Generally, creditors cannot reach proceeds from a personal injury or wrongful death settlement because such proceeds are exempt under Virginia Law. However, there are several important exceptions to this rule. One of these exceptions is for medical providers who provide treatment to the injured party. According to Code of Virginia Section 8.01-66.2, certain medical providers may claim limited amounts from a personal injury settlement when they provide services to a person who was injured by another. The statutory limit of the lien is $2,500 in the case of a hospital or nursing home, $750 for each physician, nurse, physical therapist, or pharmacy, and $200 for each emergency medical services provider or agency. If your medical bills are paid by your health insurance, the health insurance company may seek reimbursement from your settlement as well, but the right of reimbursement must be stated in the plan documents. Other liens, such as those asserted by Medicare and Medicaid, may also affect or reduce an injured party’s recovery.
Creditors can also reach a personal injury settlement if the injured party makes an assignment of their rights to the settlement proceeds. Assignments can provide a source of funding for treatment and other necessities prior to the settlement of the case. However, assignments may reduce the overall amount received by the injured party.
Dealing with creditors seeking payment from your personal injury settlement, and negotiating contracts for medical treatment and necessities can be a tricky process if you are not familiar with the
legal consequences of your decisions. You should seek the advice of an experienced attorney to advise you of your options. At PLDR, we will advise you of your legal obligations to creditors and other parties seeking reimbursement from your settlement, with an eye toward maximizing your overall recovery.