Personal Case When Liens Are More Than Policy Limits: Interpleader

You're in a serious accident, and the insurance company is offering their "policy limits." The Oklahoma state minimum is only $25k. What can you do if your medical bills are significantly more than that?
Clayton T. Hasbrook

Written by Clayton T. Hasbrook. Last modified on October 27, 2023

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You have two main options:

  • File a lawsuit against the negligent party (Defendant).
  • File an Interpleader to get the settlement money divvied up.

The problem with option one is that you’d still have to get a judgment or verdict against the defendant, and there will likely be issues on actually collecting anything on the judgment. Before signing the settlement release, you can have your attorney do a background check/asset search to see if the defendant could pay on the excess judgment (amount over and above the insurance policy). Otherwise, it’s called a “paper verdict” as it’s only worth the paper it’s on. Another potential option is to garnish part of their wages.

What is an Interpleader?

An interpleader allows a stakeholder to deposit disputed assets with the court. It protects them from multiple liability and avoids duplicative lawsuits. The purpose is to determine the rightful owner among conflicting claims. Interpleaders benefit stakeholders by minimizing liability. They benefit claimants by providing a forum to establish ownership rights. The court benefits from efficiently consolidating overlapping disputes.

In a personal injury case, an insurance company may file an interpleader if multiple parties assert claims against the policy proceeds, such as medical providers through liens, health insurers through subrogation, and the plaintiff’s attorney fees. The court would then determine the proper distribution. The injured victim can also file the interpleader.

Should I file a separate interpleader lawsuit if my case is already pending against the defendant driver?

No, your attorney can file a "Motion To Disburse." The same requirements will still need to be met on serving the lienholders notice, though.

Parties Involved

The main parties include:

  • Stakeholder: The person/entity holding the disputed asset who initiates the interpleader. Usually, a neutral third party like an escrow agent.
  • Claimants: The parties asserting conflicting claims over the asset. There may be multiple claimants.
  • Court: Evaluates evidence and arguments to decide ownership.

If the liability insurance company files the interpleader, the defendants will be the injured victim, the medical providers (doctors, hospitals, etc), and any health insurance companies like BlueCross BlueShield or Oklahoma Health Care Authority. If the injured party is filing the action, the defendants are the same, but the liability insurance company is not included as a proper party.

Other Types of Disputes

Common interpleader disputes involve:

  • Inheritances: When beneficiaries dispute asset distribution from a will.
  • Insurance claims: When liability policy limits are less than the amount owed to the lienholders.
  • Joint accounts: Conflicts over who rightfully owns the assets.
  • Co-owned property: Disagreements between owners about property rights.
  • Trust fund assets: When multiple trust beneficiaries assert rights to the same assets.

The other common personal injury interpleader

There are multiple plaintiffs in the same case. For example, a negligent driver rear-ends a car with one driver and five passengers. If the defendant only has the state minimum coverage required, the most the insurance company will pay is $25k per person, but only $50k collectively per accident. Either the liability insurance company or one of the plaintiffs will need to initiate an interpleader for a judge to decide how to distribute the $50k.

Jurisdiction and Venue

Interpleader cases fall under Oklahoma state court jurisdiction. However, federal courts may have jurisdiction if diversity or federal question requirements are met. The venue is typically the county where the disputed property is located. But parties can agree to a different venue if more convenient. The proper court for a personal injury interpleader is where the accident occurred or where the defendant resides.

Interpleader Process

  1. File the Interpleader Petition in the county where the incident occurred [12 O.S. §2022] or amend an existing suit [12 O.S. §2015(A)].
  2. Send Notice to All Parties by certified mail, including medical providers, even if they haven’t filed a lien yet. This reduces the risk of appeals later [42 O.S. §§43, 46, 49].
  3. Request a Court Date by filing a motion and proposed order. Notify all parties of the date.
  4. Draft a Proposed Order for how the money will be divided up. The lawyer’s fees and case costs come out first [5 O.S. §7]. Then any governmental health plans get priority [63 O.S. §5051.1(D)(1)(a)]. The rest is split proportionally among the other claimants [Burchfield v. Bevans, 10th Circuit, 1957].
  5. Attend the Hearing or circulate the proposed order to get an agreed order submitted to the judge.
  6. Distribute the Funds as the court orders, either directly or by endorsing checks to the claimants.
  7. File for Dismissal to close the case once done.

How will the judge divvy up the settlement?

For example, there are $100k in liens, but only a $25k liability policy. Assuming the bills are reasonable, the judge will give each lienholder a “pro-rata” share of the settlement. If the hospital bill is $50k, the hospital will get 50% of the settlement. But, this is after taking into account the attorney fees and costs.

Liens in Personal Injury Cases

One common problem car accident victims face is getting the medical care they need. Many primary care physicians (“family doctors’) do not treat car accident cases. This leaves patients having to find a medical provider that treats on a lien basis. The medical providers file a lien that puts the insurance company and attorneys on notice. This ensures they get paid out of any settlement.

Hospital Liens under 42 O.S. 43

This Oklahoma statute gives hospitals a lien on any recovery or settlement obtained by a patient injured in an accident not covered by workers’ compensation, for the reasonable charges for treatment related to those injuries. The hospital lien is inferior to any lien by the patient’s attorney. The hospital also gets a lien on any insurance payout to the injured patient, again subordinate to the attorney’s lien. The liens do not apply to workers’ compensation claims. The lien rights also apply to unaffiliated medical diagnostic imaging facilities that provide services like MRI, CT, and PET scans to accident victims.

Lien for Medical Services under 42 O.S. 46

Allows for liens for medical providers who treat someone injured due to the negligence or actions of another person. It gives physicians and other licensed healing professionals a lien on any recovery the injured person receives from the negligent party. The lien is for the amount owed for the medical treatment. The lien is inferior to any attorney’s lien handling the injured person’s claim.

To enforce the lien, the medical provider must file a written notice with specified information in the county clerk’s office before any payment is made to the injured person. They must also send a copy of the notice to the negligent party, the injured person, and the injured person’s attorney if known. The lien can be enforced by filing a civil action within one year after the medical provider learns of a final judgment, settlement, or compromise related to the injury claim.

Health Insurance Subrogation

Health insurance subrogation in a personal injury case involves the insurer’s right to recover medical payments made on the insured’s behalf from a settlement or judgment resulting from the insured’s claim against the at-fault party. The enforceability of subrogation clauses depends on the specific language of the policy, whether the insured has been fully compensated, and public policy considerations. For example, if an insured’s medical bills total $50,000, but they receive a settlement of $30,000, the insurer may be limited in seeking subrogation if the insured has not been made whole.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Clayton T. Hasbrook who has years of legal experience as a personal injury lawyer. Our last modified date shows when this page was last reviewed.