Do I Have to Pay Back the Hospital or My Health Insurance After a Settlement?

If you’ve been injured in a car accident, fall, or other incident — and your medical bills were paid by a hospital or your health insurance company — you may be surprised to learn that they can claim a portion of your settlement.

These are called liens, and if you don’t address them properly, they can reduce your recovery — or delay your settlement altogether.

At Ryan & Rouse, we help personal injury clients throughout North Alabama understand and resolve medical liens so they keep as much of their compensation as possible.

A lien is a legal claim for repayment. In the context of a personal injury case, it means that a hospital, doctor, or health insurer who paid for your treatment wants to be reimbursed from your settlement.

There are two common types:

1. Hospital Liens

• In Alabama, hospitals can file a statutory lien on your personal injury claim under the Alabama Hospital Lien Statute (§ 35-11-370).
• This lien attaches to any recovery you obtain from the at-fault party.
• The hospital must file the lien properly with the probate court in the county where treatment was provided.
• If valid, it must be paid before the remaining settlement is distributed.

2. Health Insurance Subrogation

• Most private health insurance plans (especially ERISA or employer-sponsored plans) include a subrogation clause, allowing them to be reimbursed if you recover compensation.
• Subrogation lets the insurance company “step into your shoes” to recover what they paid on your behalf.

What Happens If You Ignore the Lien?

If you don’t resolve valid liens:

• The hospital or insurer may sue you after you receive your settlement.
• Your attorney may be ethically obligated to pay the lien before releasing any funds.
• Delays can occur while liens are sorted out or negotiated.

This is why at Ryan & Rouse, we identify and address liens before you finalize your case — not after.

Can Liens Be Reduced?

Yes — and we do it regularly. Hospitals and insurers often accept less than the full billed amount, especially when:

• The settlement is small relative to the medical bills
• There are multiple lienholders
• The client has ongoing medical needs or financial hardship
• The plan is not self-funded under ERISA (which can limit negotiation options)

We’ll review every charge, challenge anything unrelated to your injury, and negotiate aggressively to maximize your recovery.

Why You Need an Experienced Attorney

Medical liens can be legally complex, and settling a personal injury case without addressing them properly could leave you exposed to repayment demands, collection efforts, or even lawsuits. At Ryan & Rouse, we handle everything — from negotiating liens to managing disbursement — so you walk away with peace of mind and a clear picture of what’s yours to keep.

📞 Call us today at (256) 801-1000 to schedule a free personal injury consultation with Taylor Rouse We don’t just fight for your settlement — we fight to protect what you take home.