’s counsel should challenge any attempts by med-pay lien holders for reimbursement directly from third party carriers. Failure to do so can lead to a smaller net settlement for the plaintiff.
