Does an Insurance Company Automatically Have a Lien?

Subrogation rights are rarely absolute. But the process can be convoluted as you figure out whether federal law or state law governs your case’s health insurance liens. From Medicare to private liens here are some of the potential scenarios: 

  1. Medicare Federal law; 
  2. Medicaid State law (that is directed by a federal law in the Social Security Act); 
  3. ERISA Plans Federal law by Circuit courts; 
  4. FEHBA Plans Federal law by Circuit courts; 
  5. Other Private Plans State law. 


The five examples above deserve individual posts, so this discussion centers on “Other Private Plans.” State law will apply to these private health insurance plans so long as they are not Medicare Advantage Plans, Self-Funded ERISA plans, Managed Medicaid/Managed Care Organizations, etc. 


In the circumstance of a true private insurance plan, there are 33 states that allow a lien via common law. There are nine states that have some sort of anti-subrogation law. Those states are: 

  1. Arizona 
  2. Connecticut 
  3. Kansas 
  4. Missouri 
  5. New Jersey 
  6. New York 
  7. North Carolina 
  8. Virginia 
  9. Georgia (Essentially anti-subrogation through a strong made whole doctrine that cannot be overridden by contract language) 


Anti-subrogation has exceptions. This post is not about those exceptions. 


Then, there are eight states that are called “non-equity” states. In these states, the state common law (case law) does not create a subrogation or lien right as the default rule. But note that the common law only applies if the insurance plan/contract language is silent regarding subrogation or liens. Alternatively, in these non-equity states, the plan must affirmatively create a lien right (unless it is federally protected). These states are: 

  1. Illinois 
  2. Louisiana 
  3. Maine 
  4. Michigan 
  5. New Hampshire 
  6. Ohio 
  7. South Carolina 
  8. Massachusetts (limited to medical expense benefits, life insurance, and accident insurance) See Frost v. Porter Leasing Corp., 436 N.E.2d 387 (Mass. 1982). 


So, as long as the health insurance is not Medicare, not Medicaid, not ERISA, not Tricare (or VA), and not FEHBA, then, these eight states require the plan language include subrogation and/or reimbursement rights. We understand how simple this analysis looks (it’s not!). Please contact us for assistance with all of your subrogation and lien concerns.