Hospital Liens and Personal Injury Claims
Imagine you've been in a bad car accident. You're hospitalized and may or may not have insurance. A few months down the line you receive a certified letter stating that the medical facility has put a $20,000 “lien” on any proceeds from your claim.
Unfortunately, this means you've just encountered your state's hospital lien statute.
If this has left you wondering what to do or confused as to what exactly a lien is -- fear not, we're here to help.
We'll explain ….
What is a Hospital Lien?
Why are Hospital Liens Used?
Tips you Can Use to Fight Against a Lien
Let's get started….
What is a Hospital Lien?
For many people, the word “lien” might bring up thoughts of taxes or claims against your property. According to the Cornell University Legal Information Institute a lien is :
“A security interest or legal right acquired in one's property by a creditor. A lien generally stays in effect until the underlying obligation to the creditor is satisfied.”
In other words, it's a financial claim by one party against another party for a specified amount of money. When we speak of a hospital liens, we're referring to the legal right of a medical provider to put a claim against you.
Sometimes a hospital will ask you to sign a “lien letter” authorizing them to use a lien to recoup costs if necessary.
The most common scenario where a this comes into play is where someone is treated by emergency services but doesn't have sufficient (or any) insurance coverage.
The hospital may then go after the individual for the difference, or if they find out a third party is responsible and pursue them.
Why are Hospital Liens Used?
Liens are a form of insurance for medical facilities ensuring that they have some form of recourse if a significant bill goes unpaid or uncovered. Lien laws vary quite a bit state to state, so researching yours or speaking to a qualified attorney is in your best interest.
But generally speaking, liens can be placed on the following services:
- Ambulance transportation
- Visits with your attending physician
- Nurse services
- Dental services (especially emergency)
- Generalized hospital services
- Medical supplies (wheelchair, physical therapy, etc)
Hospital liens are obviously problematic if you're on the receiving end. They often include inflated totals, they're much less flexible than billings from insurance companies, and if the lien goes unsettled it will delay receiving the settlement check from the other party.
5 Tips You Can Use to Fight Against a Hospital Lien
Even if you've received a lien, there are still some steps you can follow to fight against it:
- Check to see if the hospital followed correct procedure. Within the statutory scheme of each state's laws, there are regulations for how a lien can and should be placed. There must be proper notice that is given within a certain timeframe, etc. If these guidelines are not followed the lien may be invalid.
- Check to see what (if anything) has been paid so far. Reviewing the payment record will show if any (even partial) payments have been made. Sometimes a smaller amount of payment will be accepted in full by a medical provider, this can be the difference between a “contract rate” and a “charged rate”. Knowing where you stand will let you know how to proceed.
- Try to determine if you're being balance billed. Balance billing is when a medical provider charges for the difference between the hospital's charged rate and the amount paid out by an insurer. Balance billing is not allowed if Medicare or Medicaid is in play. For the rest, it depends on what a state's law stipulates but it can be a good tactic for fighting back. Anyone who has been billed $100 for Ibuprofen knows what we're talking about.
- Check an itemized invoice carefully. Too often people accept medical bills as gospel. The truth is that double billings, inflated rates, and other mistakes are not uncommon -- so go line by line to check things for yourself. Also, consider what is reasonable. This might be hard as most medical bills are so outrageously expensive these days. But it never hurts to try to apply some common sense logic as well.
- If all else fails you can use the nuclear option and get your attorney to utilize a “statutory interpleader”. This makes sense if you've agreed to a settlement with another party but the hospital is being unreasonable with their demands. By using an interpleader you are placing the disputed funds into the court's custody for them to decide how to divvy things up.
When it comes to fighting liens, legal representation is almost a must -- but it never hurts to be informed for yourself.
Having a hospital lien placed on you is not an ideal situation to be in, but it's not all doom and gloom. Having a lien on you may mean you have a sizable settlement coming your way regardless.
Liens are complicated, and how they work depends entirely on jurisdiction, but it's important to have a few takeaways firmly in mind. To review:
- A hospital lien is a legal claim by a medical provider against you or a potential insurance settlement you will be receiving for medical costs.
- Hospitals use liens to protect their bottom lines. The most common scenario for lien-usage is when someone receives emergency care without insurance coverage.
- There are many ways to challenge a lien, and getting a good attorney to represent you is the most fundamental step. Beyond that, make sure the hospital perfected their lien, review the payment record, determine if you're being balance billed, carefully review an itemized billing and if all else fails, use an interpleader.
1 - Cornell University Law School
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