After an accident caused by someone else's negligence, like a car crash or slip and fall, you may face mounting medical bills to treat your injuries. Even with health insurance, copays and deductibles can add up quickly. If you're unable to work due to your injuries, paying those medical expenses out-of-pocket can be a huge financial strain.
Fortunately, if you have a valid personal injury claim against the at-fault party, you may not have to pay those bills immediately. Your medical providers or health insurance company may agree to a medical lien, allowing you to defer payment until your personal injury case is resolved through a settlement or court judgment. A Port St. Lucie personal injury lawyer can help you navigate this process. Let's take a closer look at how medical liens work in personal injury cases.
Table of contents
- What is a Medical Lien?
- Why Agree to a Medical Lien?
- Medical Lien Logistics
- Limitations on Medical Liens
- Benefits of Medical Lien for Providers and Insurers
- Risks of Medical Lien for Injured People
- How a Personal Injury Lawyer Can Help
- Contact a Personal Injury Lawyer With Frankl Kominsky Injury Lawyers Today
What is a Medical Lien?
A medical lien is a legal agreement between an injured person and a healthcare provider or health insurance company. In this agreement, the provider or insurer agrees to treat the patient's accident-related injuries and delay collecting payment for that treatment. In exchange, the patient agrees that the medical bills will be paid directly out of any compensation they receive from a personal injury settlement or verdict.
Essentially, a medical lien gives the healthcare provider or insurance company a secured interest in the anticipated personal injury claim proceeds. It ensures they will be reimbursed for the cost of treatment before the injured person receives their portion of the settlement or judgment money.
There are two main types of medical liens in personal injury cases:
- Healthcare provider liens - Hospitals, doctors, physical therapists, chiropractors, and other medical professionals who directly treat the injured person's accident-related injuries may agree to a medical lien. Under Florida law, most healthcare providers must bill a patient's health insurance first, if applicable. The provider lien would cover any remaining balance.
- Health insurance liens - If an injured person's health insurance pays for some or all of their accident-related medical care, the insurance company is entitled to be reimbursed out of any personal injury compensation the patient receives. This right of reimbursement is often called subrogation. Many health insurance policies include specific subrogation clauses. Even without an explicit clause, Florida law grants health insurers an automatic lien for bills they pay because of a third party's negligence.
Why Agree to a Medical Lien?
There are several reasons an injured person and their personal injury lawyer may agree to a medical lien:
- Ensures access to medical care - If the injured person does not have health insurance or cannot afford their copays and deductibles, a medical lien allows them to get necessary treatment they may otherwise forego or delay. Timely, appropriate medical care is crucial to recover physically and demonstrate the extent of injuries for a personal injury claim.
- Avoids out-of-pocket costs - Paying accident-related medical bills out-of-pocket while also being unable to work due to injuries can be financially devastating. A medical lien defers those costs until the personal injury case is resolved.
- Shows significant injuries - The fact that a healthcare provider is willing to take a lien signal to the insurance company and/or jury that the provider considers the injuries serious. An injured person is unlikely to continue going to the doctor if they have only minor injuries or are faking or exaggerating their injuries. Consistent medical treatment documented through bills can help prove personal injury damages.
- Required by health insurance - As noted above, if health insurance pays for accident-related treatment, the insurer has an automatic right to reimbursement. The injured person does not have a choice.
- Reduces settlement leverage - In cases involving health insurance liens, some medical providers may agree to reduce their bills if the case settles. The health insurer's lien amount is typically the lower, adjusted bill. So, resolving bills through a lien may increase the injured person's net settlement recovery compared to if they paid bills out-of-pocket.
Medical Lien Logistics
In most personal injury cases, medical liens are agreed to in writing. The lien document specifies which bills are covered and stipulates that those bills will be paid directly out of personal injury compensation before the client receives funds. The lien document is signed by the injured person (or their legal guardian if the injured person is a minor or incapacitated) and their lawyer. It's important to have an experienced personal injury attorney review any medical lien paperwork.
Once the case settles or a judgment is entered, medical lien holders are typically paid immediately before the client receives their portion of the proceeds. In fact, many personal injury lawyers, including car accident lawyers, will insist on paying lien holders directly out of the client's settlement or judgment so there are no issues with unpaid bills down the road. The lawyer will facilitate collecting the final bills, verifying the amounts, and negotiating reductions where possible.
Medical lien payments will be itemized in the injured person's settlement breakdown. This is a spreadsheet prepared by the lawyer that lists the total settlement or judgment amount, all fees and expenses deducted from that total (including attorney's fees, costs, and medical liens), and the net amount disbursed to the client.
Limitations on Medical Liens
It's important to understand that medical liens only apply to bills for reasonable and necessary treatment of accident-related injuries. An injured person cannot get cosmetic surgery or any other unrelated care and expect those bills to be included in a lien.
There may also be limitations on certain types of treatment covered by a lien. For example, some health insurance plans exclude chiropractic care or alternative therapies. An injured person needs to check their health insurance policy and review any lien paperwork carefully so they understand potential exclusions.
Medical liens also don't apply to bills for pre-existing conditions. Only treatment specifically for new injuries or aggravations of prior injuries directly caused by the accident will be covered by a lien. The client may still need to use their health insurance or pay out-of-pocket for any unrelated treatment.
Benefits of Medical Lien for Providers and Insurers
At first glance, it may seem like medical providers and health insurance companies are the ones doing the injured person a favor by agreeing to a medical lien and deferring collection.
But in reality, medical liens offer several advantages for providers and insurers:
- Increased chances of getting paid - Agreeing to a medical lien makes it more likely that an injured person will continue treatment with that provider. The more treatment, the higher the provider's billable services. Had the provider demanded payment up front, the patient may have gone elsewhere or stopped treatment altogether. The lien also gives the provider a secured interest in settlement funds, which makes collecting payment easier.
- Reimbursement from higher billed rates - Florida law prohibits doctors and many other healthcare professionals from "balance billing" insured patients. Balance billing is when a provider accepts a discounted rate from the health insurer as payment in full but then tries to collect the unpaid balance between that discounted rate and their standard billed rate from the patient. With a medical lien, however, the provider typically recovers the full billed rate for accident-related treatment -- not just the lower amount they might collect from health insurance. This results in a windfall.
- Marketing tool - For healthcare providers who treat many accident victims, like chiropractors, orthopedists, and physical therapists, agreeing to liens can be an effective marketing tactic to attract more patients. A provider who won't treat an injured person without payment upfront will lose business to competitors who more freely accept liens.
- Subrogation rights - As discussed above, health insurance companies have a legal right to be reimbursed for accident-related treatment. Asserting a lien protects this valuable subrogation right. Health insurers aren't simply being generous by agreeing to conditionally cover an injured person's accident-related care. It's a strategic financial decision.
Risks of Medical Lien for Injured People
While medical liens can be an important tool in personal injury cases, there are also some potential downsides for injured people to keep in mind:
- Pressure to settle—Once an injured person has signed a lien and started treatment, the medical bills can add up quickly. As the total potential lien amount grows, the provider may feel subtle or overt pressure to settle the case as soon as possible so they can be paid. The provider's interests are not always aligned with the patient's in terms of holding out for maximum case value. Feeling rushed to settle for less than a case is worth is not in an injured person's best interest.
- Overtreatment—Some unscrupulous providers may intentionally overtreat an injured person or provide unnecessary care to drive up their bills and increase their potential lien recovery. The patient may not even realize they're being taken advantage of. An experienced personal injury lawyer can help spot red flags and push back on unreasonable bills.
- Unpaid bills - If a personal injury case resolves for less than anticipated, the injured person may be left with unpaid medical bills. With certain exceptions, lien holders generally aren't required to reduce their bills just because a case doesn't settle for as much as expected. The injured person will be responsible for making payment arrangements for any portion of accident-related bills not covered by the settlement or judgment.
- Lien priority - Medical lien holders typically receive payment before the injured person receives their portion of a settlement or verdict. The injured person may end up with a significantly reduced recovery or even nothing after paying liens and other case expenses. An experienced lawyer can negotiate lien reductions where possible and explore options for settling subrogation claims for less than face value, ensuring you leave with as much money in your pocket as possible.
How a Personal Injury Lawyer Can Help
Being injured in an accident is stressful enough without having to navigate medical liens and health insurance subrogation on your own. An experienced personal injury attorney can streamline the lien process and take the burden off the injured person's shoulders.
Some specific ways a lawyer helps with medical liens include:
- Determining which providers are willing to treat on a lien basis
- Reviewing lien paperwork to make sure only accident-related care is covered
- Monitoring treatment to ensure it is reasonable and appropriate
- Collecting, organizing, and verifying final bills from each provider
- Asserting lien rights and subrogation claims against settlement or judgment proceeds
- Negotiating reductions with lien holders to increase client's net recovery
- Facilitating resolution and payment of final lien balances
- Providing clear explanations and a written breakdown of lien payments
Contact a Personal Injury Lawyer With Frankl Kominsky Injury Lawyers Today
If you've been injured because of someone else's negligence, the last things you should worry about are medical bills and insurance paperwork. Let Frankl Kominsky Injury Lawyers deal with the liens so you can focus on getting better.
Our knowledgeable personal injury attorneys are well-versed in Florida lien laws. We will protect your rights and fight for the maximum compensation you deserve.
Contact Frankl Kominsky Injury Lawyers today at (561) 800-8000 or through our online form for a free, no-obligation consultation. We've recovered over $100 million for accident victims in Southeastern Florida, and we're ready to put our skills and resources to work for you too.