February 23, 2017
When a medical provider has provided services related to injuries at issue in a personal injury claim, N.C. Gen. Stat. § 44-49 provides the medical provider the right to assert a lien on any recovery. That is, the medical provider may require that some money from the settlement funds be paid to the medical provider to satisfy, in whole or in part, any outstanding balances related to the injuries in question. In order for a medical provider to assert its lien, it must provide to the injured party’s attorney, without charge, an itemized statement to be used in the negotiation, settlement, or trial of the claim, and written notice of the lien. Once the lien has been properly created, the lien attaches to the attorney’s trust account. Any funds disbursement from the personal injury recovery must take into consideration the valid medical lien.
The question that oftentimes arises is how much must be paid from the recovery to satisfy the medical lien? North Carolina General Statutes § 44-50 provides for two alternatives: either in full or based on a pro rata distribution. Under this subsection, the amount disbursed to satisfy a medical lien “shall in no case, exclusive of attorneys’ fees, exceed fifty percent (50%) of the amount of damages recovered.” Plainly put, when attorneys’ fees are withdrawn from the recovery, all medical liens must total one-half (1/2) or less of the remaining recovery balance. Where the medical lien total is one-half (1/2) or less than the remaining recovery balance, all liens are paid in full. Where the medical lien total exceeds one-half (1/2) of the remaining recovery balance, the valid medical liens are paid under a pro rata distribution. When medical liens are paid under a pro rata distribution, there will inevitably be amounts still owed under the medical lien. This amount can nevertheless be billed to client in his individual capacity.