How Medical and Hospital Liens Can Impact Your Personal Injury Settlement

Some doctors and hospitals can legally take part of your injury settlement. Here’s what you can do about medical liens.

When you’re hurt in an auto accident or some other type of accident, you need prompt medical treatment.

If you can’t pay up front for your medical treatment, the doctors, medical facility, and hospital have a legal right to come after you for payment.

Liens against your potential insurance settlement, jury award, or even against your home are all legal ways for medical providers to collect payment.

Here’s what you should know about medical liens, and how to get your medical bills paid after an accident.

What is a Medical Lien?

A medical or hospital lien is a health care provider’s claim for payment against your personal injury settlement or jury award. Liens may be placed by individual doctors or by medical facilities, like hospitals or urgent care centers.

If you are injured and uninsured, you still need medical care even when you don’t have the money to pay for treatment. You may have bills from the hospital, radiology facilities, chiropractors, medical doctors, and ongoing medical bills for treatments and therapy.

Emergency medical treatment cannot be denied regardless of your ability to pay. Once your condition is stable, meaning no longer life-threatening, the hospital and doctor have a right to refuse further services unless you make payment arrangements.

Letter of Protection

The medical provider may be willing to continue your health care services and wait to be paid if you or your injury attorney agree to provide a Letter of Protection, or LOP. This is a signed agreement stating you will pay the health care provider after your case settles.

An LOP arrangement only means the medical care provider is willing to wait for payment. You are not off the hook for your medical costs if your claim settles for less money than you anticipated, or you go to court and lose your personal injury lawsuit.

The Letter of Protection is a contract between you and the health care provider. If you fail to honor that contract, the provider has the right to sue you. If that happens, you may be responsible not only for the money you owe them but also for their attorney’s fees and court costs.

State Medical and Hospital Lien Laws

Letters of Protection are helpful, but a provider doesn’t necessarily need one to be financially protected.

Many states have laws protecting health care providers who advance treatment to patients. In the states that don’t require LOPs, a lien is enacted when the provider sends a certified letter notifying the patient of their lien.

States give health care providers these financial protections as a matter of public policy. Without some guarantee of payment, many providers could not afford to stay in business. Every state’s laws are different. Here are some examples.

California’s medical lien law states:

“Every person, partnership, association, corporation, public entity, or other institution or body maintaining a hospital licensed under the laws of this state which furnishes emergency and ongoing medical or other services to any person injured by reason of an accident or negligent or other wrongful act … shall, if the person has a claim against another for damages on account of his or her injuries, have a lien upon the damages recovered, or to be recovered, by the person, or by his or her heirs or personal representative in case of his or her death to the extent of the amount of the reasonable and necessary charges of the hospital and any hospital affiliated health facility… in which services are provided for the treatment, care, and maintenance of the person in the hospital or health facility affiliated with the hospital resulting from that accident or negligent or other wrongful act.”

Texas lien laws state, in relevant part: 

“A hospital has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person.

An emergency medical services provider has a lien on a cause of action or claim of an individual who receives emergency medical services in a county with a population of 800,000 or less for injuries caused by an accident that is attributed to the negligence of another person.”

Georgia lien laws allow medical liens to be paid after the victim’s attorney’s fees: 

“Any person, firm, hospital authority, or corporation operating a hospital, nursing home, or physician practice or providing traumatic burn care medical practice in this state shall have a lien for the reasonable charges for hospital, nursing home, physician practice, or traumatic burn care medical practice care and treatment of an injured person, which lien shall be upon any and all causes of action accruing to the person to whom the care was furnished or to the legal representative of such person on account of injuries giving rise to the causes of action and which necessitated the hospital, nursing home, physician practice, or provider of traumatic burn care medical practice care, subject, however, to any attorney’s lien.”

Be Aware of Hospital Chargemaster Rates

Hospitals have a list of Chargemaster rates that’s a price list for every procedure and cost a patient may incur.

Chargemaster rates tend to be much higher than the actual cost of a medication or medical service, anywhere from four to 44 times the actual cost.

Hospital bills sent to health insurance companies are based on the Chargemaster rate, with the understanding that the insurance company will only pay a reduced “agreed upon” amount that is much lower than the Chargemaster rate.

Hospitals tend to use the Chargemaster rate for liens against injury victims who are treated at that facility.

Worse, some hospitals engage in the controversial practice of jumping right to a medical lien instead of billing the injury victim’s health insurance plan. The hospital stands to get more money that way.

If your health care insurer pays for your medical treatment, they have a right of subrogation, meaning they can also put a lien on your settlement, but only for the amount they actually spent on your behalf. The subrogation amount will be a lot less than the hospital’s chargemaster rates for your medical care. This also includes liens from Medicare, Medicaid, or the Veterans’ Administration.

How to Keep More Compensation

You’ll be able to walk away with a larger portion of your injury compensation if you’re aware of potential liens from the start.

Whether you decide to handle your insurance claim on your own or hire a personal injury lawyer, it’s critical that you base your demand on the full cost of all your medical expenses, not just your deductibles, co-pays, or the reduced amount charged to your health insurance company.

Values for personal injury cases are largely calculated based on your total medical expenses, so be sure you include everything.

Don’t Ignore Medical Liens

A fair personal injury settlement should be enough to cover your economic costs, like medical and hospital bills, as well as an amount for pain and suffering. Your attorney should take out their fees and pay any medical liens before cutting a check to you.

If you handle your own claim, pay your medical bills promptly after settlement. If your claim doesn’t settle, you’re still responsible for paying any outstanding medical bills.

Unless you make arrangements to pay, the medical provider will send your debt to a collections agency. If the collections agency can’t hound you into paying, they will go to court to seek a judgment against you for the debt, plus legal costs.

With a judgment in place, you may have your wages garnished, or a lien put against your home.

A recent report revealed 56 hospitals in New York State put medical liens against 4,880 patients’ homes in a two-year period. The median outstanding medical debt was $1,900.

Get Reliable Legal Help

Talk to your attorney about your injury-related medical bills, how you were charged, and how your bills will be paid.

Medical bills and liens are often negotiable. Some lienholders won’t take less than the full amount owed, but many are willing to accept less than the full amount under certain circumstances.

If a hospital billed at Chargemaster rates, your attorney may be able to challenge the “reasonableness” of your medical bill charges under state laws. A few states limit the amount of the lien to a percentage of your settlement proceeds.

You don’t have to file a personal injury lawsuit to get good legal advice. Most personal injury attorneys offer a free consultation to the injured party. There’s no cost to find out what a good attorney can do for you.

Medical Liens on Settlement Questions

Charles R. Gueli, Esq. is a personal injury attorney with over 20 years of legal experience. He’s admitted to the NY State Bar, and been named a Super Lawyer for the NY Metro area, an exclusive honor awarded to the top five percent of attorneys. Charles has worked extensively in the areas of auto accidents,... Read More >>