Gap Between Medical Bills and Settlement: Who Pays in Georgia?

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When a Georgia injury claim settles for less than the medical bills plus everything else the injury cost, several rules decide who absorbs the shortfall. A provider’s lien reaches the claim but not the patient, a health insurer is reimbursed only if the recovery made the injured person whole, the state Medicaid program has its own lien, and a statute sets part of the order among them.

What the Bills Count For

For a cause of action arising on or after April 21, 2025, special damages for medical care are limited to the reasonable value of medically necessary care, as the trier of fact determines it, and for a plaintiff with health insurance the evidence of that value includes both the amounts charged and the amounts actually necessary to satisfy the charges under the insurance contract (OCGA 51-12-1.1(b), (c)). Where care was provided under a letter of protection or a similar promise of payment from the recovery, the letter, the itemized charges, any sale of the account to a third party, and any referral become relevant and discoverable (OCGA 51-12-1.1(d)).

The Order of Claims on the Money

A hospital, nursing home, physician practice, chiropractic practice, or provider of traumatic burn care has a lien on the injured person’s cause of action for the reasonable charges of the care, and that lien is subject to any attorney’s lien; “in the case of any chiropractic lien, said lien shall also be subject to any hospital lien” (OCGA 44-14-470(b)). The lien attaches to the cause of action only. It is not a lien against the injured person or the person’s other property, and it is not evidence that the person failed to pay a debt (OCGA 44-14-470(b)). A release or settlement does not defeat the lien unless the lien holder joins in it or releases the lien (OCGA 44-14-473(a)).

The Department of Community Health has a lien for the medical care Medicaid provided, on money that accrues to the recipient because of a third party’s liability, and it must file its verified lien statement within one year from the date the last item of care was furnished; its statute does not affect the priority of any attorney’s lien (OCGA 49-4-149(a), (b)).

When the Recovery Does Not Make the Injured Person Whole

A health insurer or other benefit provider that paid medical expenses may require reimbursement from the recovery, up to the amount allocated to those categories of damages, only if two conditions are met: the recovery exceeds the sum of all the injured person’s economic and noneconomic losses, not counting the losses the provider paid, and the reimbursement claim is reduced by a pro rata share of the attorney’s fees and expenses of litigation (OCGA 33-24-56.1(b)). Where the recovery is claimed to fall short, the provider may seek a declaratory judgment, and if the court determines that the settlement does not fully compensate the injured party, the benefit provider has no right of reimbursement (OCGA 33-24-56.1(c)).

For example, imagine an injured person whose losses total $200,000, not counting $25,000 in medical bills a health plan paid, and who settles for $100,000. The recovery does not exceed the sum of the losses, so the first condition in subsection (b) is not met, and if a court determines that the settlement does not fully compensate the injured person, the plan has no right of reimbursement under the statute.

A plan governed by federal law can change that result. In US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013), an employer’s health plan established under the Employee Retirement Income Security Act, the Supreme Court held that equitable rules limiting reimbursement to a double recovery, or requiring the plan to share the attorney’s fees, cannot override the plan’s clear terms, and that the common-fund rule applies where the plan says nothing about allocating those fees.

Frequently Asked Questions

Is an insurer bound by a hospital lien if it never received the hospital’s notice?
Yes, once the lien statement is filed. “The filing of the claim or lien shall be notice thereof to all persons, firms, or corporations liable for the damages, whether or not they received the written notice provided for in this Code section” (OCGA 44-14-471(b)).

Can a settling party avoid a hospital lien with an affidavit?
A party that settles with the injured person and first obtains an affidavit affirming that all hospital, nursing home, physician, chiropractic, and burn care bills for the injuries “have been fully paid,” and stating the affiant’s county of residence, is not bound by the lien, except that the affidavit does not protect the party where the lien is already on file in that county in the patient’s name (OCGA 44-14-473(b), (c)).

Who decides how a verdict is divided among categories of damages?
“[T]he trier of fact may allocate the amounts paid among the categories of damages actually sought by the plaintiff at trial, and it shall be conclusively presumed that such allocation by the trier of fact is reasonable” (OCGA 33-24-56.1(d)).

Can the health insurer be named on the settlement check?
No. No defendant or liability insurer “shall include any insurer seeking reimbursement under subsection (b) of this Code section as a copayee on any check or draft in payment of a settlement or judgment” (OCGA 33-24-56.1(e)).

Does applying for Medicaid assign the injury claim to the state?
A recipient whose medical care the department may be obligated to pay “shall be deemed to have made assignment to the department of any rights of such person to any payments for such medical care from a third party, up to the amount of medical assistance actually paid,” but only if notice of that provision was given when the application was filed (OCGA 49-4-149(d)).

  • OCGA 51-12-1.1(b), (c), (d); SB 68, 2025 Ga. Laws, Section 9(b) (applicability)
  • OCGA 44-14-470(b); OCGA 44-14-471(b); OCGA 44-14-473(a), (b), (c)
  • OCGA 33-24-56.1(b), (c), (d), (e)
  • OCGA 49-4-149(a), (b), (d)
  • US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013)

Disclaimer

This article provides general information about medical liens and reimbursement claims under Georgia law. It is not legal advice and does not create an attorney-client relationship. What must be paid from a settlement depends on the liens perfected, the plans involved, the notices given, and the specific facts. A person with a settlement should consult a licensed Georgia attorney promptly about the particular situation.

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