Fighting lien overreach

Here’s an uncomfortable truth about personal injury practice: liens often get paid out of net settlements after attorney’s fees and costs. This creates a perverse incentive structure. Negotiating liens aggressively doesn’t increase a law firm’s profit by a single penny. Every dollar saved goes directly to the client. Yet this is precisely why fighting lien overreach matters: every dollar saved goes directly to the client. That’s why the top plaintiffs’ firms become lien reduction strategy experts. It’s our professional duty. And for those who like crossword puzzles, chess, and reading the tax code, it is thrilling work.

Subrogation companies understand this dynamic perfectly. Companies like The Rawlings Company, Carelon, and Optum have built business models on the assumption that overworked attorneys will simply roll over and pay whatever is demanded. They provide minimal legal support for their reimbursement claims, betting that the path of least resistance wins. For them, it’s a numbers game. For our clients, it’s the difference between financial recovery and financial ruin.

The Kaiser paradigm shift

The recent takeover of Kaiser Permanente’s lien recovery by The Rawlings Company reveals just how aggressive these tactics have become. Historically, Kaiser’s liens were handled by Equian, who notably did not pursue recovery from uninsured or underinsured motorist claims. This wasn’t kindness on the part of Kaiser. It was legal reality.

Enter The Rawlings Company, apparently winning the Kaiser contract by promising to extract blood from stones. They now aggressively pursue UM and UIM recoveries, arguing that plan language alone creates enforceable rights. But saying it doesn’t make it so. The law hasn’t changed just because the subrogation company has.

The legal ammunition

When Rawlings or similar companies assert overreaching liens against UM/UIM coverage, they’re hoping we won’t know the law. But Courts have been clear. Boston Mutual Ins. v. Murphree, 242 F.3d 899 (9th Cir. 2001), cuts to the heart of the matter: “Given the functional differences between these coverages, no reasonable insured would expect that the plan’s coordination clause, which at most implicates other first party medical coverage, could possibly apply to UIM coverage.”

Similarly, St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp., 65 Cal.App.3d 66 (1976), provides additional support for challenging these overreaching attempts. Armed with these authorities, we’ve consistently achieved dramatic reductions, often paying only token amounts to fully satisfy liens that initially demanded tens of thousands.

The medical payments strategy

There will be times that the health plan has a legitimate lien claim. Here’s a sophisticated approach that doubles the benefit for clients. Under California Civil Code § 3040, health insurance plans must reduce their liens for attorney’s fees and costs. After securing this reduction, use Medical Payments coverage to satisfy the lien. If you’ve recovered policy limits, the auto insurer cannot seek reimbursement on the Medical Payments lien.

Even if the auto insurer attempts subrogation on the Medical Payments coverage, you can reduce that lien for fees and costs as well. This creates a double reduction, minimizing the client’s total reimbursement obligation through strategic sequencing of payments and reductions.

Turning causation issues into solutions

The tough medical causation problem. Your experts are on board, and you feel confident in prevailing, but it’s a pain point in the case that’s being exploited by the other side. If the jury believes the defense’s experts, a large chunk of the medical damages are ripped from the case. The case settles, but then the subrogation company comes knocking at your door for a slice of your client’s pie. This is where Coopers has learned to hold the lien analysts to their burden and turn the defense experts into our witnesses. We employed this strategy recently in a battle over a self-funded ERISA lien. The lien was reduced, substantially, putting more money into our client’s pockets.

The professional imperative

Every firm faces the same economic reality: time spent fighting liens is time not spent on new cases or fee-generating work. But this is where professional responsibility diverges from profit motive. When a subrogation company counts on our exhaustion or indifference, they’re betting against our clients’ interests.The next time a subrogation representative confidently asserts a lien, remember that their confidence often stems from experience with attorneys who won’t push back. The more of us who push, the better it is for our whole practice (not to mention our clients). Fight back. Know the law. Challenge the overreach. It fulfills our fundamentals: maximizing recovery for those who’ve trusted us with their cases.

Expert assistance

Sometimes there are liens that are too large and too complicated even for the most competent plaintiffs’ firms. Fortunately, there are a number of firms that specialize in reducing these complicated liens. Their granular knowledge of matters like self-funded ERISA plans can make a big difference, and are worth hiring to help in the right situation. These firms are also generous with their learning, teaching CLEs and sharing templates, meaning supporting them yields new research and knowledge shared across the bar in the fight to reduce liens.

The bottom line

Subrogation companies have turned lien recovery into an industry built on intimidation and legal overreach. They profit from complexity and count on attorney fatigue. But when we push back with legal authority and strategic thinking, these paper tigers often fold.