Tiffany Mitchell told TMZ that the Mean Girls star called her a "f**king gypsy" before a fight broke out, which resulted in Lohan being arrested for assault.
Mitchell, a psychic, told the website that she approached Lohan after having a premonition about her but was turned away by the actress, who allegedly insulted her as she walked away.
A friend of Mitchell reportedly responded by calling Lohan a "wh**e", adding that her latest project Liz & Dick "sucked". Lohan is accused of punching Mitchell in response, leading to the fight and her arrest.
Mitchell's husband told TMZ: "We are not gypsies. That has nothing to do with our religion... it was a racist comment.
"Just because your career went down the drain and your new movie sucks, you can't go around beating people up."
Meanwhile, Lohan has reportedly denied hitting Mitchell but admitted to friends she used the term without realising it was considered derogatory.
Yesterday it was also reported that Lohan will face charges over a car accident in June, where she is alleged to have lied about being in control of the vehicle.
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