How Personal Injury Attorneys Can Resolve a Medical Lien on Settlement

March 18, 2024

An accidental injury can necessitate medical treatment that may be beyond your means, but payment could be delayed if a hospital has a medical lien on your personal injury settlement. What is a medical lien, and how must it be addressed? Join us as we explore how personal injury lawyers can resolve a medical lien on a settlement.

What Is a Medical Lien?

Before we explain how to resolve a medical lien on a personal injury settlement, we should define what a medical lien is.

A lien is a legal right to someone else’s assets granted by a debtor to a creditor to secure repayment of a debt. The property owner/debtor granting the lien is known as the lienee, while the creditor receiving the benefit of the lien is known as the lienholder.

Sometimes, the assets may not be a physical piece of property, like a lienee’s house, but rather a financial instrument from which recovery could be drawn, like a personal injury settlement. This is typically the case with a medical lien, which is a legally binding agreement between a patient who received medical treatment and a hospital who provided it. A hospital with a medical lien on a personal injury claim essentially treats a patient’s injury on credit, with the expectation that payment for that treatment will be taken out of the settlement before the patient receives any compensation.

Medical liens can be useful to injured people who do not have health insurance or another immediate way to pay for their treatment. However, they do create obligations to the lienholder that must be satisfied, including payment or resolution of that debt before the lien can be released. Similarly, the hospital has to meet certain obligations for the medical lien to be legitimate.

How the Medical Lien Process Works

Now that you know what a medical lien is, we can examine how the medical lien process works from start to finish. The rules regarding medical liens can vary from state to state, but we will focus on the duties of lienholders and lienees in Indiana for the purposes of this discussion.

Medical Treatment Is Received

If you have been hurt by somebody else’s negligence, whether in a car accident, a slip-and-fall on an unsafe property, or in some other way, you will probably need medical attention, preferably sooner rather than later. Delays in treatment could hinder the healing process and allow doubt to be cast on the causal relationship between the incident and your injury.

The price tag for this treatment can escalate quickly, particularly if you undergo hospitalizations or surgeries. Even with health insurance, the cost to you can be sizeable. Without health insurance, you may not be able to pay for the care you need, which is where pursuing a claim with a personal injury lawyer can make a difference.

If you retain the services of a law firm to represent you for your personal injury claim, your attorney will identify all of the parties who harmed you and formally notify them and their insurance companies in writing. A lawsuit may be filed as well, with the ultimate goal of obtaining a verdict or settlement that compensates you for the injuries and other damages you have sustained.

A Medical Lien Is Perfected

While a personal injury case can allow you to receive compensation, it is also a means by which a hospital can be compensated for the treatment you need. Under Indiana law, hospitals can be repaid out of a personal injury settlement if they have a “lien for all reasonable and necessary charges for hospital care, treatment, and maintenance of a patient” from “any cause of action, suit, or claim” arising from the injury treated. However, a medical lien on a settlement will not be considered valid unless it has been “perfected.”

There is a specific procedure for perfecting a medical lien in the State of Indiana. Within 90 days after a patient is discharged, a hospital needs to file a “verified statement in writing” with the office of the recorder of the county in which the hospital is located that includes the following:

· the patient’s name and address;

· the provider’s name and address;

· the dates of treatment;

· the amount owed for that treatment; and

· the names and addresses of anyone who the patient or the patient’s legal representative alleges is liable for the damages arising from the patient’s injury.

Within ten days after filing that statement, the hospital will need to send a copy of it by registered mail to:

· each allegedly liable party named in the statement;

· the patient’s lawyer (if known); and

· the Indiana Department of Insurance “as notice to insurance companies doing business in Indiana.”

Once these steps have been completed, the medical lien is considered perfected, entitling the lienholder to “damages for the reasonable cost” of the care provided.

If you wish to contest a perfected medical lien or dispute the reasonableness of the charges enumerated in the lien, your personal injury lawyer will need to file “a motion to quash or reduce the claim in the circuit court in which the lien was perfected, making all other parties of interest respondents.”

Otherwise, your lawyer must address the medical lien after resolving your personal injury case “by compromise, settlement, or judgment.” Until that moment arrives, the lienholder is “barred from enforcing the collection” of the debt.

While a perfected medical lien creates an obligation for you and your attorney, it creates an obligation for the lienholder as well, which can free you from debt collection efforts until the conclusion of your case.

The Personal Injury Case Is Settled

Your personal injury lawyer will attempt to bring your case to a favorable conclusion, either as a verdict or judgment at trial or more often as a negotiated settlement with the defendants’ insurers and attorneys. During negotiations, the parties involved will consider your damages from this incident, including:

· Past, present, and future medical expenses

· Lost income

· Pain and suffering

· Psychological and emotional trauma

· Permanency of injuries

· Diminished quality of living

· Loss of consortium

· Punitive and/or wrongful death accident damages (if applicable)

These and other factors will heavily influence how much can be obtained for your personal injury case. Basically, the greater your damages are, the greater your verdict or settlement might be.

While your personal injury attorney will endeavor to maximize the value of your case, your compensation may be capped by the defendants’ insurance coverage and assets. If your damages exceed what the defendants can pay, you may need to seek out other avenues of economic recovery, such as an uninsured or underinsured motorist policy if you were hurt in a car accident.

The Medical Lien Is Resolved

Once your personal injury lawyer has obtained a verdict or settlement on your behalf, the defendants and their insurers will issue payment to your attorney’s office. But before any of the funds can go to you, the medical liens on your settlement need to be resolved, along with any other liens on your file.

To resolve a medical lien, your lawyer will have to reach an agreement with the lienholder about payment of that lien. The lienholder will then need to officially release the lien, first by filing an executed certificate with the office of the recorder of the county. The certificate must state that the lien “has been paid or discharged” and authorize the recorder to release the medical lien.

After the recorder enters into “the margin of the record of the lien and the entry book a memorandum of the filing and the date the certificate was filed,” the medical lienholder must mail a copy of the release of lien certificate to the Department of Insurance within ten days of filing that certificate with the recorder.

At this point, the medical lien is released. You have no more obligations to the medical lienholder, and the lienholder is “barred from seeking any additional reimbursement” from you or your attorney.

After every lien on your case has been resolved, your lawyer may take payment for his or her services and reimbursement for any expenses, then disburse the remainder of the personal injury settlement funds to you.

Can a Medical Lien Be Reduced?

A capable personal injury attorney strives to get you maximum compensation and limit what is paid out to others from your settlement. To achieve that end, your lawyer can negotiate with your lienholders to reduce your liens. Very often, creditors will accept a good faith payment for less than they are owed rather than hold out for full payment they might never receive, and medical lienholders are no exception.

There are multiple arguments that a personal injury lawyer could make to justify a medical lien reduction. For example, a medical lien entitles the lienholder to damages for the cost of the care provided, the amount of which should be detailed in the lien itself. But do the charges listed on your medical lien reflect what you were really charged for your treatment? This is what a meticulous attorney will find out by exhaustively studying your medical records and billing statements to calculate an accurate total for your medical bills. Anything above that amount would not need to be paid.

Furthermore, the medical lienholder cannot seek payment for medical bills that have already been paid, whether by you, an insurance company, or some other party. Under Indiana law, a lienholder is “barred from seeking from the patient or the patient’s representative payment for any amount of the…charges that exceed the patient’s financial obligation…under the terms of any private benefits to which the patient is entitled, including the terms of any health plan contract and medical insurance.”

Before attempting to perfect a medical lien on a settlement, a hospital needs to make sure that the lien has been “reduced by the amount of any medical insurance proceeds paid to the hospital on behalf of the patient after the hospital has made all reasonable efforts to pursue the insurance claims in cooperation with the patient.” Therefore, the lien should already reflect “credits for all payments, contractual adjustments, write-offs, and any other benefit in favor of the patient.” If a lienholder is seeking payment for the same service more than once, your lawyer can insist that the medical lien be reduced accordingly.

Because the lienholder is only entitled to receive damages for “the reasonable cost” of the medical care provided, your personal injury attorney could dispute charges if they are unreasonable or excessive. The charges could be contested by filing a motion to reduce the medical lien in the circuit court in which it was perfected, though the lienholder may simply agree to a reduction during negotiations with your lawyer without the need for courtroom proceedings.

Finally, while your attorney will try to get you paid for the entirety of your damages, there are times when those damages surpass the defendants’ applicable insurance coverage and assets, occasionally by a considerable margin. If there are no other means of recovery to make up for this shortfall, you might not have the funds to pay the lienholders fully and obtain adequate compensation for yourself.

Fortunately, the State of Indiana is sympathetic to plaintiffs in these difficult situations and may permit your attorney to seek reductions so that you can receive respectable compensation for your losses. Under the Indiana Code, if you would only be left with “less than twenty percent…of the full amount of the settlement or compromise if all the liens…were paid in full, the liens must be reduced on a pro rata basis” so that you could get at least twenty percent of the settlement or compromise.

As you can see, your personal injury lawyer has various grounds upon which to get a reduction in your medical liens so that you can be fairly compensated even in less-than-ideal circumstances.

Can a Medical Lienholder Pursue You at a Later Date?

Once a medical lienholder has settled and released a medical lien, the lienholder cannot go after you or your personal injury attorney for more compensation, even if the claim was settled for less than the amount of the lien.

Moreover, a hospital cannot assert a lien on your personal injury case after it has been paid out. In fact, a medical lien must be perfected within 90 days after you have been discharged from the hospital (or not later than the final settlement, whichever is first), so hospitals could be prevented from perfecting a lien on your case before it settles if they wait too long to do so.

Nevertheless, even if a provider does not establish a medical lien that will mandate reimbursement out of your settlement, that does not mean that you could not be pursued personally for any outstanding medical debts. While the law only permits hospitals to impose medical liens on a settlement, you could enter into agreements with other types of medical providers for repayment. Specifically, your lawyer could send a letter of protection to the medical provider agreeing to pay the medical expenses owed. Upon the completion of your case, your attorney could negotiate with the provider to resolve that outstanding debt. Furthermore, if you are aware of medical providers who are seeking payment but have not already perfected liens (when permitted) or received letters of protection, you could ask your lawyer to negotiate with them so that you can stay out of debt.

Can Other Types of Liens Be Reduced?

Medical lienholders and providers with letters of protection are not the only parties who may be repaid out of your personal injury settlement. While we have primarily referenced the liability insurance companies for the defendants, other insurers could impose subrogation liens on your settlement to get reimbursed for what they have paid out. These lienholders might include your health insurance company, a workers’ compensation insurance carrier if you received benefits because your injury happened on the job, or your auto insurer if your injury was incurred in a motor vehicle accident.

Additionally, you might have an obligation to repay a lender if you took out a loan in anticipation of your personal injury settlement, while government agencies may impose liens for debts related to child support, back taxes, and other matters.

Your personal injury attorney needs to address these non-medical liens upon settlement and could attempt to negotiate them down as well, though the legal requirements for doing so may be different from the requirements governing medical liens.

How Much Time Does It Take to Negotiate Medical Liens?

No two personal injury cases are exactly alike. Each one has a different fact pattern, with different parties who may be at fault and different levels of insurance coverage and assets available. Likewise, the extent of the damages can differ, impacting the medical treatment required and what can be recovered for injury-related losses.

A case for a minor personal injury might be resolved quickly, with the settlement obtained, the medical liens negotiated, and the funds distributed in a matter of months or even weeks. Alternatively, it could take years before settlement talks begin or a trial is conducted following a catastrophic injury, with a swarm of providers and lienholders vying to get compensated out of the settlement. The process of negotiating and reducing this many liens would naturally be more elaborate, even more so when limited resources make huge reductions necessary.

Given the number of potential variables, it is impossible to tell you in advance how much time it will take to negotiate medical liens on your personal injury case. However, we can assure you that our diligent personal injury lawyers will resolve these liens as swiftly as they can while still taking pains to dot every “i” and cross every “t.”

It can be frustrating to wait this long to get your life back to normal, but your patience will be rewarded when Hensley Legal Group puts more money in your pocket by negotiating your medical liens down to the bone.

Contact Hensley Legal Group Today

Hopefully, you now have a better understanding of how the lien process works and what a personal injury attorney can do to resolve a medical lien on settlement. We realize that a sudden injury can be disorienting, especially if you have never suffered one before, leaving you unsure about what to do or where to turn.

But if this is your first major accident, it won’t be the first for the accomplished Indiana personal injury attorneys at Hensley Legal Group. We have been protecting the rights of the average Hoosier for more than 25 years, and we are eager to do the same for you and your family.

To schedule a no-cost consultation with a dedicated Indiana personal injury lawyer, contact Hensley Legal Group today.