How Do Liens Work on No-Fault Cases?

March 2, 2025 Alexander Mirvis Car Accident Settlement Negotiations 0

When someone is injured in a car accident, New York State’s No-Fault insurance system is meant to simplify and expedite medical care. Under No-Fault, your medical bills should be paid promptly—regardless of who caused the accident—so you can focus on healing rather than on battling over fault. However, issues can arise, and one of those issues is the prospect of medical liens. Below is an overview of how liens work in No-Fault cases, why they exist, and what you should know to protect yourself and your rights.



1. The Basics of No-Fault Billing

  1. No-Fault Insurance Pays First: In a perfect scenario, all medical bills for injuries arising from the car accident are submitted directly to the No-Fault insurance carrier. This coverage generally pays for your medical treatment, lost wages (to a certain extent), and other reasonable and necessary accident-related expenses.
  2. Filing Timeframes:
    • 45 Days for Providers to Bill: Under New York State regulations, healthcare providers must submit their bills to the No-Fault carrier within 45 days of the date of service. This ensures timely reimbursement and prevents billing delays that might cause headaches for patients.
    • 30 Days to File NF-2 Form: As the injured party, you have 30 days from the date of the accident to submit a No-Fault application (commonly referred to as the NF-2 form). This step officially notifies the insurer that you are pursuing a No-Fault claim and triggers your right to No-Fault benefits.

2. The Role of the Assignment of Benefits

When you receive treatment from a provider under No-Fault, you typically sign an Assignment of Benefits (AOB) form. This document accomplishes two major things:



  1. Authorizes Payment: It directs the No-Fault insurance company to pay the healthcare provider directly for the services rendered.
  2. Potential for Liens: It also grants the provider certain legal rights. If, for any reason, No-Fault denies or discontinues payment, the AOB ensures the provider can seek payment from another source—or through a lien—without directly suing the patient.

Essentially, the AOB acts as a safety net for the provider, allowing them to continue treating a patient and seek reimbursement later if something goes wrong with the No-Fault coverage.



3. When Might a Medical Provider Assert a Lien?

Ideally, No-Fault pays all necessary medical expenses, and there is no need for the provider to file a lien. However, circumstances can arise in which the provider is left unpaid, leading them to seek other ways to cover the cost of your treatment. These include:



  1. Negative IME Reports: An IME (Independent Medical Examination) is typically requested by the No-Fault insurance company. A physician of the insurance company’s choosing evaluates your injuries and renders a report on whether your ongoing treatment is still “medically necessary.” If the IME report is unfavorable (a “negative IME”), the insurer may deny or discontinue payment, claiming your care is no longer required.
  2. Policy Issues: Sometimes, problems with the insurance policy itself—like an invalid or lapsed policy—can result in denied bills.
  3. Exhausted No-Fault Benefits: In New York, the minimum No-Fault coverage is $50,000, but some policies have higher limits. If the cost of your treatment exceeds the coverage amount, the insurer stops paying once those benefits are exhausted.
  4. No Available No-Fault Policy: In rare cases, it might be discovered that there was no valid No-Fault policy in effect at the time of the accident, leaving medical bills unpaid.

Any of these situations can set the stage for a healthcare provider to assert a lien, attempting to secure payment from a future legal settlement or another source.



4. Arbitration: The First Line of Defense

Before a lien becomes a focus, providers who have been denied payment will typically seek arbitration. Arbitration is a form of dispute resolution in which a neutral arbiter evaluates the case and decides whether the insurer should pay the provider’s bills. This process is often faster and less costly than litigation. However, if arbitration fails or is not possible, a lien can become a more pressing issue.



5. Understanding and Managing Liens

If your No-Fault benefits are denied, your provider might:



  1. Demand Payment from Another Source: This could mean pursuing compensation from another insurance policy or a third party if one exists.
  2. File a Lien: By virtue of the Assignment of Benefits, the healthcare provider can place a lien on any future personal injury settlement or judgment you receive. They’re essentially saying, “We treated you for injuries related to this accident, so if you recover money in a lawsuit against the at-fault party, or from another source, we are entitled to part of those funds.”

For patients, liens can be confusing because they appear to target your settlement or any potential legal recovery. However, remember that signing the AOB gave the provider the right to recoup their fees from any available source once No-Fault stops paying.



6. Tips for Patients

  • File Your NF-2 Promptly: Don’t miss the 30-day window. Filing quickly establishes your claim and helps avoid unnecessary denials.
  • Stay in Communication with Your Providers: Make sure your doctors or other healthcare professionals submit their bills within the 45-day window so claims are processed correctly.
  • Track Correspondence from the Insurance Company: If you receive a Notice of IME or a denial based on an IME, speak with your doctor and legal counsel immediately about next steps.
  • Understand Your Policy: Find out how much No-Fault coverage you have. If you are close to exhausting your benefits, you may need to work with your healthcare providers to plan how ongoing care will be covered.
  • Seek Legal Advice: If your bills are denied or a provider mentions a lien, it can be beneficial to consult with an attorney who specializes in personal injury or insurance law. They can help you navigate disputes and potentially negotiate reductions in liens.

7. Liens Are Optional and Negotiable

One crucial aspect to remember is that liens are not automatic; they are optional for both the patient and the provider. Here’s what that means:



  1. Patient Consent Is Required:
    • Acceptance or Request by the Patient: A healthcare provider generally will not treat a patient “on a lien” without explicit agreement from the patient. In other words, the patient must sign documents acknowledging that, in lieu of immediate insurance payment, the provider will seek compensation from a future settlement or lawsuit.
    • Why Providers Might Offer a Lien: Sometimes, if a No-Fault claim is denied or a policy’s benefits are close to exhaustion, a provider may offer to treat you under a lien arrangement to ensure you can continue receiving necessary care. Signing the “Assignment of Benefits” form is not enough to initiate a lien. The attorney and patient have to agree to the lien and the extent of the treatment, as well as the approximate possible lien amount cap needs to be established.
  2. Risk for Providers:
    • Uncertain Recovery: Treating a patient on a lien arrangement is inherently risky for the provider. They are betting on the outcome of a personal injury case or some other form of recovery. If there is no recovery, or if settlement funds are lower than anticipated, the provider might end up receiving little to no reimbursement.
    • Providers Are Selective: Because of this risk, many providers do not accept liens unless they are reasonably confident that there will be sufficient funds available from a settlement or other source.
  3. Negotiation Is Possible—and Often Expected:
    • Flexible Terms: Liens can be negotiated down, and in some cases, drastically reduced—sometimes to “pennies on the dollar.” For instance, if your case settles for less than expected, your attorney (if you have one) can negotiate with the provider to lower the lien so that you can receive a fair portion of the settlement after medical bills.
    • Open Communication: It’s in everyone’s best interest for the provider, the attorney, and the patient to stay in contact and discuss expectations. If you know your settlement is likely to be smaller than hoped, addressing this early can lead to a more favorable negotiation with the lienholder.

Overall, whether you agree to be treated on a lien will depend on various factors—such as the strength of your personal injury case, your existing insurance coverage, and your financial situation. If your No-Fault coverage has been denied or exhausted, accepting a lien might be a practical way to continue receiving care, with the understanding that the lien can be modified or reduced if your final recovery is limited.



Liens on No-Fault cases can be an unwelcome surprise, especially if you assumed your medical bills were fully covered by insurance. However, liens only come into play when No-Fault coverage is denied, disputed, or exhausted. By understanding the timing requirements for filing claims, the significance of the Assignment of Benefits, and the process your provider must go through before asserting a lien, you put yourself in a stronger position to address any problems that arise.



Remember that liens are optional and negotiable. A provider will typically only agree to treat you on a lien if you consent and if there is a realistic expectation of compensation. If your No-Fault insurance has refused payment or if benefits are exhausted, liens can offer a path forward for receiving medical care, with the understanding that you and your attorney may later negotiate the final amount owed. Ultimately, the goal of No-Fault insurance is to protect you from the hassles of protracted disputes so you can recover from your injuries with less stress—and understanding how liens work is a key part of ensuring you’re fully protected.



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