LEVERAGING CAL CODE CIV PROC § 664.6 FOR LIEN REDUCTION ON YOUR PERSONAL INJURY CLAIM.
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A lien or reimbursement claim asserted against a pending personal injury settlement can quickly become a disruptive obstacle. You may have a favorable settlement in place yet find yourself stalled because the recovery agent refuses to communicate or compromise. A common question we receive is whether a trial judge can assist in resolving the issue. The answer is yes, provided the procedural posture is correct and you take action before the case is formally settled.
When a lien is holding up disbursement, recovery agents gain significant leverage. The defense wants to close their file, and the court is under pressure to clear its docket. You are left managing your client’s expectations, keeping the court informed, and fighting with a third-party recovery agent. This is where understanding Code of Civil Procedure section 664.6 becomes critical.
Preserving Jurisdiction Under CCP § 664.6
CCP § 664.6 offers a procedural tool to enforce a settlement while preserving court jurisdiction. Subdivision (f) provides:
“If the court enters judgment or dismisses the case without prejudice pursuant to this section, the following shall apply:
(1) A party may file a motion or other document pertaining to the settlement, including an application for determination of good faith settlement, a motion for the reduction or determination of a lien… or, if the terms of a settlement are not performed, a motion based upon such terms.” [emphasis added]
If properly invoked, this provision allows you to finalize disbursement, dismiss the case, and retain a judicial mechanism to resolve the lien.
Strategic Use of Allocation Orders to Limit Exposure
Cases involving unallocated settlements are particularly vulnerable to lien exposure. Consider situations with multiple plaintiffs or distinct claims; for example, personal injury versus loss of consortium, or survival versus wrongful death. The defense may offer policy limits or a global figure to resolve all claims but leave allocation to the plaintiffs.
Proper allocation can materially reduce lien exposure. Reimbursement rights generally attach only to the recovery related to the covered individual’s personal injury claim, not to recoveries belonging to other plaintiffs. However, many plan administrators take the position that their lien extends to the entirety of the gross settlement. This raises both due process concerns and property rights questions, which warrant separate legal treatment.
It is worth noting that allocating by private agreement in a settlement document is usually insufficient. Recovery agents often argue that such allocations are inherently collusive. Because the liability carrier is not financially impacted, so long as all claims are released and a Civil Code § 1542 waiver is secured, the concern is not without merit. A court-ordered allocation, reached through a contested hearing, is far more persuasive. CMS and DHCS both recognize court-ordered allocations, provided the process reflects genuine adversarial proceedings. We have seen significant lien reductions when allocation orders are properly obtained.
Challenging the Lien Directly
Once jurisdiction is preserved under CCP § 664.6(f), the court may also hear motions to determine or reduce the lien itself. A properly served motion, formally delivered to the recovery firm or plan administrator, may support entry of an order fixing the amount of the lien, or extinguishing it entirely, if no responsive appearance is made.
Whether the court has subject matter jurisdiction to rule on the substance of the lien claim depends on its legal foundation. For example, if the lien arises from a self-funded ERISA plan, federal preemption issues must be carefully evaluated. In many cases, state courts will decline to reach the merits of ERISA-related disputes, and counsel should proceed accordingly.
Get Ahead of the Problem
As with many issues in personal injury practice, timing is key. Addressing lien disputes after dismissal or disbursement often forecloses meaningful judicial involvement. By invoking CCP § 664.6 early, requesting allocation orders, and filing strategic motions when appropriate, you can preserve judicial oversight and limit lien exposure.
Explore More Resources with Lien Project Network
For a deeper dive into lien resolution strategies, settlement planning, and reimbursement challenges, explore our educational modules. Lien Project Network serves as a trusted resource for plaintiff attorneys, providing insights on financial planning, public benefits, and structured settlements in the context of lien management.
Need Assistance? Work With The Lien Project, PC
If you need expert legal assistance in navigating lien resolution, reimbursement claims, or settlement planning, our team at The Lien Project, PC is ready to help. As an LPN member, you earn credits that can be applied toward lien reduction and resolution services provided by The Lien Project, PC, allowing you to offset up to $900 per year. Your investment in continuing education through Lien Project Network not only enhances your lien resolution skills but also reduces the cost of engaging legal experts when needed.
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