Liens on Your Maryland Settlement: Health Insurers, Medicare, and Medicaid — Who Gets Paid Back, and How Much
You fought for months or years. The case finally settled. And then your lawyer tells you that before you see a dime, several entities are standing in line with their hands out: your health insurer, maybe Medicare, maybe Medicaid, maybe a hospital. Clients are often shocked — it's my settlement, I'm the one who was hurt — and the shock is understandable. But these repayment claims, loosely called "liens," are real, they are governed by wildly different rules depending on who is asserting them, and handling them well is one of the most valuable and least visible things an injury lawyer does.
Here is the landscape for Maryland cases.
Medicare: the claim you cannot ignore
If Medicare paid for treatment related to your injury, federal law — the Medicare Secondary Payer Act — gives the government a right to be repaid those "conditional payments" out of your recovery. This is the most serious lien in the business: it follows the money, and ignoring it can create liability for the client, the lawyer, and even the insurance company that paid the settlement.
But Medicare's claim is not unlimited. By regulation (42 C.F.R. § 411.37), Medicare must reduce its repayment demand to account for its share of your attorney's fees and litigation costs — the government benefits from your lawyer's work, so it shares the cost of that work. Disputed or unrelated charges can be challenged and removed from the demand, and in hardship cases further reduction or waiver is possible.
Medicaid: repayment capped at the medical share
Maryland's Medicaid program also has recovery rights for injury-related care it paid for. The critical protection comes from the U.S. Supreme Court: in Arkansas Dep't of Health & Human Services v. Ahlborn, 547 U.S. 268 (2006), and again in Wos v. E.M.A., 568 U.S. 627 (2013), the Court held that a state Medicaid program may reach only the portion of a settlement that represents medical expenses — not the parts compensating lost wages, pain and suffering, or other damages. In a case that settled for less than full value, that allocation principle can dramatically shrink what Medicaid recovers.
Private health insurance and ERISA plans: read the plan document
For private coverage, everything depends on what kind of plan paid:
- Self-funded employer plans governed by ERISA are the toughest. Under US Airways v. McCutchen, 569 U.S. 88 (2013), the written plan terms control — a plan with airtight reimbursement language can demand full repayment. But McCutchen also held that when the plan is silent on attorney's fees, the common-fund doctrine fills the gap and the plan's recovery is reduced by its share of fees.
- Insured plans are subject to state insurance regulation and are often more constrained — and more willing to negotiate.
Identifying which type of plan you have (via the plan document, not the insurance card) is step one, because the negotiating leverage differs completely.
Maryland PIP: yours to keep
One piece of good news for crash victims: Maryland personal injury protection (PIP) benefits are no-fault payments under your own auto policy, and Maryland law does not give the PIP insurer a right to be repaid out of your liability recovery — Md. Code, Insurance § 19-507(d) flatly prohibits PIP subrogation.
The lineup at a glance
| Who paid | Right to repayment | Typical reduction levers |
|---|---|---|
| Medicare | Yes — federal conditional-payment claim | Procurement-cost reduction (fees/costs); removing unrelated charges; hardship waiver |
| Maryland Medicaid | Yes — but limited to the medical-expense share of the recovery (Ahlborn) | Allocation arguments; fee reduction |
| Self-funded ERISA plan | Depends on plan language — can be full repayment | Common-fund/fee arguments where plan is silent; negotiation |
| Insured health plan | Depends on contract and state regulation | Contract limits; negotiation |
| Maryland PIP | No repayment | — |
| Workers' compensation | Yes, statutory lien in third-party cases | Statutory fee-sharing; negotiation |
What this means for injured people in Maryland
Two settlements of the same size can put very different amounts in the client's pocket, depending entirely on how the liens are handled. Before any case resolves, every claimed lien should be (1) verified — is it legally enforceable at all? (2) audited — are unrelated charges packed into it? and (3) negotiated — with the fee-reduction and allocation doctrines above doing the heavy lifting. This work happens quietly at the end of a case, but it is often worth tens of thousands of dollars to the client.
If you or a loved one has been hurt, call Posey Lebowitz at (202) 524-0123 or send us a message for a free consultation.
Part of our DMV case law archive, compiled in 2026 to reflect the archive of some of the most important decisions in injury law.