In personal injury law, the legal theory is that if someone or an entity harms another person, then whoever caused the harm should be liable for paying the medical bills stemming from the injury at a minimum. As a result, medical treatment is one of the most common categories of economic damage in personal injuries.
There can be complexities that can arise in the discussion of medical bills, though.
One question that often comes up is what happens if a medical insurance company has already paid the medical bills for the injured person. The question then becomes, can a plaintiff sue the party that’s liable for the medical bills regardless?
If that were to happen, then the plaintiff might be getting a windfall. At the same time, in this somewhat circular conversation, just because health insurance covers the costs doesn’t mean that a liable party shouldn’t be responsible for the harm they caused.
An at-fault party can be sued for medical bills that a health insurer pays, but that doesn’t mean the plaintiff is likely to get all of the money intended for covering the bills.
With those things in mind, the following is information about health insurance and the role it plays in personal injury lawsuits, as well as more details about medical liens.
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How Medical Coverage Works
If someone is hurt, let’s say in a car accident, and they need surgery, they may go through months of treatment. Along with the surgery itself and the appointments it involves, then the hurt person might also see a physical therapist and do physical rehabilitation.
Once deductibles are met, the hurt person pays for medical treatment related to the accident, which, let’s say, totals $20,000. An attorney is then hired, who files a lawsuit against the person responsible for the injuries.
At that point, the health insurance company might file a lien against a lawsuit.
What Are Medical Liens?
Medical liens are a demand that can be placed against a personal injury case. When a lien is filed in the example we talked about above, the health insurance company of the injured person is saying that since their client was injured, it’s their right to sue. However, the person who was hurt didn’t pay for the medical care for the injuries, the health insurance company did.
The lien indicates that if the hurt person is to receive reimbursement for medical care, the money should go to the insurance company rather than the insured person directly.
If a health insurance company issues liens to recover money it paid for medical treatment following an accident, the injured and insured person or their attorney may have to pay the lien. The process under which the lien would need to be paid is called subrogation.
The extent of one of these subrogation claims depends on the language in someone’s insurance policy and state law. You would need to talk to a personal injury attorney to know exactly what to expect.
In some states, a hospital can file a lien to be repaid for expenses related to caring for a patient injured in an accident. There are some medical providers that will ask you to sign a lien letter. A lien letter states that you’re submitting to a lien against any personal injury settlement you might receive.
One of these medical provider liens has to follow stringent guidelines to be valid.
Some of the requirements that must be followed for a medical provider or hospital lien include that it’s filed in the recorder’s office within 180 days after the injured person’s release from the hospital. The lien has to be filed in the county where the hospital is located.
The lien must have the patient’s proper name, address, and dates of service. If a hospital isn’t compliant, then the lien isn’t enforceable. That doesn’t mean you aren’t responsible for paying your bill, but instead, it means that the hospital doesn’t have a lien against a potential settlement.
If a hospital has the chance to bill your health insurance provider, then it has to do that, and it can’t file a lien for the remainder of the bill.
Workers’ Compensation Liens
If you’re hurt in an accident related to your work, then there may be a workers’ compensation lien issued. If your medical bills or your lost wages are paid through the workers’ comp fund in your state.
The lien amount will usually total whatever workers’ comp paid for your case. The laws for workers’ comp vary a lot between states, so you need to determine whether or not your carrier is able to assert a lien if you are to get a personal injury settlement.
Government Liens
If the government pays for any part of your medical care, the general rule is that they have a right to be paid back if, at any point,later on, you recover money from another party.
Some government agencies like Medicaid and Medicare liens have different rights to place liens on settlements. There are some government agencies with the right to recover portions of proceeds from personal injury lawsuits.
Releasing a Lien
Finally, you might be able to get a lien holder, if there is one, to take less than what they paid. It’s best to work with an attorney here because they can often negotiate with the medical providers when they hold a lien against your case.
There’s something called a fund doctrine to be aware of. Under this, attorneys creating a fund for the benefit of a third party are entitled to be reimbursed from the fund in the form of attorney fees.
Workers’ comp carries know a lien may be so large that it then disincentivizes negotiations. If a lien is more than whatever the total a plaintiff might recover from a lawsuit, the plaintiff might decide not to sue. The attorney for the plaintiff can negotiate with a carrier to resolve the lien for sometimes much less than the claim’s face value.
