After a Texas car accident settlement, you sign a release, the insurer sends the funds to your lawyer's trust account, and liens, fees, and case expenses are paid before you receive your share. Hospital liens and health insurance reimbursement can take time to resolve. Owsley Law Firm explains every deduction in writing before you sign.
Reaching a settlement is not the same as being paid. Between the agreement and the check, there are documents to sign, funds to clear, and claims by hospitals and insurers who paid for your care to resolve.
Understanding the steps helps you plan and avoid surprises. It also explains why the settlement amount and your net recovery are different numbers.
What happens after I accept a settlement?
You sign a release, the insurer issues payment, and your lawyer resolves liens before disbursing your share.
The release ends your claim against the parties it names, so it should be read carefully, especially to confirm it does not release your own UIM insurer or other defendants unintentionally.
Once the insurer receives the signed release, it issues the settlement funds, usually to the lawyer's trust account. Funds must clear before any money can be disbursed.
How long does it take to get paid?
Often a few weeks after signing, longer if liens need to be negotiated.
Insurers usually issue payment within a few weeks of receiving the release. Liens and reimbursement claims can take longer to resolve, particularly with government programs. Undisputed amounts can sometimes be paid out while a lien is negotiated.
What is a hospital lien in Texas?
A claim a hospital can place on your injury recovery for emergency care, limited by statute.
Under Property Code section 55.002, a hospital may hold a lien on the patient's claim if the patient was admitted within 72 hours of the accident. Section 55.004 limits the lien, including capping it at 50 percent of the patient's recovery. Liens must be addressed before funds are disbursed.
Do I have to pay back my health insurance?
Often yes, if your plan paid crash-related bills and has a reimbursement right.
Health plans frequently have subrogation or reimbursement rights. Whether and how much depends on the type of plan. Employer self-funded plans, government programs, and individual policies follow different rules, and many reimbursement claims can be negotiated down.
How are attorney fees and expenses taken out?
As set out in your written contingency fee agreement.
Texas requires contingency fee contracts to be in writing and signed by the attorney and the client. The agreement states the percentage and how case expenses are handled. Your settlement statement should show each deduction, and you should review and sign it before funds are disbursed.
- The gross settlement amount
- The attorney fee under the agreement
- Each case expense, itemized
- Each lien or reimbursement paid
- Your net recovery
Is a car accident settlement taxable?
Compensation for physical injuries is generally not taxable under federal law, but some parts can be.
Under the federal tax code, damages received on account of personal physical injuries are generally excluded from income. Interest, exemplary damages, and some other items can be taxable. A tax professional should review any unusual settlement.
What if the settlement is for a minor?
A court may need to approve it, and funds are often protected until the child turns 18.
Settlements for minors often require court approval and may be placed in a protected account or structured arrangement. The court's goal is to protect the child's recovery.
Common deductions from a settlement
| Item | What it is | Can it be reduced? |
|---|---|---|
| Attorney fee | The contingency fee set in your written agreement | Set by the agreement |
| Case expenses | Filing fees, records, expert costs, as the agreement provides | Itemized on the statement |
| Hospital lien | A lien under Property Code chapter 55 | Often negotiable; limited by statute |
| Health insurance reimbursement | Repayment to a plan that paid your bills | Often negotiable depending on the plan |
| Medicare or Medicaid | Federal and state reimbursement claims | Follows program rules |
What evidence proves it
- The signed release
- Your written fee agreement
- The settlement statement itemizing every deduction
- Lien notices and final payoff letters
- Health plan reimbursement correspondence
- Proof of disbursement
Mistakes that cost people money
- Signing a release without reading who it covers
- Ignoring a hospital lien
- Assuming health insurance will not seek reimbursement
- Spending settlement money before it clears
- Not reviewing the settlement statement before disbursement
Frequently asked questions
How long after settling do I get my money?
Often a few weeks after signing the release, longer if liens or reimbursement claims must be negotiated.
Why is my check smaller than the settlement amount?
Attorney fees, case expenses, liens, and reimbursement claims are paid from the settlement. Your settlement statement lists each one.
Can hospital liens be reduced?
Texas limits hospital liens by statute, and many can be negotiated. The final payoff is part of the settlement process.
Do I pay taxes on my settlement?
Damages for physical injuries are generally not taxable under federal law, but interest and some other items can be. Ask a tax professional about your specific settlement.
Can I get part of my money before liens are resolved?
Sometimes. Undisputed portions can often be disbursed while a disputed lien is negotiated, depending on the circumstances.
This page is general information about Texas law and is not legal or medical advice. Every case depends on its own facts. Contact the firm for a free review of yours.
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