Wrongful Termination and Health Insurance Loss: Pharmacy Liens for Employment Attorneys

James Wong — Founder & Pharmacist, LienScripts | November 12, 2024 | 8 min read

When a wrongful termination causes loss of employer-sponsored health insurance, injured plaintiffs lose access to prescription medications they depend on. Pharmacy liens aren't just for motor vehicle accidents — employment attorneys should understand when they apply to their clients.

This post is for informational purposes only and does not constitute legal advice.

The Medication Access Problem in Employment Cases

Employment attorneys handling wrongful termination, disability discrimination, and retaliation claims are accustomed to calculating economic damages: back pay, front pay, lost benefits, lost retirement contributions. Health insurance is a standard component of the benefits calculation.

What's less commonly considered: when a wrongfully terminated employee loses employer-sponsored health insurance, they may also lose access to prescription medications they depend on — whether for a pre-existing condition, a workplace injury, or a stress-related condition causally connected to the termination itself.

This is the intersection where pharmacy liens become relevant to employment law practice.

[!KEY] Pharmacy liens are not limited to motor vehicle accidents — any civil claim with third-party liability and a plaintiff who lacks insurance coverage for harm-related medications may qualify, including wrongful termination cases where COBRA coverage lapses and psychiatric medications become unaffordable.

When Pharmacy Liens Apply in Employment Cases

Pharmacy liens are designed for civil plaintiffs who need medication access while a claim is pending. The standard application is a motor vehicle accident — but the structure applies to any civil claim where:

1. The plaintiff has a medication need attributable to the defendant's conduct (or to the harm the plaintiff suffered)
2. The plaintiff lacks insurance coverage for those medications
3. The claim has not yet resolved

Employment cases that meet these criteria include:

Wrongful termination with insurance loss: A plaintiff terminated without cause loses COBRA coverage when they can't afford the premiums. Medications they were taking for a work-related stress condition, or a pre-existing condition that the employer's plan covered, are now unaffordable.

Disability discrimination resulting in medical leave without pay: A plaintiff forced off work without accommodation loses income and often insurance. If the disability itself requires ongoing prescription management, the pharmacy lien bridges the coverage gap.

Hostile work environment / harassment with documented psychiatric harm: Courts have recognized psychiatric harm (PTSD, major depression, generalized anxiety disorder) as compensable damages in employment cases. These conditions require ongoing prescription management — SSRIs, SNRIs, anxiolytics, sleep medications. A plaintiff without insurance coverage for these medications either goes without treatment or pays out of pocket.

Retaliation cases with physical manifestations: Stress-induced physical conditions — hypertension exacerbated by workplace harassment, GI conditions aggravated by a hostile environment — may require prescription treatment. Whether these conditions are causally attributed to the employment conduct is a damages question; the medication need is a practical reality during the pendency of the claim.

The Causal Connection Requirement

Pharmacy liens cover medications that are causally connected to the harm at issue in the claim. In a PI case, this is straightforward — the accident caused the injury that requires medication. In an employment case, the causal analysis is more nuanced:

• Psychiatric medications initiated or materially changed after the termination or the hostile conduct may be causally attributed to the employment harm
• Pre-existing conditions whose medication management was disrupted by loss of insurance coverage present a different causal structure — the termination caused insurance loss, which caused medication access loss
• Medications for conditions unrelated to the employment claim are not covered under a pharmacy lien

Employment attorneys should discuss the causal connection with the treating physician before enrolling a client in a pharmacy lien. A prescription for PTSD medications written by a psychiatrist who has documented the causal connection to the workplace harm is a well-supported lien enrollment. A prescription for a chronic condition that predates the employment claim and is unrelated to the employer's conduct is not.

COBRA and the Coverage Gap

Many wrongfully terminated plaintiffs initially elect COBRA continuation coverage — but COBRA premiums (which shift the full cost of insurance to the former employee) are unaffordable for a plaintiff whose income has been cut off by the termination. COBRA coverage typically lapses within weeks or months, creating the medication access gap.

A pharmacy lien can be established during the COBRA period (before lapse) or after it lapses. The key is that the medications covered must be injury-related (causally connected to the employment harm) — COBRA coverage for unrelated conditions doesn't preclude a lien for employment-harm-related medications.

[!NOTE] Before enrolling a wrongful termination client in a pharmacy lien, discuss the causal connection with the treating physician — psychiatric medications initiated or materially changed after the adverse employment action should be documented with a treatment note attributing them to the workplace harm.

Including Pharmacy Lien Costs in Employment Damages

In an employment case where a pharmacy lien is used to maintain access to employment-harm-related medications, the accumulated lien amount is a component of economic damages. These are actual costs the plaintiff will pay from any settlement or judgment — comparable to unreimbursed medical expenses in a PI case.

Employment attorneys should track the pharmacy lien total as part of the ongoing special damages calculation. At settlement, the lien is paid from proceeds in the same manner as any other medical expense.

[!KEY] Employment cases can run two to four years — the accumulated pharmacy lien total over that timeline can represent a meaningful special damages component, so employment attorneys should track and disclose the growing lien balance to clients on a regular basis.

Practical Considerations for Employment Attorneys

Employment attorneys who haven't used pharmacy liens before should understand a few practical differences from the standard PI application:

• The medication need may be psychiatric/behavioral rather than physical — the lien covers these prescriptions the same way it covers pain medications
• The causal connection may require physician documentation — it's worth getting a letter or treatment note from the treating physician attributing the medications to the employment harm
• The case timeline may be long — employment cases can run two to four years, and the pharmacy lien should be disclosed to the client as an obligation that will grow over that period

For more on pharmacy lien coverage for employment-related civil claims, visit for attorneys.

[!KEY] Psychiatric medications initiated after a hostile work environment or wrongful termination are compensable damages — getting a treatment note from the prescribing psychiatrist that attributes the prescription to the workplace harm is the single most important step before enrolling an employment plaintiff in a pharmacy lien.