Why I Collect and Hold Medical Payments Coverage Before Disbursing a Settlement
When I am representing someone in an auto accident in North Carolina, sometimes, but not always, I get this question:
“Why are you holding onto my Med Pay funds instead of just paying them to me right away?”
It’s a fair question, but the answer is somewhat complicated. It mainly has to do with liens and rights of reimbursement.
As your attorney, my job isn’t just to get you compensated—it’s to protect you from problems that can pop up after the settlement check clears. And nothing can cause more trouble than failing to properly address all potential claims against the funds I collect for you.
What Is MedPay, and Why Does It Matter?
Med Pay is an optional coverage on your auto insurance policy that helps pay for medical bills after an accident, no matter who’s at fault. If you have it, you should definitely use it! But as mentioned above, part of my job is to protect you from making costly errors.
Hospitals, health insurance companies, Medicaid, or even workers’ compensation carriers may all have liens or reimbursement rights to that money. If I just handed it over to you without checking, it could leave you (and potentially me) exposed to serious financial and legal consequences.
While they aren’t fun and do sometimes possibly reduce your take-home from your settlement, these rights can be legally enforced, so we have to deal with them. If we fail to pay even one legitimate lienholder, that party can come after the settlement—and sometimes after you personally.
Why I Hold the Funds
When I receive Med Pay funds, I don’t rush to disburse them. I take the time to:
- Identify all potential lienholders or payback obligations.
- Confirm the amounts owed and whether they’re legally enforceable.
- Negotiate reductions where possible/appropriate.
- Document every step so there’s no dispute later.
This process can take time, but it’s far better than accidentally overlooking a lien and facing a claim from a healthcare provider or health insurance provider down the road.
Ignoring a Lien Is Dangerous
If you ignore even one valid lien, the consequences can be serious:
- The lienholder could sue for repayment.
- You could lose future coverage or benefits.
That’s why I handle these details carefully and personally. I’d rather delay disbursement a bit to make sure it’s done right than rush a payout that could come back to haunt you.
The Bottom Line
I know everyone wants their settlement money quickly. But part of my job as your attorney is to make sure that money stays yours once you get it. By holding and carefully managing your Med Pay funds, I’m protecting you.
Call me if you’ve been injured in a car accident and have questions about your Med Pay coverage. 919-929-2992
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