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The Palmetto State Injury Journal

Medical Liens in South Carolina Personal Injury Cases: What Injured Clients Need to Know

Nov 23, 2025

| Insurance

If you’ve been injured in a car accident, slip and fall, or another serious incident in South Carolina, one of the biggest challenges you may face is getting medical treatment right away—especially if you’re uninsured, underinsured, or unable to pay out of pocket.

In many South Carolina personal injury cases, the solution is treating on a medical lien. But medical liens can be complex, confusing, and financially risky if you don’t understand how they work. As a South Carolina personal injury lawyer, I see the impact of liens every day — on cases, on families, and on clients’ peace of mind.

This guide explains everything you need to know about medical liens, hospital liens, health insurance liens, Medicare liens, medical cost financing companies and how they affect your personal injury settlement.

What Is a Medical Lien in a Personal Injury Case?

A medical lien is a legally binding agreement that allows a healthcare provider or insurance company to be paid directly from your future personal injury settlement or court award. In simple terms, a medical lien is an IOU for medical care.

Medical lien laws were created over 100 years ago, long before modern insurance or today’s high medical costs. That outdated system still affects how hospitals and insurers claim money from your injury settlement today. Virtual Mentor. 2008;10(5):324-331. doi: 10.1001/virtualmentor.2008.10.5.mhst1-0805. Though lien laws were originally created more than a century ago to protect hospitals treating uninsured patients, today lien-based billing is most commonly used for car accident victims.

Understanding how liens work is critical because the amount a lien holder claims can dramatically affect how much of your settlement you actually receive.

How a Medical Lien Works

Before you decide whether to treat on a medical lien, it helps to understand the basic idea behind it. A lien allows you to receive medical treatment immediately without paying anything upfront. The provider waits to be paid until your personal injury case settles, and by law, your attorney must use part of the settlement to pay all valid liens before you receive your share.

As part of that process, your attorney reviews every lien for accuracy, disputes improper charges, and negotiates reductions to protect your recovery.Your personal injury attorney is required by law to pay all valid liens before you receive your share.

Who Can File a Medical Lien in a Personal Injury Case?

After an accident, it’s common for several different providers and insurance programs to seek repayment from your settlement. A “medical lien” simply means that someone who paid for, or provided, your accident-related care is asserting a legal right to be reimbursed before you receive your portion of the settlement. These liens can come from hospitals, doctors, health insurers, and even government programs, depending on who covered your treatment. If they paid for or provided accident-related care, they may assert a lien.

Not All Liens Are the Same

Before deciding whether treating on a lien is right for you, it’s important to understand that not all liens work the same way. Some liens are optional and require your agreement. But, others are created by law and must be repaid under the law. Understanding the difference is crucial because choosing to treat on an optional lien can impact how much of your settlement you keep later.

Optional liens include:

Optional lien-based care may be appropriate when:

• You have no insurance coverage
• You cannot obtain care through any other option
• Without lien-based treatment, you may go without care entirely

In these situations, choosing to treat on a lien can be a lifeline. It allows you to access specialists, imaging, therapy, and other necessary treatment immediately, rather than waiting weeks or months or going untreated. When used correctly — and only when absolutely necessary — an optional lien can bridge the gap between injury and recovery.

Statutory liens include:

These liens are mandatory and must be paid back from your settlement whether you want them or not. Your attorney cannot “opt out” of them — the law requires repayment.

Lien Priority Rules in South Carolina

When your personal injury case settles, not all lienholders stand on equal footing. The law sets strict rules about which liens must be paid first and how much each type of lien holder is allowed to recover. These rules control how your settlement is divided — and they have a major impact on how much money you ultimately receive.

Understanding lien priority is critical, because even if multiple providers or insurers claim repayment, some are legally entitled to be paid in full and before anyone else, while others can only recover a limited amount. Your attorney must follow these priority rules when disbursing your settlement.

The law requires lien holders to be paid in the following order:

  1. Medicare
  2. TRICARE / VA
  3. Medicaid
  4. SEHP
  5. ERISA Plans
  6. Private Health Insurance
  7. Medical Providers

Your attorney must pay lien holders in this order before you receive funds.

Why Health Insurance Doesn’t Always Cover Your Bills After an Accident

This is one of the most common areas of confusion for clients. After an accident, many people expect their health insurance to simply pay their medical bills like usual. And while insurance often does pay upfront, it also expects to be repaid once you receive a settlement. This is because of something called subrogation.

Subrogation is the legal right of your health insurer to recover money it spent on your medical bills from your personal injury settlement. For example:

  1. You get hurt in a crash
  2. Your health insurance pays your ER and follow-up care
  3. You later receive a settlement
  4. Your health insurance asks to be reimbursed from that settlement

In other words: If your insurance pays your accident-related bills and you receive money from the at-fault party, your health insurer will demand repayment. Many clients have never heard of this because health insurers rarely explain it. It often comes as a surprise when people learn their settlement must repay their health plan, even when insurance paid the bills upfront.

Why Hospitals Prefer Liens Over Billing Insurance — And What South Carolina Courts Have Said About It

Many hospitals bypass your health insurance for one reason: they make dramatically more money by filing a lien than by honoring the discounted rates they agreed to accept from your insurer. As the *[New York Times](<Here is a polished, client-friendly section you can drop directly into your medical liens blog. It explains medical cost financing companies (sometimes called medical funding companies, medical factoring companies, or healthcare finance lenders) in a way that is accurate, protective of the client, and aligned with the tone of the rest of your article.

⭐ Medical Cost Financing Companies: Another Option — But With Serious Risks

In addition to medical liens, some injured people are offered treatment or diagnostic testing through medical cost financing companies (also known as medical funding companies or medical factoring companies). These companies pay healthcare providers upfront for your care and then seek repayment from your personal injury settlement later — often at extremely high rates.

How Medical Financing Companies Work

These companies typically operate like this:

  1. They pay the doctor or hospital for your medical care.
  2. In exchange, they take ownership of the provider’s lien.
  3. You sign a contract agreeing to repay the financing company out of your settlement.
  4. The company charges significant markups or interest-like fees on top of the original bill.

On the surface, this may seem helpful because it ensures you get care quickly, but the financial consequences can be substantial.

⭐ Potential Benefits

Medical funding companies can:

For some clients, this may be the only way to access necessary care.

⭐ The Downsides You Need to Know

Medical funding companies are not regulated the same way as health insurers or even medical providers. Their practices can create serious risks for injured clients, including:

1. Significantly Higher Medical Bills

Funding companies often charge far more than what the actual provider would have billed — sometimes three to five times higher than insurance rates.

2. Reduced Settlement Payouts

Because these companies demand repayment from your settlement at inflated rates, they can take a huge portion of your final recovery.

3. Limited Ability to Negotiate

Unlike hospitals or doctors, medical finance companies are often unwilling to reduce their liens, even when a reduction is necessary for the client to receive a fair settlement.

4. Hidden Fees and Compounding Costs

Contracts may include administration fees, “processing” charges, or interest-like increases over time.

5. Long-Term Financial Burden

If your settlement is small — or if you don’t win your case — you may still owe the funding company directly.

⭐ How Your Attorney Helps Protect You

Before agreeing to treatment through a medical financing company, your attorney can:

In many cases, your attorney may be able to connect you with traditional providers who accept liens directly — avoiding the inflated costs that financing companies demand.

⭐ When Using a Medical Financing Company Makes Sense

Medical funding companies may be appropriate when:

Even then, it is important to proceed carefully and only with full understanding of the financial consequences.

⭐ Always Involve Your Attorney Before Signing Anything

Medical funding contracts are legally binding and can dramatically affect what you take home at the end of your case. Always let your personal injury lawyer review:

Your attorney is your advocate — and their goal is to protect both your medical recovery and your financial future.

https://www.nytimes.com/2021/02/01/upshot/rich-hospitals-profit-poor.html>)* reported, hospitals increasingly use lien laws to sidestep insurance altogether, allowing them to pursue the highest amount they can possibly charge rather than the reduced contracted rates they are required to accept when billing insurance.

The South Carolina Supreme Court confronted this exact issue in Beverly v. Grand Strand Regional Medical Center, where a hospital refused to bill a patient’s Blue Cross Blue Shield insurance and instead attempted to charge her at full retail price, despite having a contract requiring the hospital to bill BCBS directly and accept BCBS’s discounted rate. The Court held that patients ARE third-party beneficiaries of the hospital’s contract with their insurance company. That means:

However, even after the South Carolina Supreme Court’s decision in Beverly v. Grand Strand, which allows patients to enforce their insurance contract if the hospital had a duty to bill insurance, the reality remains the same:

👉 South Carolina has no statutory law requiring hospitals to bill insurance first.
👉 No limits on how much they can demand through a lien.
👉 No caps on what percentage of a settlement they can take.
👉 No consumer protections like those found in other states.

Why hospitals file a lien instead of billing insurance:

The New York Times found that some hospital systems even hire outside companies to comb through police reports so they can identify accident victims early—before the patient has a chance to run the charges through insurance.

In many parts of the country, lawmakers have stepped in to protect injured patients from hospitals that try to bypass insurance and go after personal injury settlements instead.

These states have enacted consumer-friendly rules such as:

These safeguards prevent hospitals from ignoring insurance contracts and charging accident victims dramatically inflated “full price” medical bills. South Carolina has none of these protections. South Carolina’s hospital lien laws have not been updated to reflect modern insurance practices, and they offer no statutory limits on what hospitals can charge or collect.

The only real protection patients have in South Carolina is the ability to fight back—through their attorney—by enforcing insurance contracts, disputing improper charges, and demanding reductions. This is why hospital liens here can be so aggressive, and why having an attorney who understands both lien law and Beverly is critical for protecting your settlement.

Hospital liens in South Carolina can absorb a shocking portion of your personal injury settlement.
But thanks to cases like Beverly v. Grand Strand, your attorney may be able to fight back by:

This is why aggressive oversight, strategic negotiation, and a strong advocate are essential. Without it, hospitals can take far more of your settlement than they should.

Why Some Doctors Accept Liens — and Why Others Won’t

Lien-based treatment often comes through a Letter of Protection (LOP). A letter of protection is a legally binding contract issued by your attorney to your healthcare providers. Because this arrangement postpones payment, each provider must decide whether they are willing to take on the delay and uncertainty involved.

Doctors who accept liens may:

• Want to help uninsured patients receive needed care

• Believe in treating patients regardless of financial status

• View lien-based treatment as consistent with patient-centered medical ethics

These doctors essentially provide treatment on credit, trusting that the case will resolve and that the lien will be honored.

Doctors who refuse liens often do so because:

• They risk never being paid if the case is unsuccessful

• Even if the case settles, a reduced settlement may not cover the full medical bill

• They may have to wait years for payment

• They cannot guarantee how much they will ultimately be paid, because liens are often negotiated down

In other words, agreeing to treat on a lien is a business decision for the provider. Some are willing to take the risk; many are not. That’s why not every specialist, surgeon, or therapist will agree to treat under a Letter of Protection — and why your attorney’s guidance is critical before choosing this option.

Rising Medical Costs Are Making Liens More Common

As medical costs soar, liens have become a lifeline for injured South Carolinians who cannot access treatment otherwise. According to the U.S. Centers for Medicare & Medicaid Services (2023):

• U.S. healthcare spending: $4.9 trillion

• 7.5% increase in a single year

• Average spending: $14,570 per person

• Hospital care: $1.5 trillion

• Physician services: $978 billion

• Prescription drugs: $450 billion

With medical costs rising faster than wages, insurance limits, and household budgets, more patients are forced to rely on liens just to access basic care. While liens can provide critical treatment when no other option exists, they also create financial challenges later—making it even more important to have an attorney who can protect your recovery.

Medical Cost Financing Companies: Another Option — But With Serious Risks

In addition to traditional medical liens, some injured people are offered treatment or diagnostic testing through medical cost financing companies (also called medical funding or medical factoring companies). These companies pay the provider upfront and then collect repayment from your settlement later — usually at extremely high rates.

Here’s how it generally works:

  1. The financing company pays the doctor or hospital for your care.
  2. The company takes over the provider’s lien or creates its own contractual lien.
  3. You sign an agreement promising to repay the company from your settlement.
  4. The company adds large markups, fees, or interest-like charges on top of the original bill.

Although these arrangements can make treatment available quickly, they can also create significant financial burdens later.

Medical funding companies can help you get care you otherwise could not afford, including specialist visits, imaging, and procedures, and for some clients, this is the only way to access necessary treatment. But unlike insurance companies or regulated medical providers, these financing companies operate with very few restrictions. Their contracts often include steep markups, administrative fees, processing charges, and interest-like increases that can drastically inflate your final bill.

Because of these risks, your attorney should review any financing agreement before you sign it. Your lawyer can evaluate whether the terms are fair, explain the long-term financial impact, compare financing to traditional lien treatment, advise you on whether the arrangement is in your best interest, and negotiate reductions when possible.

Financing companies may be appropriate if you have no insurance, have no other way to access care, need urgent imaging or specialist treatment, or require a procedure you simply cannot afford upfront. Even then, you should only move forward after fully understanding the financial consequences.

These contracts are legally binding and can significantly reduce the amount of money you receive at the end of your case. Always let your personal injury attorney review funding agreements, liens, assignments, or any repayment documents. Your attorney’s goal is to protect both your medical recovery and your financial future.

How Do I Pay Back a Medical Lien?

Many clients are surprised to learn how much they owe when their case settles, because lien balances are easy to forget. But repayment of valid liens is mandatory. By law, every lien holder must be paid before you receive any portion of your settlement. This includes medical providers, Medicare and Medicaid, ERISA health plans, and private insurers with a legal right of reimbursement.

Your attorney is required to pay these liens directly from the settlement funds. If your settlement isn’t large enough to cover all lien amounts, you may still be responsible for the remaining balance. In some cases, liens can reduce a settlement significantly, even to the point of consuming most or all of it.

This is why we carefully consider whether lien-based treatment is appropriate before recommending it. Many providers will agree to a payment plan, but your obligations depend entirely on the contract you signed. For that reason, you should never sign a lien agreement without having your attorney review it first.

How Your Attorney Protects You

Your lawyer’s role is critical. A good South Carolina personal injury attorney will:

✔ Identify all lienholders

✔ Review bills for:

 • Duplicate charges

 • Unrelated treatment

 • Improper medical coding

 • Billing errors

✔ Challenge invalid liens

✔ Negotiate reductions

✔ Seek waivers when possible

✔ Ensure lienholders follow the law

✔ Prevent liens from consuming your settlement

✔ Pay liens in the correct priority order

✔ Protect you from future collections

Your attorney’s negotiation skills can make thousands of dollars of difference in what you take home. Even after your case settles, lien negotiation is one of the most important steps. Most lien resolutions take a few weeks to several months, depending on the number of lien holders and their responsiveness.

Medical Liens Are Complicated — But You’re Not Alone

The shock of learning how many lien holders want a piece of your settlement can be overwhelming. But with the right attorney, you don’t have to face that alone. At Palmetto State Injury Lawyers, we:

• Explain your rights

• Identify every lien

• Protect your settlement

• Fight unfair lien claims

• Negotiate aggressively

• Advocate for your future

Your job is to heal. Our job is to make sure you keep as much of your settlement as possible.

📞 Contact Palmetto State Injury Lawyers

We’ll help you get the care you need — and protect your settlement every step of the way.