Medical Liens on Personal Injury Claim Proceeds
Did you know that if you obtain compensation for bodily injuries in an auto accident or other personal injury claim, the recovery may be subject to a lien held by a medical provider, insurance company, or governmental entity (such as Medicare or Medicaid) that paid for your medical treatment? Did you know that if you fail to pay a proper lien out of the settlement or judgment proceeds, you could incur personal legal liability for the unpaid lien?
By law, healthcare providers who properly perfect their right to payment, and third parties who pay healthcare providers for such treatment, often have a lien for the costs of the healthcare provided to treat the patient’s injuries incurred in the accident. The lien applies to any recovery by the patient on his or her legal claim. For example, if you are injured in an accident and your private insurance pays your doctor’s bills, the insurance company likely has a lien. The reason? The insurance company would not have had to pay those costs if the negligent party hadn’t caused the injury—and thus caused the need for the treatment and resultant costs.
The practical significance? In a legal claim, injury victims must be careful to honor the rights to payment of lienholders. This is important for the patient-victim to avoid being sued for failure to ensure that proper liens are paid out of judgment or settlement funds.
If a lienholder asserts a right to payment, care should be given to make sure that all items on the lien statement are appropriate. Watch for unrelated treatment items based on the particular ICD (International Classification of Diseases) code shown for each doctor’s visit or treatment item on the itemized lien statement.
Another aspect of medical liens to be aware of: they often have a direct relationship to the value of a claim. The bad news for the injury victim is that a higher lien means payment to the lienholder. The good news is that a higher lien has a tendency to prove the underlying course of treatment, which may strengthen the claim for general damages like pain and suffering. Liens are also related to the collateral source rule (to which the Legislature recently made significant changes).
Depending on the type of lien, it may be negotiated to a reduced amount. It is important to consider the type of lien before attempting negotiations. Some insurance lienholders, particularly ERISA plans, have superior rights and are more difficult to negotiate.
If liens are not properly handled, the patient-victim’s auto accident or personal injury case can become an unnecessary nightmare. To ensure a more smooth claim process and peace of mind, hire a law firm that has experience in addressing liens in personal injury cases.