When you have a personal injury claim, one of the first to find out about it will be your health care provider. Many providers ask, in your patient information or patient visit form, whether you're there because of an accident or a work-related injury. In this age of managed care, capped reimbursements, and declining revenues, health care providers have taken a keen interest in asserting claims against personal injury settlements.
In many states, providers can seek direct payment from third parties like insurance companies that owe patients money for a personal injury claim. Quite often, this path offers significant advantages over billing the patient or accepting a reduced reimbursement from a patient's health insurance coverage.
Let's find out how these claims work, and how they could affect your settlement.
A health care lien is a legally-enforceable claim against your personal injury settlement (compensation you negotiate with the legally-responsible party or their insurer) or judgment (a court order awarding you an amount of compensation, usually after a trial). A health care lienholder is what's sometimes called a "priority" creditor, meaning a creditor whose claim goes to the front of the payment line ahead of some (or all) other creditors.
There are two ways a health care provider can get a health care lien:
You and your health care provider are free to agree that the provider will get a lien on any recovery you make from a third party, whether by settlement or judgment. Check your patient intake or patient visit paperwork: It might include a written lien agreement. Other times, the contract will be a separate document.
Most states have enacted a health care lien statute, though a handful of states regulate liens via local ordinances (laws enacted at the county, township, or city level) rather than state law. Provider lien laws vary significantly from one state to the next, and in important ways, so it's critical that you become familiar with your state or local law.
Here are just a few of the ways these laws often differ:
It's an increasingly common practice for health care providers to ask if your injury or condition resulted from an accident or a work-related incident. Once the provider knows that a third party might be legally responsible, it has another potential source of payment for your medical bills.
In fact, health care providers, and particularly hospitals, often hire third-party vendors that are paid a fee to obtain this information and collect payment. Beware of anyone who offers assistance in processing your medical claims. In some cases, it's simply a ploy to obtain information about a possible personal injury recovery.
Providers often will notify others, like the responsible party's insurance company or attorney, of their lien. Sometimes state law requires this notice. Even in states where it isn't required by law, providers often send these notices to make sure that anyone who's involved in paying funds to you has actual notice of their lien.
Finally, the health care lienholder will also send a notice to your attorney, if you have one. The attorney is required by law to honor a valid lien before paying any money to you.
If you have health insurance, odds are you're part of a managed care network. Whether a PPO, an HMO, or some other variant, the common denominator among managed care networks is that in-network providers agree to accept a reduced payment or discounted fee for being included in the network.
Here's how it usually works. You have an office visit with your doctor. You've agreed (typically as part of your new patient paperwork) to let the doctor bill your health insurer directly, an arrangement that makes your life easier. So the doctor bills your insurer for, say, $350, the amount they charge for an office visit.
Eventually, you'll get an "explanation of benefits" (EOB) from your health insurance company. The EOB will show the $350 charge, and will also show how much the insurance company actually paid on your behalf. Let's say your insurer paid $200. If your doctor is an in-network provider, the doctor has agreed to accept that amount—$200—in full payment, and to write off the balance of $150.
If they know you've got a personal injury claim, some providers won't send their bill to your insurance company. Instead, they'll assert a health care lien and try to collect directly from the responsible party or their insurer. Or they'll collect what they can from your health insurance carrier, and try to collect any excess balance via a health care lien.
This practice is sometimes called "balance billing." If an in-network provider tries to balance bill, contact your health insurance company. Balance billing might violate the provider agreement between your insurer and the health care provider.
In addition, balance billing can be illegal under both federal and some state laws, depending on the circumstances. If you're concerned about being balance billed, ask an attorney or get in touch with your state insurance department.
As mentioned above, many health care providers—especially those who are in-network—will file their claims directly with your health insurer. Note that most health insurance companies require that claims be filed within a certain deadline. If your provider fails to timely file a claim with your insurance company, it can cause you problems.
If you get a bill from a health care provider that doesn't reflect any kind of discount, check with the provider to see whether they filed a claim with your health insurance. If not, be sure you file a claim within the filing deadline. Check with your insurer to make sure you follow the procedures required by your health insurance plan.
We've shared the basics about health care provider liens. But state health care lien laws can be complicated and difficult to understand. A mistake here can be costly. If you get a settlement or judgment and fail to pay a valid provider lien, the provider likely has the legal right to come after you (and maybe others with notice of the lien, too) for any amount the provider is owed.
Don't risk an expensive mistake. If you're concerned about provider (or other) liens against your personal injury recovery, get expert legal help. Here's how to find an attorney in your area.