Settlements: what happens if plaintiff owes money?

The exceedingly short abstract below, from the New York Law Journal, reminds me of a couple of advisory incidents involving settlements and liens, i.e., debts the plaintiff is officially on the hook for–at least in personal injury cases where a government agency has supported the plaintiff to one degree or another.

When I settled my foot case (about which I’ve written extensively, primarily because of the problems I had with the lawyers I’d retained), I owed money to Medicare. Why? Because I naturally used my Medicare insurance for my hospital and subsequently doctor’s visits.

Eventually, I was informed that Medicare, a government agency, had to be reimbursed for those expenses–around $800–out of my settlement. And (after much foofaraw caused by my lawyers) they were.

The first time I became aware that a settlement needed to pay back a plaintiff’s debts to a governmental agency was when I worked for lawyers. One of our clients who was going to receive a large settlement was required to reimburse monies she received from welfare during the time that her accident case was in litigation. If I remember, she had also received welfare before her accident and I think those funds had to be reimbursed, as well.

So a settlement, per the indication below, requires that the plaintiff’s lawyer must “satisfy the lien,” i.e., reimburse a plaintiff’s debts (at least to government agencies, if not anybody else), before he disperses the settlement amount to his client.

It seems that the lawyer in the case below had failed to pay the debtor State Insurance Fund before dispersing the settlement funds, claiming perhaps that he hadn’t known the plaintiff owed money to the Fund. But according to this decision, he had known and should have paid that money out of the settlement funds before he dispersed the money to his client.

I can’t figure out why he didn’t, but then I don’t really know what happened.

Anyhow, this is an advisory to all your plaintiffs who are expecting settlement money but owe money to a government entity–at the least.

 Commissioners of the State Ins. Fund v. Garcia, 15245/2014


  • Supreme Court, Suffolk County, Part XL
  • Justice James Hudson

Attorney Notified of Lien Before Dispensing Settlement Funds, Liable to Satisfy Lien

This entry was posted in The Facts of Life and tagged , , , , . Bookmark the permalink.